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8-K - FORM 8-K - Nuance Communications, Inc. | b82044e8vk.htm |
EX-99.2 - EX-99.2 - Nuance Communications, Inc. | b82044exv99w2.htm |
News Release | ||
From Nuance Communications | ||
For Immediate Release |
Contacts: |
||
For Investors
|
For Press and Investors | |
Kevin Faulkner
|
Richard Mack | |
Nuance Communications, Inc.
|
Nuance Communications, Inc. | |
Tel: 408-992-6100
|
Tel: 781-565-5000 | |
Email: kevin.faulkner@nuance.com
|
Email: richard.mack@nuance.com |
Nuance Announces Third Quarter Fiscal 2010 Results
Healthcare and Mobile Markets Fuel Revenue, EPS and Cash Flow Growth
BURLINGTON, Mass., August 9, 2010 Nuance Communications, Inc. (NASDAQ: NUAN) today announced
financial results for its third quarter of fiscal 2010, ended June 30, 2010.
Nuance reported GAAP revenue of $273.2 million in the third quarter of fiscal 2010, a 13.4%
increase over GAAP revenue of $241.0 million in the third quarter of fiscal 2009. Nuance reported
non-GAAP revenue of approximately $293.4 million, which includes $20.2 million in revenue lost to
accounting treatment in conjunction with acquisitions. Third quarter fiscal 2010 non-GAAP revenue
grew approximately 16.8% over non-GAAP revenue of $251.3 million in the same quarter last year.
In the third quarter of fiscal 2010, Nuance recognized a GAAP net loss of ($1.5) million, or
($0.01) per diluted share, compared with GAAP net loss of $(2.8) million, or $(0.01) per diluted
share, in the third quarter of fiscal 2009, as adjusted for the retrospective application of FASB
ASC 470-20, which Nuance adopted on October 1, 2009. In the third quarter of fiscal 2010, Nuance
reported non-GAAP net income of $91.3 million, or $0.30 per diluted share, compared to non-GAAP net
income of $73.3 million, or $0.26 per diluted share, in the third quarter of fiscal 2009. Nuance
benefited from revenue growth as well as focus on expense controls to improve operating margin,
despite increased investments in the business. For the third quarter of fiscal 2010, non-GAAP
operating margin rose to 32.9%, compared to 32.6% in the third quarter of fiscal 2009. Nuance
reported cash flow from operations of $64.1 million in the third quarter of fiscal 2010, compared
to $53.7 million in the third quarter of fiscal 2009.
Please refer to the Discussion of Non-GAAP Financial Measures and to the GAAP to Non-GAAP
Reconciliations, included elsewhere in this release, for more information regarding the companys
use of non-GAAP measures.
Nuance delivered increased operating cash flow and non-GAAP EPS above our guidance range, driven
by strong performance in our healthcare and mobile business lines. Gross margins and operating
margins improved year over year, even as we increased investments in R&D, services and sales
personnel, said Paul Ricci, chairman and CEO of Nuance. Strong bookings in our enterprise and
healthcare on-demand products, as well as the recent launch of Dragon NaturallySpeaking 11 position
Nuance for sustained growth in Q4 and fiscal 2011.
Highlights from the quarter include:
| Healthcare-Dictation For Nuances healthcare and dictation solutions, third quarter non-GAAP revenue was $125.9 million, up 16.5%, as reported, from the same quarter last year. During the third quarter, new bookings included large eScription, Dragon Medical and radiology contracts. Key healthcare customers included Advocate Illinois Masonic, Appalachian Healthcare, Citrus Valley, Eastern Ohio Health Alliance, Indiana Clinics, Lifespan Healthcare, Mt. Kisco Medical Group, Ochsner Clinical Foundation, Plexus, Providence Alaska, Universal Health Services, and University of Utah. Key non-medical Dragon customers included the FBI and Texas Department of Family and Protective Services. | ||
| Mobile-Enterprise For Nuances enterprise and mobile solutions, third quarter non-GAAP revenue was $131.7 million, up 4.9%, as reported, from the same quarter last year. Key customers, new bookings or design wins in the quarter included Air France, Atip, Axis Telecom, Bosch, BT, CHMC, CitiGroup, Denso, Elektrobit, Global Bilgi, Harman Becker, HBAS, HTC, M & Soft, Magneti Marelli, Melco, Modelabs, Morgan Stanley, Nokia, Orange, Pantech, Parrot, Prosodie, PSE&G, Reliance, T-Mobile, Times of India, TLM Com, Toshiba, US Air, USAA, UPS, Vietnam Telecom, Vistcom Europe, Vodafone, and ZTE. | ||
| Imaging For Nuances PDF and document imaging solutions, third quarter non-GAAP revenue was $35.8 million, up 102%, as reported, from the same quarter last year, primarily due to contributions from eCopy and X-Solutions. Nuance achieved key third quarter bookings and design wins with Adelshaw Boggard, AON, Auto Cad, Barclays Portugal, Bond Pearce, Canon, DLA Piper, DP Systems, Estes/IKON, HP, IBM, Infineon, Middletons, Pinsent Marons, Softbank, and UNICREDIT. |
Financial Analyst Day
Nuance plans to hold a financial analyst day in Boston, MA on the morning of Thursday December
9, 2010 and via Webcast. Additional details will follow.
