QUEST SOFTWARE INC - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - QUEST SOFTWARE INC	d8k.htm

Exhibit 99.1

LOGO

NEWS

For Immediate Release

Editorial Contact: Daphne Kent

614-726-4787

daphne.kent@quest.com

Investor Contacts: Thomas Patterson

949-754-8336

thomas.patterson@quest.com

Stephen Wideman

949-754-8142

stephen.wideman@quest.com

QUEST SOFTWARE REPORTS FOURTH QUARTER AND FISCAL YEAR 2010 RESULTS

Fourth Quarter Revenues of $216.8 Million &

11.5% Growth in License Revenues

Fiscal Year 2010 Revenues of $767.1 Million &

14.8% Growth in License Revenues

Increases Stock Repurchase Program to $150 Million

ALISO VIEJO, Calif., Feb. 3, 2011 – Quest Software, Inc. (Nasdaq: QSFT) today reported financial results for the quarter and year ended Dec. 31, 2010. Total revenues were $216.8 million, an 11.4% increase compared to the prior year’s fourth quarter revenue of $194.5 million, while license revenues grew 11.5% to $98.0 million. Total revenues for the year ended Dec. 31, 2010, were $767.1 million, a 10.3% increase compared to $695.2 million for the same period in 2009. Operating margins were 14.4% and 15.7% for the three and twelve months ended Dec. 31, 2010, respectively, as compared to 23.4% and 12.0% for the three and twelve months ended Dec. 31, 2009, respectively. On a non-GAAP basis, operating margins were 22.6% and 23.1% for the three and twelve months ended Dec. 31, 2010.

Cash and investments at Dec. 31, 2010, totaled $492.3 million, an increase of $82.1 million over the comparable balance at Sep. 30, 2010. Cash flow from operations was $62.7 million for the three months ended Dec. 31, 2010.

Quest Software Reports Fourth Quarter and Fiscal Year 2010 Results – page 2 of 11

“We continued to execute in the fourth quarter, delivering solid revenue growth,” said Doug Garn, President and CEO of Quest Software. “In 2010, we delivered 14.0% non-GAAP operating income growth to $177.4 million and 16.0% diluted earnings per share growth to $1.45 per fully diluted share. Our 14.8% increase in license revenue demonstrates the strength of the market momentum we are seeing. With our strong technology and services portfolio, coupled with a compelling product roadmap, we remain confident that we will continue to extend our market leadership into the future.”

Increase to Stock Repurchase Program

Quest Software also announced today that its board of directors has increased the authorization under its current stock repurchase program to an aggregate of up to $150 million of its common stock. Any stock repurchases may be made through open market and privately negotiated transactions, at times and in such amounts as management deems appropriate, including pursuant to one or more Rule 10b5-1 trading plans. Rule 10b5-1 permits Quest Software to establish, while not in possession of material nonpublic information, prearranged plans to buy stock at a specific price in the future, regardless of any subsequent possession of material nonpublic information. The timing and actual number of shares repurchased will depend on a variety of factors including market conditions, corporate and regulatory requirements, and capital availability. The stock repurchase program does not have an expiration date and may be limited or terminated at any time without prior notice.

GAAP Results

Quest Software expects net income for the fourth quarter of 2010 to be $30.3 million, or $0.32 per fully diluted share. This compares to net income of $37.0 million, or $0.40 per share on a fully diluted basis, for the fourth quarter of 2009. Operating margin was 14.4% in the fourth quarter of 2010 compared to 23.4% in the comparable period of 2009, resulting in operating income of $31.2 million, which compares to $45.5 million for the corresponding period in 2009. Net income for the year ended Dec. 31, 2010, was $98.6 million, or $1.06 per fully diluted share compared to net income of $70.4 million, or $0.75 per fully diluted share for the same period in 2009. Operating margins increased year-over-year from 12.0% to 15.7% in the fiscal year, resulting in operating income of $120.6 million, compared to $83.5 million for the corresponding period in 2009.

