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8-K - FORM 8-K - Nuance Communications, Inc. | b88624e8vk.htm |
EX-99.3 - EX-99.3 - Nuance Communications, Inc. | b88624exv99w3.htm |
EX-99.2 - EX-99.2 - Nuance Communications, Inc. | b88624exv99w2.htm |
Exhibit 99.1
Oct. 17, 2011 18:05 UTC
Nuance Issues Preliminary Fourth Quarter Fiscal 2011 Financial Results
BURLINGTON, Mass.(BUSINESS WIRE) Nuance Communications, Inc. (Nasdaq: NUAN) today
announced preliminary revenue, EPS and cash flow from operations results for the fourth quarter
fiscal 2011, ended September 30, 2011.
Based on preliminary financial data, Nuance expects Q4 11 non-GAAP revenues between $396 million
and $400 million; GAAP revenues between $363 million and $367 million; non-GAAP EPS between $0.41
and $0.42 per diluted share; GAAP EPS between ($0.05) and ($0.03) per diluted share; and cash flow
from operations of approximately $90 million. The preliminary expectations are subject to revision
until the Company reports final Q4 11 results on November 22, 2011.
Year-over-year growth in our mobile, imaging and healthcare businesses, as well as improving
trends in our enterprise business, helped to produce strong results in the quarter, said Tom
Beaudoin, chief financial officer at Nuance. We maintained strict focus on our operations and
strategic investments while achieving our revenue goals.
On August 9, 2011, Nuance provided initial guidance for Q4 11 of non-GAAP revenues between $380 and
$395 million; GAAP revenues between $355.3 and $370.3 million; non-GAAP EPS between $0.38 and
$0.41; and GAAP EPS between ($0.07) and ($0.04).
Nuance to Host Fourth Quarter Conference Call on November 22, 2011
The Company will release results for its fiscal fourth quarter ended September 30, 2011, after the
market close on Tuesday, November 22, 2011. Nuance will provide a copy of prepared conference call
remarks in combination with its press release. This process and these remarks are offered to
provide shareholders and analysts additional time and detail for analyzing Nuances results. The
remarks will be available at www.nuance.com/earningsresults in conjunction with the press
release.
The conference call will begin at 5:00 p.m. ET 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) 230-1085 or (612) 288-0337 at
least five minutes prior to the call and referencing code 219585. 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
219585.
About Nuance Communications
Nuance Communications, Inc. (NASDAQ: NUAN) is a leading provider of voice and language 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 devices and systems.
Every day, millions of users and thousands of businesses experience Nuances proven applications.
For more information, please visit www.nuance.com.
Safe Harbor and Forward-Looking Statements
Statements in this document regarding Nuances preliminary revenue, EPS and cash flow from
operations results for the fourth quarter fiscal 2011, and improvements in healthcare, mobile and
imaging revenue 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 be considered to be forward-looking statements. There are 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 pressures; 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 other factors described in Nuances
annual report on Form 10-K for the fiscal year ended September 30, 2010 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 business 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 twelve months ended September 30, 2011 and 2010, 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.
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, Equitrac and SVOX for the three and twelve months
ended September 30, 2011, that would otherwise have been recognized but for the purchase accounting
treatment of this transaction. 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.
(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 natural
language and semantic processing technology, Nuance has entered into three IP collaboration
agreements, with terms ranging between five and six years. Depending on the agreement, some or all
of the intellectual property derived from these collaborations will be jointly owned by the two
parties. For the majority of the developed intellectual property, Nuance will have sole rights to
commercialize such intellectual property for periods ranging between two to six years, depending on
the agreements. For non-GAAP purposes, Nuance considers these long-term contracts and the resulting
acquisitions of intellectual property from this third-party over the agreements terms 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 these expenses.
Nuance does not exclude from its non-GAAP results the corresponding revenue, if any, generated from
these 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 these collaboration
agreements 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.
(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.
Nuance Communications, Inc.
Reconciliation of Supplemental Financial Information
GAAP and non-GAAP Revenue and Net Income per Share Guidance
(in thousands, except per share amounts)
Unaudited
Reconciliation of Supplemental Financial Information
GAAP and non-GAAP Revenue and Net Income per Share Guidance
(in thousands, except per share amounts)
Unaudited
Three months ended | ||||||||
September 30,2011 | ||||||||
Low | High | |||||||
GAAP revenue |
$ | 363,000 | $ | 367,000 | ||||
Acquisition-related adjustment revenue |
33,000 | 33,000 | ||||||
Non-GAAP revenue |
$ | 396,000 | $ | 400,000 | ||||
GAAP net loss per share |
$ | (0.05 | ) | $ | (0.03 | ) | ||
Acquisition-related adjustment revenue |
0.10 | 0.10 | ||||||
Acquisition-related adjustment cost of revenue |
(0.01 | ) | (0.01 | ) | ||||
Acquisition-related costs, net |
0.03 | 0.03 | ||||||
Cost of revenue from amortization of intangible assets |
0.05 | 0.05 | ||||||
Amortization of intangible assets |
0.08 | 0.07 | ||||||
Non-cash stock-based compensation |
0.12 | 0.12 | ||||||
Non-cash interest expense |
0.01 | 0.01 | ||||||
Non-cash income taxes |
0.04 | 0.04 | ||||||
Costs associated with IP collaboration agreements |
0.02 | 0.02 | ||||||
Restructuring and other charges, net |
0.02 | 0.02 | ||||||
Change in fair value of share-based instruments |
0.00 | 0.00 | ||||||
Non-GAAP net income per share |
$ | 0.41 | $ | 0.42 | ||||
Shares used in computing GAAP and non-GAAP net income
per share: |
||||||||
Weighted average common shares: basic |
306,500 | 306,500 | ||||||
Weighted average common shares: diluted |
320,000 | 320,000 | ||||||
Contacts
Nuance Communications, Inc.
For Press and Investors
Richard Mack, 781-565-5000
richard.mack@nuance.com
or
For Investors
Kevin Faulkner, 408-992-6100
kevin.faulkner@nuance.com
For Press and Investors
Richard Mack, 781-565-5000
richard.mack@nuance.com
or
For Investors
Kevin Faulkner, 408-992-6100
kevin.faulkner@nuance.com
Source: Nuance Communications, Inc.
View this news release online at: http://www.businesswire.com/news/home/20111018000000/en |