Conference Call and Prepared Remarks
Nuance is providing a copy of prepared remarks in combination with its press release. These
remarks are offered to provide shareholders and analysts with additional time and detail for
analyzing results in advance of the Companys quarterly conference call. The remarks will be
available at www.nuance.com/earningsresults in conjunction with the press release.
As previously scheduled, the conference call will begin today, August 9, 2010 at 5:00 pm EDT and
will include only brief comments followed by questions and answers. The prepared remarks will not
be read on the call. To access the live broadcast, please visit the Investor Relations section of
Nuances Website at www.nuance.com. The call can also be heard by dialing (800) 230-1074 or (612)
234-9959 at least five minutes prior to the call and referencing conference code 165644. A replay
will be available within 24 hours of the announcement by dialing (800) 475-6701 or (320) 365-3844
and using the access code 165644.
About Nuance Communications, Inc
Nuance Communications, Inc. (NASDAQ: NUAN) is a leading provider of speech and imaging solutions
for businesses and consumers around the world. Its technologies, applications and services make
the user experience more compelling by transforming the way people interact with information and
how they create, share and use documents. Every day, millions of users and thousands of businesses
experience Nuances proven applications. For more information, please visit www.nuance.com.
Trademark reference: Nuance, the Nuance logo, Dragon Medical and eScription are registered
trademarks or trademarks of Nuance Communications, Inc. or its affiliates in the United States
and/or other countries. All other trademarks referenced herein are the property of their respective
owners.
-2-
Safe Harbor and Forward-Looking Statements
Statements in this document regarding sustained growth for the remainder of fiscal 2010 and Nuance
managements future expectations, beliefs, goals, plans or prospects constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any
statements that are not statements of historical fact (including statements containing the words
believes, plans, anticipates, expects, or estimates or similar expressions) should also
be considered to be forward-looking statements. There are a number of important factors that could
cause actual results or events to differ materially from those indicated by such forward-looking
statements, including: fluctuations in demand for Nuances existing and future products; economic
conditions in the United States and abroad; Nuances ability to control and successfully manage its
expenses and cash position; the effects of competition, including pricing pressure; possible
defects in Nuances products and technologies; the ability of Nuance to successfully integrate
operations and employees of acquired businesses; the ability to realize anticipated synergies from
acquired businesses; and the other factors described in Nuances annual report on Form 10-K for the
fiscal year ended September 30, 2009 and Nuances quarterly reports on Form 10-Q filed with the
Securities and Exchange Commission. Nuance disclaims any obligation to update any forward-looking
statements as a result of developments occurring after the date of this document.
The information included in this press release should not be viewed as a substitute for full GAAP
financial statements.
Discussion of Non-GAAP Financial Measures
Management utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing
and assessing the overall performance of the business, for making operating decisions and for
forecasting and planning for future periods. Our annual financial plan is prepared both on a GAAP
and non-GAAP basis, and the non-GAAP annual financial plan is approved by our board of directors.
Continuous budgeting and forecasting for revenue and expenses are conducted on a consistent
non-GAAP basis (in addition to GAAP) and actual results on a non-GAAP basis are assessed against
the annual financial plan. The board of directors and management utilize these non-GAAP measures
and results (in addition to the GAAP results) to determine our allocation of resources. In
addition and as a consequence of the importance of these measures in managing the business, we use
non-GAAP measures and results in the evaluation process to establish managements compensation.