Non-GAAP Results

On a non-GAAP basis, net income for the fourth quarter of 2010 is expected to be $38.0 million, or $0.40 per fully diluted share. This compares to non-GAAP net income of $36.9 million, or $0.40 per share on a fully diluted basis, for the fourth quarter of 2009. The non-GAAP operating margin was 22.6% in the fourth quarter of 2010, resulting in non-GAAP operating income of $49.0 million, compared to non-GAAP operating margin and

Quest Software Reports Fourth Quarter and Fiscal Year 2010 Results – page 3 of 11

operating income of 24.8% and $48.3 million, respectively, for the corresponding period in 2009. For the year ended Dec. 31, 2010, non-GAAP net income was $135.0 million, or $1.45 per fully diluted share. This compares to non-GAAP net income of $117.8 million, or $1.25 per fully diluted share, for the year ended Dec. 31, 2009. The non-GAAP operating margin was 23.1% for the year ended Dec. 31, 2010, resulting in non-GAAP operating income of $177.4 million, compared to non-GAAP operating margin and operating income of 22.4% and $155.6 million, respectively, in the comparable period of 2009.

This release contains estimates of our net income and earnings per share for the quarter ended December 31, 2010. During the year-end close process, we discovered that approximately $6.8 million in tax reserves should have been released in the quarter ended September 30, 2010. The release of these tax reserves would result in higher net income and earnings per share than previously reported for the third quarter. We are continuing to review our financial results related to the release and expect to include this adjustment in our Annual Report on Form 10-K for the year ended December 31, 2010. We do not expect this adjustment to have any impact on the reported net income and earnings per share for the full year ended December 31, 2010.

Non-GAAP results exclude the after-tax effects of amortization of intangible assets acquired with business combinations, stock-based compensation expenses, acquisition related costs, patent infringement litigation costs and expenses associated with our completed stock option investigation. A reconciliation of GAAP to non-GAAP financial results is included with this press release.

Quest Software’s management prepares and uses non-GAAP financial measures in the presentation of the Company’s results to provide a consistent understanding of its historical operating performance and comparisons with peer companies. Management believes that non-GAAP reporting provides a meaningful representation of the Company’s on-going economic performance and therefore uses non-GAAP reporting internally to evaluate and manage the Company’s operations. Management believes excluding charges such as those described above from its GAAP results facilitates investors’ understanding of the Company’s ongoing business operating results. These non-GAAP financial measures also facilitate comparisons to the operating results of the Company’s competitors and provide investors with transparency with respect to the supplemental information used by management in its operational and financial decision making. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for measures of financial performance prepared in conformity with GAAP.

Fourth Quarter and Fiscal Year 2010 Conference Call Information

Quest Software will host a conference call today, Thursday, Feb. 3, 2011, at 2:00 p.m. Pacific Time, to discuss its results. A simultaneous webcast of the conference call will be available on Quest Software’s website in the Investor Relations section at www.quest.com/company/investor-relations.aspx . A webcast replay will be available on the same website through Feb. 3, 2012. An audio replay of the conference call will also be available through Feb. 10, 2011, by dialing (888) 203-1112 (from the U.S. or Canada) or 719-457-0820 (outside the U.S. and Canada), using confirmation code: 7524197.

Quest Software Reports Fourth Quarter and Fiscal Year 2010 Results – page 4 of 11

About Quest Software, Inc.

Quest Software (Nasdaq: QSFT) simplifies and reduces the cost of managing IT for more than 100,000 customers worldwide. Our innovative solutions make solving the toughest IT management problems easier, enabling customers to save time and money across physical, virtual and cloud environments. For more information about Quest solutions for application management, database management, Windows management, virtualization management, and IT management, go to www.quest.com.

# # #

Quest and Quest Software are registered trademarks of Quest Software, Inc. The Quest Software logo and all other Quest Software product or service names and slogans are registered trademarks or trademarks of Quest Software, Inc. All other trademarks and registered trademarks are property of their respective owners.

Forward-Looking Statements

This release and the matters to be discussed on the conference call may include predictions, estimates and other information that might be considered forward-looking statements, including statements relating to expectations of future revenue and operating margin performance and other operating prospects. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those anticipated as a result of various factors, including: the impact of adverse changes in general economic conditions on Quest Software’s relationships with customers, strategic partners and vendors; reductions or delays in information technology spending; variations in demand or the size and timing of customer orders; competitive conditions in Quest Software’s various product areas; rapid technological change; risks associated with the development and market acceptance of new products and product strategies; disruptions caused by acquisitions of companies and/or technologies; fluctuating currency exchange rates and risks associated with international operations; the need to attract and retain qualified employees; risks associated with Quest Software’s ongoing patent litigation; and other risks inherent in software businesses. For a discussion of these and other related risks, please refer to Quest Software’s recent SEC filings, including the Annual Report on Form 10-K for the year ended Dec. 31, 2009, which are available on the SEC’s website at www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. Quest Software undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof.