For example, our annual bonus program payments are based upon the achievement of consolidated
non-GAAP revenue and consolidated non-GAAP earnings per share financial targets. We consider the
use of non-GAAP revenue helpful in understanding the performance of our business, as it excludes
the purchase accounting impact on acquired deferred revenue and other acquisition-related
adjustments to revenue. We also consider the use of non-GAAP earnings per share helpful in
assessing the organic performance of the continuing operations of our business. By organic
performance we mean performance as if we had owned an acquired asset in the same period a year
ago. By continuing operations we mean the ongoing results of the business excluding certain
unplanned costs. While our management uses these non-GAAP financial measures as a tool to enhance
their understanding of certain aspects of our financial performance, our management does not
consider these measures to be a substitute for, or superior to, the information provided by GAAP
revenue and earnings per share. Consistent with this approach, we believe that disclosing non-GAAP
revenue and non-GAAP earnings per share to the readers of our financial statements provides such
readers with useful supplemental data that, while not a substitute for GAAP revenue and earnings
per share, allows for greater transparency in the review of our financial and operational
performance. In assessing the overall health of the business during the three and nine months
ended June 30, 2010 and 2009, and, in particular, in evaluating our revenue and earnings per
share, our management has either included or excluded items in six general categories, each of
which are described below.
-3-
Acquisition-Related Revenue and Cost of Revenue.
The Company provides supplementary non-GAAP financial measures of revenue, which include revenue
related to acquisitions, primarily from eCopy and SpinVox for the three and nine months ended
June 30, 2010, that would otherwise have been recognized but for the purchase accounting treatment
of these transactions. Non-GAAP revenue also includes revenue that the Company would have otherwise
recognized had the Company not acquired intellectual property and other assets from the same
customer during the same quarter. Because GAAP accounting requires the elimination of this revenue,
GAAP results alone do not fully capture all of the Companys economic activities. These non-GAAP
adjustments are intended to reflect the full amount of such revenue. The Company includes non-GAAP
revenue and cost of revenue to allow for more complete comparisons to the financial results of
historical operations, forward-looking guidance and the financial results of peer companies. The
Company believes these adjustments are useful to management and investors as a measure of the
ongoing performance of the business because, although we cannot be certain that customers will
renew their contracts, the Company historically has experienced high renewal rates on maintenance
and support agreements and other customer contracts. Additionally, although acquisition-related
revenue adjustments are non-recurring with respect to past acquisitions, the Company generally will
incur these adjustments in connection with any future acquisitions.
Acquisition-Related Costs, Net.
In recent years, the Company has completed a number of acquisitions, which result in operating
expenses which would not otherwise have been incurred. The Company provides supplementary non-GAAP
financial measures, which exclude certain transition, integration and other acquisition-related
expense items resulting from acquisitions, to allow more accurate comparisons of the financial
results to historical operations, forward-looking guidance and the financial results of less
acquisitive peer companies. The Company considers these types of costs and adjustments, to a great
extent, to be unpredictable and dependent on a significant number of factors that are outside of
the control of the Company. Furthermore, the Company does not consider these acquisition-related
costs and adjustments to be related to the organic continuing operations of the acquired businesses
and are generally not relevant to assessing or estimating the long-term performance of the acquired
assets. In addition, the size, complexity and/or volume of past acquisitions, which often drives
the magnitude of acquisition-related costs, may not be indicative of the size, complexity and/or
volume of future acquisitions. By excluding acquisition-related costs and adjustments from our
non-GAAP measures, management is better able to evaluate the Companys ability to utilize its
existing assets and estimate the long-term value that acquired assets will generate for the
Company. The Company believes that providing a supplemental non-GAAP measure which excludes these
items allows management and investors to consider the ongoing operations of the business both with,
and without, such expenses.
These acquisition-related costs are included in the following categories: (i) transition and
integration costs; (ii) professional service fees; and (iii) acquisition-related adjustments.
Although these expenses are not recurring with respect to past acquisitions, the Company generally
will incur these expenses in connection with any future acquisitions. These categories are further
discussed as follows:
(i) Transition and integration costs. Transition and integration costs include retention
payments, transitional employee costs, earn-out payments treated as compensation expense, as
well as the costs of integration-related services provided by third parties.
(ii) Professional service fees. Professional service fees include direct costs of the
acquisition, as well as post-acquisition legal and other professional service fees associated
with disputes and regulatory matters related to acquired entities.
-4-
(iii) Acquisition-related adjustments. Acquisition-related adjustments include adjustments to
acquisition-related items that are required to be marked to fair value each reporting period,
such as contingent consideration, and other items related to acquisitions for which the
measurement period has ended, such as gains or losses on settlements of pre-acquisition
contingencies.
Amortization of Acquired Intangible Assets.