Social Networks:

Twitter

Facebook

YouTube

Web Links Referenced in this Release:

Quest Software, Inc.: www.quest.com

Application Management: http://www.quest.com/application-monitoring/

Database Management: http://www.quest.com/database-management/

Windows Management: http://www.quest.com/windows-management/

Virtualization Management: http://www.quest.com/virtualization/

IT management: http://www.quest.com/

Twitter: http://twitter.com/#!/Quest

Facebook: http://www.facebook.com/#!/pages/Quest-Software/65026711832

LinkedIn: http://www.linkedin.com/companies/quest-software

YouTube: http://www.youtube.com/user/questsoftware

Quest Software Reports Fourth Quarter and Fiscal Year 2010 Results – page 5 of 11

QUEST SOFTWARE, INC.

CONSOLIDATED INCOME STATEMENTS

(In thousands, except per share data)

(Unaudited)


	Three Months Ended December 31					Year Ended December 31
	2010		2009			2010			2009
Revenues:
Licenses	$	98,020	$	87,905		$	320,683		$	279,238
Services		118,762		106,626			446,414			415,998

Total revenues		216,782		194,531			767,097			695,236
Cost of revenues:
Licenses		2,125		1,841			8,303			7,581
Services		20,543		15,661			67,809			58,528
Amortization of purchased technology		3,537		4,469			16,101			19,393

Total cost of revenues		26,205		21,971			92,213			85,502

Gross profit		190,577		172,560			674,884			609,734
Operating expenses:
Sales and marketing		90,405		76,211			304,934			272,944
Research and development		41,756		36,442			151,896			144,370
General and administrative		24,050		21,578			84,808			76,748
Litigation loss provision		-		(10,375	)		-			19,025
Amortization of other purchased intangible assets		3,158		3,235			12,670			13,159

Total operating expenses		159,369		127,091			554,308			526,246

Income from operations		31,208		45,469			120,576			83,488
Other income (expense), net		49		(789	)		(5,657	)		2,549

Income before income tax (benefit) provision		31,257		44,680			114,919			86,037
Income tax (benefit) provision		991		7,658			16,352			15,678

Net income	$	30,266	$	37,022		$	98,567		$	70,359

Net income per share:
Basic	$	0.40	$	0.41		$	1.09		$	0.77

Diluted	$	0.39	$	0.40		$	1.06		$	0.75


Weighted average shares:
Basic		91,981		90,105			90,411			91,926
Diluted		95,069		92,800			93,282			94,066

Quest Software Reports Fourth Quarter and Fiscal Year 2010 Results – page 6 of 11

Reconciliation of Non-GAAP Financial Measures to Comparable U.S. GAAP Measures (Unaudited)

The Company has provided a reconciliation of each non-GAAP financial measure used in this earnings release and related conference call and webcast to the most directly comparable GAAP financial measure. These measures differ from GAAP in that they exclude amortization of intangible assets acquired with business combinations, stock-based compensation expenses, acquisition related costs, patent infringement litigation costs and expenses associated with our completed stock option investigation. The Company’s basis for these adjustments is described below.

Management excludes the expenses described above when evaluating the Company’s operating performance and believes that the resulting non-GAAP measures are useful to investors and financial analysts in assessing the Company’s operating performance due to the following factors:

•

The Company does not acquire businesses on a predictable cycle. The Company, therefore, believes that the presentation of non-GAAP measures that adjust for the impact of intangible asset amortization that are related to business combinations and acquisition related costs, provides investors and financial analysts with a consistent basis for comparison across accounting periods and, therefore, is useful to help investors and financial analysts understand the Company’s operating results and underlying operational trends.

•

Amortization costs are fixed at the time of an acquisition, then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition.

Quest Software Reports Fourth Quarter and Fiscal Year 2010 Results – page 7 of 11

•

Although stock-based compensation is an important aspect of the compensation of the Company’s employees and executives, stock-based compensation expense and its related tax impact are excluded as such charges are generally fixed at the time of grant and amortized over a period of several years and cannot be changed or influenced by management after the grant.

•

Stock-based compensation is not an expense that typically requires or will require cash settlement by the Company.

•

Litigation expenses arising from our ongoing patent litigation, as well as litigation expenses from our completed stock option investigation which included expenses incurred for outside legal fees and costs, consulting services and other professional fees, and indemnification expenses for current and former directors and officers. Because these expenses were non-recurring, the Company believes they are not indicative of future operating results and that investors benefit from an understanding of Quest Software’s operating results without giving effect to them.