The Company excludes the amortization of acquired intangible assets from non-GAAP expense and
income measures. These amounts are inconsistent in amount and frequency and are significantly
impacted by the timing and size of acquisitions. Providing a supplemental measure which excludes
these charges allows management and investors to evaluate results as-if the acquired intangible
assets had been developed internally rather than acquired and, therefore, provides a supplemental
measure of performance in which the Companys acquired intellectual property is treated in a
comparable manner to its internally developed intellectual property. Although the Company excludes
amortization of acquired intangible assets from its non-GAAP expenses, the Company believes that it
is important for investors to understand that such intangible assets contribute to revenue
generation. Amortization of intangible assets that relate to past acquisitions will recur in future
periods until such intangible assets have been fully amortized. Future acquisitions may result in
the amortization of additional intangible assets.
Costs Associated with IP Collaboration Agreement.
In order to gain access to a third partys extensive speech recognition technology and research
organization, Nuance has entered into a six-and-a-half-year agreement to accelerate development of
new speech technologies. All intellectual property derived from the collaboration will be jointly
owned by the two parties, but Nuance will have sole rights to commercialize this intellectual
property during the term of the agreement. For non-GAAP purposes, Nuance considers this long-term
contract and the resulting acquisition of intellectual property from this third-party over the
agreements term to be an investing activity, outside of its normal, organic, continuing operating
activities, and is therefore presenting this supplemental information to show the results excluding
this expense. Nuance does not exclude from its non-GAAP results the corresponding revenue, if any,
generated from the collaboration efforts. Although the Companys bonus program and other
performance-based incentives for executives are based on the non-GAAP results that exclude these
costs, certain engineering senior management are responsible for execution and results of the
collaboration agreement and have incentives based on those results.
Non-Cash Expenses.
The Company provides non-GAAP information relative to the following non-cash expenses:
(i) stock-based compensation; (ii) certain accrued interest; and (iii) certain accrued income
taxes. These items are further discussed as follows:
(i) Stock-based compensation. Because of varying available valuation methodologies, subjective
assumptions and the variety of award types, the Company believes that the exclusion of
stock-based compensation allows for more accurate comparisons of operating results to peer
companies, as well as to times in the Companys history when stock-based compensation was more
or less significant as a portion of overall compensation than in the current period. The
Company evaluates performance both with and without these measures because compensation expense
related to stock-based compensation is typically non-cash and the options and restricted awards
granted are influenced by the Companys stock price and other factors such as volatility that
are beyond the Companys control. The expense related to stock-based awards is generally not
controllable in the short-term and can vary significantly based on the timing, size and nature
of awards granted. As such, the Company does not include such charges in operating plans.
Stock-based compensation will continue in future periods.
-5-
(ii and iii) Certain accrued interest and income taxes. The Company also excludes certain
accrued interest and certain accrued income taxes because the Company believes that excluding
these non-cash expenses provides senior management, as well as other users of the financial
statements, with a valuable perspective on the cash-based performance and health of the
business, including the current near-term projected liquidity. These non-cash expenses will
continue in future periods.
Other Expenses.
The Company excludes certain other expenses that are the result of unplanned events to measure
operating performance and current and future liquidity both with and without these expenses; and
therefore, by providing this information, the Company believes management and the users of the
financial statements are better able to understand the financial results of what the Company
considers to be its organic, continuing operations. Included in these expenses are items such as
restructuring charges, asset impairments and other charges (credits), net. These events are
unplanned and arose outside of the ordinary course of continuing operations. These items also
include adjustments from changes in fair value of share-based instruments relating to the
issuance of our common stock with security price guarantees payable in cash.
The Company believes that providing the non-GAAP information to investors, in addition to the
GAAP presentation, allows investors to view the financial results in the way management views
the operating results. The Company further believes that providing this information allows
investors to not only better understand the Companys financial performance, but more
importantly, to evaluate the efficacy of the methodology and information used by management to
evaluate and measure such performance.
Financial Tables Follow
-6-
Nuance Communications, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Unaudited
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Unaudited
Three months ended | Nine months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenue: |
||||||||||||||||
Product and licensing |
$ | 108,840 | $ | 87,387 | $ | 335,228 | $ | 259,987 | ||||||||
Professional services and hosting |
117,875 | 110,966 | 337,798 | 304,162 | ||||||||||||
Maintenance and support |
46,488 | 42,687 | 136,159 | 122,870 | ||||||||||||
Total revenue |
273,203 | 241,040 | 809,185 | 687,019 | ||||||||||||
Cost of revenue: |
||||||||||||||||
Product and licensing |
10,901 | 8,414 | 34,194 | 26,222 | ||||||||||||
Professional services and hosting |
71,353 | 68,321 | 206,349 | 189,584 | ||||||||||||
Maintenance and support |
7,631 | 7,207 | 23,335 | 21,387 | ||||||||||||
Amortization of intangible assets |
11,893 | 10,017 | 35,095 | 27,444 | ||||||||||||
Total cost of revenue |
101,778 | 93,959 | 298,973 | 264,637 | ||||||||||||
Gross profit |
171,425 | 147,081 | 510,212 | 422,382 | ||||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
38,916 | 27,742 | 113,797 | 85,622 | ||||||||||||
Sales and marketing |
67,219 | 50,233 | 196,680 | 160,850 | ||||||||||||
General and administrative |
29,887 | 24,507 | 88,643 | 75,333 | ||||||||||||
Amortization of intangible assets |
21,459 | 19,931 | 65,786 | 56,313 | ||||||||||||
Acquisition-related costs, net |
6,125 | 4,659 | 26,892 | 13,889 | ||||||||||||
Restructuring and other charges, net |
3,257 | 2,893 | 16,244 | 5,241 | ||||||||||||
Total operating expenses |
166,863 | 129,965 | 508,042 | 397,248 | ||||||||||||
Income from operations |
4,562 | 17,116 | 2,170 | 25,134 | ||||||||||||
Other expense, net |
(4,261 | ) | (13,261 | ) | (18,915 | ) | (31,704 | ) | ||||||||
Income (loss) before income taxes |
301 | 3,855 | (16,745 | ) | (6,570 | ) | ||||||||||
Provision for income taxes |
1,831 | 6,670 | 4,459 | 17,283 | ||||||||||||
Net loss |
$ | (1,530 | ) | $ | (2,815 | ) | $ | (21,204 | ) | $ | (23,853 | ) | ||||
Net loss per share: |
||||||||||||||||
Basic and diluted |
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.07 | ) | $ | (0.10 | ) | ||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic and diluted |
291,610 | 260,750 | 285,202 | 249,105 | ||||||||||||
Financial statements for the three and nine months ended June 30, 2009 have been
adjusted for the retrospective application of FASB ASC 470-20.
adjusted for the retrospective application of FASB ASC 470-20.
-7-
Nuance Communications, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
Unaudited
Condensed Consolidated Balance Sheets
(in thousands)
Unaudited
June 30, 2010 | September 30, 2009 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 492,074 | $ | 527,038 | ||||
Restricted cash |
21,974 | | ||||||
Accounts receivable and unbilled receivables, net |
222,511 | 208,719 | ||||||
Inventories, net |
8,323 | 8,525 | ||||||
Prepaid expenses and other current assets |
52,553 | 51,545 | ||||||
Total current assets |
797,435 | 795,827 | ||||||
Land, building and equipment, net |
56,372 | 53,468 | ||||||
Goodwill |
2,041,590 | 1,891,003 | ||||||
Intangible assets, net |
667,879 | 706,805 | ||||||
Other assets |
67,628 | 52,361 | ||||||
Total assets |
$ | 3,630,904 | $ | 3,499,464 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt and capital
leases |
$ | 8,209 | $ | 6,862 | ||||
Contingent and deferred acquisition payments |
2,093 | 91,431 | ||||||
Accounts payable and accrued expenses |
207,059 | 164,393 | ||||||
Deferred and unearned revenue |
139,096 | 144,395 | ||||||
Other short term liabilities |
9,574 | 12,144 | ||||||
Total current liabilities |
366,031 | 419,225 | ||||||
Long-term portion of debt and capital leases |
850,400 | 848,898 | ||||||
Long-term deferred revenue |
67,197 | 33,904 | ||||||
Other long term liabilities |
152,095 | 154,436 | ||||||
Total liabilities |
1,435,723 | 1,456,463 | ||||||
Stockholders equity |
2,195,181 | 2,043,001 | ||||||
Total liabilities and stockholders equity |
$ | 3,630,904 | $ | 3,499,464 | ||||
Financial statements as of September 30, 2009 have been adjusted for the retrospective
application of FASB ASC 470-20.
application of FASB ASC 470-20.