•

The estimated income tax effects on the above items adjust the provision for income taxes to reflect the effect of the non-GAAP adjustments on non-GAAP operating income.

These non-GAAP financial measures are not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and may differ from the non-GAAP information used by other companies. There are significant limitations associated with the use of non-GAAP financial measures. The additional non-GAAP financial information presented here should be considered in conjunction with, and not as a substitute for or superior to, the financial information presented in accordance with GAAP (such as net income and earnings per share) and should not be considered measures of the Company’s liquidity. Furthermore, the Company in the future may exclude amortization related to new business combinations from financial measures that it releases, and the Company expects to continue to incur stock-based compensation expenses.

Quest Software Reports Fourth Quarter and Fiscal Year 2010 Results – page 8 of 11

QUEST SOFTWARE, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES

(In thousands, except per share data)

(Unaudited)


	Three Months Ended Dec 31						Year Ended Dec 31
	2010			2009			2010			2009
GAAP total cost of revenues	$	26,205		$	21,971		$	92,213		$	85,502
Amortization of purchased technology		(3,537	)		(4,469	)		(16,101	)		(19,393	)
Stock-based compensation expense		(404	)		(216	)		(1,114	)		(737	)
Acquisition related costs		(14	)		-			(14	)		-

Non-GAAP total cost of revenues	$	22,250		$	17,286		$	74,984		$	65,372

GAAP gross profit	$	190,577		$	172,560		$	674,884		$	609,734
Amortization of purchased technology		3,537			4,469			16,101			19,393
Stock-based compensation expense		404			216			1,114			737
Acquisition related costs		14			-			14			-

Non-GAAP gross profit	$	194,532		$	177,245		$	692,113		$	629,864

GAAP income from operations	$	31,208		$	45,469		$	120,576		$	83,488
Amortization of purchased technology		3,537			4,469			16,101			19,393
Amortization of other purchased intangible assets		3,158			3,235			12,670			13,159
Stock-based compensation expense		7,574			3,813			23,099			15,178
Professional fees relating to our previous restatement		-			1,542			271			5,153
Litigation loss provision		-			(10,375	)		-			19,025
Patent infringement litigation costs		490			-			988			-
Acquisition related costs		2,990			133			3,733			253

Non-GAAP income from operations	$	48,957		$	48,286		$	177,438		$	155,649

GAAP net income	$	30,266		$	37,022		$	98,567		$	70,359
Amortization of purchased technology		3,537			4,469			16,101			19,393
Amortization of other purchased intangible assets		3,158			3,235			12,670			13,159
Stock-based compensation expense		7,574			3,813			23,099			15,178
Professional fees relating to our previous restatement		-			1,542			271			5,153
Litigation loss provision		-			(10,375	)		-			19,025
Patent infringement litigation costs		490			-			988			-
Acquisition related costs		2,990			133			3,733			253
Other income		(248	)		-			(248	)		-
Tax effect of these adjustments		(9,766	)		(2,900	)		(20,168	)		(24,760	)

Non-GAAP net income	$	38,001		$	36,939		$	135,013		$	117,760

GAAP net income per basic share	$	0.33		$	0.41		$	1.09		$	0.77
Amortization of purchased technology		0.04			0.05			0.18			0.21
Amortization of other purchased intangible assets		0.04			0.04			0.14			0.14
Stock-based compensation expense		0.08			0.04			0.25			0.17
Professional fees relating to our previous restatement		-			0.02			0.00			0.06
Litigation loss provision		-			(0.12	)		-			0.21
Patent infringement litigation costs		0.01			-			0.01			-
Acquisition related costs		0.03			-			0.04			0.01
Other income		(0.00	)		-			(0.00	)		-
Tax effect of these adjustments		(0.11	)		(0.03	)		(0.22	)		(0.27	)

Non-GAAP net income per basic share	$	0.41		$	0.41		$	1.49		$	1.28

Shares used in basic per share amounts		91,981			90,105			90,411			91,926

GAAP net income per fully diluted share	$	0.32		$	0.40		$	1.06		$	0.75
Amortization of purchased technology		0.04			0.05			0.17			0.21
Amortization of other purchased intangible assets		0.03			0.03			0.14			0.14
Stock-based compensation expense		0.08			0.04			0.25			0.16
Professional fees relating to our previous restatement		-			0.02			0.00			0.05
Litigation loss provision		-			(0.11	)		-			0.20
Patent infringement litigation costs		0.00			-			0.01			-
Acquisition related costs		0.03			-			0.04			-
Other income		(0.00	)		-			(0.00	)		-
Tax effect of these adjustments		(0.10	)		(0.03	)		(0.22	)		(0.26	)

Non-GAAP net income per fully diluted share	$	0.40		$	0.40		$	1.45		$	1.25

Shares used in fully diluted per share amounts		95,069			92,800			93,282			94,066

Quest Software Reports Fourth Quarter and Fiscal Year 2010 Results – page 9 of 11

QUEST SOFTWARE, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES (Continued)

(In thousands)

(Unaudited)


	Three Months Ended December 31, 2010
	Sales and Marketing			Research and Development			General and Administrative			Litigation Loss Provision			Amortization of Other Purchased Intangible Assets			Total Operating Expenses
GAAP operating expenses	$	90,405		$	41,756		$	24,050		$	-		$	3,158		$	159,369
Amortization - other purchased intangible assets		-			-			-			-			(3,158	)		(3,158	)
Stock-based compensation expense		(2,509	)		(2,669	)		(1,992	)		-			-			(7,170	)
Litigation loss provision		-			-			-			-			-			-
Professional fees for our previous restatement		-			-			-			-			-			-
Patent infringement litigation costs		-			-			(490	)		-			-			(490	)
Acquisition related costs		(159	)		(2,324	)		(493	)		-			-			(2,976	)

Non-GAAP operating expenses	$	87,737		$	36,763		$	21,075		$	-		$	-		$	145,575


	Three Months Ended December 31, 2009
	Sales and Marketing			Research and Development			General and Administrative			Litigation Loss Provision			Amortization of Other Purchased Intangible Assets			Total Operating Expenses
GAAP operating expenses	$	76,211		$	36,442		$	21,578		$	(10,375	)	$	3,235		$	127,091
Amortization - other purchased intangible assets		-			-			-			-			(3,235	)		(3,235	)
Stock-based compensation expense		(1,229	)		(1,311	)		(1,057	)		-			-			(3,597	)
Professional fees for our previous restatement		-			-			(1,542	)		-			-			(1,542	)
Litigation loss provision		-			-			-			10,375			-			10,375
Acquisition related costs		-			-			(133	)		-			-			(133	)

Non-GAAP operating expenses	$	74,982		$	35,131		$	18,846		$	-		$	-		$	128,959


	Year Ended December 31, 2010
	Sales and Marketing			Research and Development			General and Administrative			Litigation Loss Provision			Amortization of Other Purchased Intangible Assets			Total Operating Expenses
GAAP operating expenses	$	304,934		$	151,896		$	84,808		$	-		$	12,670		$	554,308
Amortization - other purchased intangible assets		-			-			-			-			(12,670	)		(12,670	)
Stock-based compensation expense		(6,861	)		(8,015	)		(7,109	)		-			-			(21,985	)
Professional fees for our previous restatement		-			-			(271	)		-			-			(271	)
Litigation loss provision		-			-			-			-			-			-
Patent infringement litigation costs		-			-			(988	)		-			-			(988	)
Acquisition related costs		(159	)		(2,324	)		(1,236	)		-			-			(3,719	)

Non-GAAP operating expenses	$	297,914		$	141,557		$	75,204		$	-		$	-		$	514,675


	Year Ended December 31, 2009
	Sales and Marketing			Research and Development			General and Administrative			Litigation Loss Provision			Amortization of Other Purchased Intangible Assets			Total Operating Expenses
GAAP operating expenses	$	272,944		$	144,370		$	76,748		$	19,025		$	13,159		$	526,246
Amortization - other purchased intangible assets		-			-			-			-			(13,159	)		(13,159	)
Stock-based compensation expense		(4,997	)		(5,384	)		(4,060	)		-			-			(14,441	)
Professional fees for our previous restatement		-			-			(5,152	)		-			-			(5,152	)
Litigation loss provision		-			-			-			(19,025	)		-			(19,025	)
Acquisition related costs		-			-			(253	)		-			-			(253	)

Non-GAAP operating expenses	$	267,947		$	138,986		$	67,283		$	-		$	-		$	474,216

Quest Software Reports Fourth Quarter and Fiscal Year 2010 Results – page 10 of 11

QUEST SOFTWARE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


	December 31
	2010		2009
ASSETS
Current assets:
Cash and cash equivalents	$	356,533	$	292,940
Short-term investments		90,284		90,109
Accounts receivable, net		179,621		157,534
Prepaid expenses and other current assets		48,312		32,974
Deferred income taxes		6,677		11,832