-8-
Nuance Communications, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Condensed Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Nine months ended | ||||||||
June 30, | ||||||||
2010 | 2009 | |||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (21,204 | ) | $ | (23,853 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
116,738 | 97,398 | ||||||
Stock-based compensation |
72,868 | 52,584 | ||||||
Non-cash interest expense |
9,746 | 9,330 | ||||||
Non-cash restructuring expense |
6,833 | | ||||||
Gain on foreign currency forward contracts |
| (8,049 | ) | |||||
Deferred tax provision |
(2,321 | ) | 8,117 | |||||
Other |
1,671 | 1,624 | ||||||
Changes in operating assets and liabilities, net of effects from acquisitions: |
||||||||
Accounts receivable |
(13,023 | ) | 47,713 | |||||
Inventories |
280 | (2,261 | ) | |||||
Prepaid expenses and other assets |
(5,149 | ) | (5,746 | ) | ||||
Accounts payable |
(3,960 | ) | 22,744 | |||||
Accrued expenses and other liabilities |
(7,825 | ) | (9,217 | ) | ||||
Deferred revenue |
30,044 | (6,124 | ) | |||||
Net cash provided by operating activities |
184,698 | 184,260 | ||||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(16,284 | ) | (15,682 | ) | ||||
Payments for acquisitions, net of cash acquired |
(155,882 | ) | (113,886 | ) | ||||
Proceeds from maturities of marketable securities |
| 56 | ||||||
Payments for equity investment |
(14,970 | ) | (159 | ) | ||||
Payments for acquired technology |
(14,850 | ) | (65,257 | ) | ||||
Increase in restricted cash |
(22,070 | ) | | |||||
Net cash used in investing activities |
(224,056 | ) | (194,928 | ) | ||||
Cash flows from financing activities: |
||||||||
Payments of debt and capital leases |
(6,376 | ) | (5,261 | ) | ||||
Purchases of treasury stock |
(575 | ) | (144 | ) | ||||
Payments of other long-term liabilities |
(7,319 | ) | (6,915 | ) | ||||
Proceeds from settlement of shared-based derivatives |
6,391 | | ||||||
Proceeds from issuance of common stock, net of issuance costs |
12,350 | 175,111 | ||||||
Proceeds from issuance of common stock from employee stock options and purchase plan |
22,832 | 10,995 | ||||||
Cash used to net share settle employee equity awards |
(17,465 | ) | (6,186 | ) | ||||
Net cash provided by financing activities |
9,838 | 167,600 | ||||||
Effects of exchange rate changes on cash and cash equivalents |
(5,444 | ) | 115 | |||||
Net increase (decrease) in cash and cash equivalents |
(34,964 | ) | 157,047 | |||||
Cash and cash equivalents at beginning of period |
527,038 | 261,540 | ||||||
Cash and cash equivalents at end of period |
$ | 492,074 | $ | 418,587 | ||||
Financial statements for the three and nine months ended June 30, 2009 have been
adjusted for the retrospective application of FASB ASC 470-20.
adjusted for the retrospective application of FASB ASC 470-20.
-9-
Nuance Communications, Inc.
Supplemental Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Supplemental Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Three Months Ended | ||||||||||||||||||||
6/30/10 | 3/31/10 | 12/31/09 | 9/30/09 | 6/30/09 | ||||||||||||||||
Cash flows from operating activities: |
||||||||||||||||||||
Net income (loss) |
$ | (1,530 | ) | $ | (15,396 | ) | $ | (4,278 | ) | $ | 4,466 | $ | (2,815 | ) | ||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||||||||||||||
Depreciation and amortization |
38,761 | 39,747 | 38,230 | 36,661 | 34,465 | |||||||||||||||
Stock-based compensation |
28,094 | 24,708 | 20,066 | 18,823 | 17,582 | |||||||||||||||
Non-cash interest expense |
3,222 | 3,245 | 3,279 | 3,162 | 3,015 | |||||||||||||||
Non-cash restructuring expense |
| 6,833 | | | | |||||||||||||||
Deferred tax provision |
(1,210 | ) | (800 | ) | (311 | ) | 17,601 | 6,505 | ||||||||||||