Total current assets		681,427		585,389
Property and equipment, net		70,854		70,051
Long-term investments		45,466		2,411
Intangible assets, net		62,785		76,072
Goodwill		706,224		670,481
Deferred income taxes		46,985		34,127
Other assets		21,843		26,607

Total assets	$	1,635,584	$	1,465,138


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,512	$	3,714
Accrued compensation		55,185		45,831
Other accrued expenses		32,600		31,902
Loans payable		521		32,602
Deferred revenue		324,121		285,907

Total current liabilities		417,939		399,956

Long-term liabilities:
Deferred revenue		100,264		86,231
Income taxes payable		41,385		44,433
Loans payable		32,730		33,292
Other long-term liabilities		11,000		8,434

Total long-term liabilities		185,379		172,390

Total liabilities		603,318		572,346
Stockholders’ equity		1,032,266		892,792

Total liabilities and stockholders’ equity	$	1,635,584	$	1,465,138

Quest Software Reports Fourth Quarter and Fiscal Year 2010 Results – page 11 of 11

QUEST SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended December 31						Year Ended December 31
	2010			2009			2010			2009
Cash flows from operating activities:
Net income	$	30,266		$	37,022		$	98,567		$	70,359
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		10,538			11,377			43,031			47,973
Compensation expense associated with stock-based payments		7,575			3,812			23,101			15,178
Change in fair value of contingent consideration		2,500			-			2,500			-
Deferred income taxes		(4,367	)		1,192			870			2,376
Excess tax benefit related to stock-based compensation		629			(1,186	)		(1,582	)		(1,825	)
Provision for bad debts		(25	)		(48	)		616			72
Litigation loss provision		-			(10,375	)		-			-
Other non-cash adjustments, net		580			162			950			(382	)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		(35,425	)		(31,808	)		(21,177	)		320
Prepaid expenses and other current assets		972			(1,122	)		4,329			(1,156	)
Other assets		284			(2,361	)		1,988			(674	)
Accounts payable		(363	)		1,497			1,008			(491	)
Accrued compensation		8,153			4,483			3,859			(3,208	)
Other accrued expenses		1,031			(16,780	)		(786	)		(8,339	)
Income taxes payable		(4,281	)		5,131			(18,244	)		(3,149	)
Deferred revenue		45,359			37,159			48,520			33,426
Other liabilities		(728	)		(702	)		(2,241	)		2,806

Net cash provided by operating activities		62,698			37,453			185,309			153,286

Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired		(1,676	)		(12,157	)		(58,734	)		(12,253	)
Purchases of property and equipment		(2,466	)		(3,009	)		(13,731	)		(11,286	)
Cash paid for software rights		-			-			(2,229	)		-
Change in restricted cash		(180	)		(196	)		587			1,494
Purchases of cost method investments		-			-			-			(3,000	)
Purchases of investment securities		(10,008	)		(35,860	)		(226,201	)		(47,853	)
Sales and maturities of investment securities		46,835			1,525			186,157			2,814
Notes receivable from a cost method investee		-			-			(2,000	)		-
Change in notes receivable		(300	)		-			(300	)		-

Net cash provided by (used in) investing activities		32,205			(49,697	)		(116,451	)		(70,084	)

Cash flows from financing activities:
Proceeds from loans payable		-			-			-			68,428
Repayment of loans payable		(187	)		(1,752	)		(32,653	)		(2,534	)
Repurchases of common stock		10			(11,328	)		(37,363	)		(112,447	)
Repayment of capital lease obligations		(55	)		(70	)		(245	)		(263	)
Cash paid for line of credit fees		-			-			-			(1,979	)
Proceeds from the exercise of stock options		25,233			15,664			62,504			43,264
Excess tax benefit related to share-based compensation		(629	)		1,186			1,582			1,825

Net cash provided by (used in) financing activities		24,372			3,700			(6,175	)		(3,706	)

Effect of exchange rate changes on cash and cash equivalents		(8	)		(1,981	)		910			(2,451	)

Net increase (decrease) in cash and cash equivalents		119,267			(10,525	)		63,593			77,045
Cash and cash equivalents, beginning of period		237,266			303,465			292,940			215,895

Cash and cash equivalents, end of period	$	356,533		$	292,940		$	356,533		$	292,940

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QUEST SOFTWARE INC Reports