Other |
1,005 | (25 | ) | 691 | 342 | (290 | ) | |||||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions: |
||||||||||||||||||||
Accounts receivable |
(4,482 | ) | (2,274 | ) | (6,267 | ) | (14,232 | ) | 13,931 | |||||||||||
Inventories |
(429 | ) | 135 | 574 | 893 | (800 | ) | |||||||||||||
Prepaid expenses and other assets |
(721 | ) | (4,329 | ) | (99 | ) | (6,913 | ) | 2,553 | |||||||||||
Accounts payable |
(1,711 | ) | 1,460 | (3,709 | ) | 3,838 | (2,755 | ) | ||||||||||||
Accrued expenses and other liabilities |
2,532 | (17,760 | ) | 7,403 | 4,210 | (6,385 | ) | |||||||||||||
Deferred revenue |
587 | 19,984 | 9,473 | 5,578 | (11,311 | ) | ||||||||||||||
Net cash provided by operating activities |
64,118 | 55,528 | 65,052 | 74,429 | 53,695 | |||||||||||||||
Net cash provided by (used in) investing activities |
(34,534 | ) | (30,075 | ) | (159,447 | ) | 10,318 | (57,570 | ) | |||||||||||
Net cash provided by (used in) financing activities |
5,897 | 10,372 | (6,431 | ) | 21,816 | (1,140 | ) | |||||||||||||
Effects of exchange rate changes on cash and cash equivalents |
(5,211 | ) | (923 | ) | 690 | 1,888 | 2,620 | |||||||||||||
Net increase (decrease) in cash and cash equivalents |
30,270 | 34,902 | (100,136 | ) | 108,451 | (2,395 | ) | |||||||||||||
Cash and cash equivalents at beginning of period |
461,804 | 426,902 | 527,038 | 418,587 | 420,982 | |||||||||||||||
Cash and cash equivalents at end of period |
$ | 492,074 | $ | 461,804 | $ | 426,902 | $ | 527,038 | $ | 418,587 | ||||||||||
Financial statements for the three month periods during fiscal
2009 have been adjusted for the retrospective application of
FASB ASC 470-20.
2009 have been adjusted for the retrospective application of
FASB ASC 470-20.
-10-
Nuance Communications, Inc.
Supplemental Financial Information GAAP to Non-GAAP Reconciliations
(in thousands, except per share amounts)
Unaudited
Supplemental Financial Information GAAP to Non-GAAP Reconciliations
(in thousands, except per share amounts)
Unaudited
Three months ended | Nine months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
GAAP revenue |
$ | 273,203 | $ | 241,040 | $ | 809,185 | $ | 687,019 | ||||||||
Acquisition-related revenue adjustments: product and licensing |
12,922 | 8,264 | 44,726 | 40,217 | ||||||||||||
Acquisition-related revenue adjustments: professional services and
hosting |
6,359 | 1,506 | 9,632 | 3,956 | ||||||||||||
Acquisition-related revenue adjustments: maintenance and support |
900 | 519 | 7,269 | 3,370 | ||||||||||||
Non-GAAP revenue |
$ | 293,384 | $ | 251,329 | $ | 870,812 | $ | 734,562 | ||||||||
GAAP cost of revenue |
$ | 101,778 | $ | 93,959 | $ | 298,973 | $ | 264,637 | ||||||||
Cost of revenue from amortization of intangible assets |
(11,893 | ) | (10,017 | ) | (35,095 | ) | (27,444 | ) | ||||||||
Cost of revenue adjustments: product and licensing (1,2) |
2,794 | (2 | ) | 8,920 | (13 | ) | ||||||||||
Cost of revenue adjustments: professional services and hosting (1,2) |
(2,181 | ) | (1,953 | ) | (7,086 | ) | (6,321 | ) | ||||||||
Cost of revenue adjustments: maintenance and support (1,2) |
(165 | ) | (93 | ) | (582 | ) | (425 | ) | ||||||||
Non-GAAP cost of revenue |
$ | 90,333 | $ | 81,894 | $ | 265,130 | $ | 230,434 | ||||||||
GAAP gross profit |
$ | 171,425 | $ | 147,081 | $ | 510,212 | $ | 422,382 | ||||||||
Gross profit adjustments (1,2) |
31,626 | 22,354 | 95,470 | 81,746 | ||||||||||||
Non-GAAP gross profit |
$ | 203,051 | $ | 169,435 | $ | 605,682 | $ | 504,128 | ||||||||
GAAP income from operations |
$ | 4,562 | $ | 17,116 | $ | 2,170 | $ | 25,134 | ||||||||
Gross profit adjustments (1,2) |
31,626 | 22,354 | 95,470 | 81,746 | ||||||||||||
Research and development (1) |
2,282 | 2,013 | 6,731 | 7,640 | ||||||||||||
Sales and marketing (1) |
12,516 | 6,687 | 29,813 | 20,246 | ||||||||||||
General and administrative (1) |
10,512 | 6,346 | 27,544 | 16,804 | ||||||||||||
Amortization of intangible assets |
21,459 | 19,931 | 65,786 | 56,313 | ||||||||||||
Costs related to research and development collaborative agreement |
4,208 | | 12,208 | | ||||||||||||
Acquisition-related costs, net |
6,125 | 4,659 | 26,892 | 13,889 | ||||||||||||
Restructuring and other charges, net |
3,257 | 2,893 | 16,244 | 5,241 | ||||||||||||
Non-GAAP income from operations |
$ | 96,547 | $ | 81,999 | $ | 282,858 | $ | 227,013 | ||||||||
GAAP provision for income taxes |
$ | 1,831 | $ | 6,670 | $ | 4,459 | $ | 17,283 | ||||||||
Non-cash taxes |
3,471 | (4,170 | ) | 6,772 | (6,125 | ) | ||||||||||
Non-GAAP provision for income taxes |
$ | 5,302 | $ | 2,500 | $ | 11,231 | $ | 11,158 | ||||||||
GAAP net loss |
$ | (1,530 | ) | $ | (2,815 | ) | $ | (21,204 | ) | $ | (23,853 | ) | ||||
Acquisition-related adjustment revenue (2) |
20,181 | 10,289 | 61,627 | 47,543 | ||||||||||||
Acquisition-related adjustment cost of revenue (2) |
(3,232 | ) | (488 | ) | (10,032 | ) | (1,135 | ) | ||||||||
Acquisition-related costs, net |
6,125 | 4,659 | 26,892 | 13,889 | ||||||||||||
Cost of revenue from amortization of intangible assets |
11,893 | 10,017 | 35,095 | 27,444 | ||||||||||||
Amortization of intangible assets |
21,459 | 19,931 | 65,786 | 56,313 | ||||||||||||
Non-cash stock-based compensation (1) |
28,094 | 17,582 | 72,868 | 52,584 | ||||||||||||
Non-cash interest expense, net |
3,222 | 3,231 | 9,746 | 9,724 | ||||||||||||
Non-cash income taxes |
(3,471 | ) | 4,170 | (6,772 | ) | 6,125 | ||||||||||
Costs from IP collaboration agreement |
4,208 | | 12,208 | | ||||||||||||
Change in fair value of share-based instruments |
1,044 | 3,782 | (3,663 | ) | 3,782 | |||||||||||
Restructuring and other charges, net |
3,257 | 2,893 | 16,244 | 5,241 | ||||||||||||
Non-GAAP net income |
$ | 91,250 | $ | 73,251 | $ | 258,795 | $ | 197,657 | ||||||||
Non-GAAP diluted net income per share |
$ | 0.30 | $ | 0.26 | $ | 0.86 | $ | 0.74 | ||||||||
Diluted weighted average common shares outstanding |
305,427 | 281,151 | 300,511 | 268,699 | ||||||||||||
Financial statements for the three and nine months ended June 30, 2009 have been adjusted for the
retrospective application of FASB ASC 470-20.
retrospective application of FASB ASC 470-20.
-11-
Nuance Communications, Inc.
Supplemental Financial Information GAAP to Non-GAAP Reconciliations, continued
(in thousands)
Unaudited
Supplemental Financial Information GAAP to Non-GAAP Reconciliations, continued
(in thousands)
Unaudited
Three months ended | Nine months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(1) Non-Cash Stock-Based Compensation |
||||||||||||||||
Cost of product and licensing |
$ | 7 | $ | 2 | $ | 25 | $ | 8 | ||||||||
Cost of professional services and hosting |
2,612 | 2,402 | 8,173 | 7,329 | ||||||||||||
Cost of maintenance and support |
165 | 132 | 582 | 557 | ||||||||||||
Research and development |
2,282 | 2,013 | 6,731 | 7,640 | ||||||||||||
Sales and marketing |
12,516 | 6,687 | 29,813 | 20,246 | ||||||||||||
General and administrative |
10,512 | 6,346 | 27,544 | 16,804 | ||||||||||||
Total |
$ | 28,094 | $ | 17,582 | $ | 72,868 | $ | 52,584 | ||||||||
(2) Acquisition-Related Revenue and Cost of Revenue |
||||||||||||||||
Revenue |
$ | 20,181 | $ | 10,289 | $ | 61,627 | $ | 47,543 | ||||||||
Cost of product and licensing |
(2,801 | ) | | (8,945 | ) | 5 | ||||||||||
Cost of professional services and hosting |
(431 | ) | (449 | ) | (1,087 | ) | (1,008 | ) | ||||||||
Cost of maintenance and support |
| (39 | ) | | (132 | ) | ||||||||||
Total |
$ | 16,949 | $ | 9,801 | $ | 51,595 | $ | 46,408 | ||||||||
-12-