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8-K - FORM 8-K - Nuance Communications, Inc. | b89247e8vk.htm |
EX-99.2 - EX-99.2 - Nuance Communications, Inc. | b89247exv99w2.htm |
Exhibit 99.1
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 Fourth Quarter
and Fiscal Year 2011 Results
and Fiscal Year 2011 Results
Strength in Mobile & Consumer Markets, Improvement in Enterprise Market
Fueled Growth in Revenue and Operating Cash Flow;
Increasing Visibility of Voice Solutions Fuels Customer Momentum
Fueled Growth in Revenue and Operating Cash Flow;
Increasing Visibility of Voice Solutions Fuels Customer Momentum
BURLINGTON, Mass., November 22, 2011 Nuance Communications, Inc. (NASDAQ: NUAN) today announced
financial results for its fourth quarter and fiscal year ended September 30, 2011.
Nuance reported GAAP revenue of $367.0 million in the fourth quarter of fiscal 2011, an 18.5%
increase over GAAP revenue of $309.8 million in the fourth quarter of fiscal 2010. Nuance reported
non-GAAP revenue of $399.5 million, which includes $32.5 million in revenue lost to accounting
treatment in conjunction with acquisitions. Fourth quarter fiscal 2011 non-GAAP revenue grew 23.0%
over non-GAAP revenue of $324.9 million in the same quarter last year.
In the fourth quarter of fiscal 2011, Nuance recognized GAAP net loss of ($5.1) million, or ($0.02)
per share, compared with GAAP net income of $2.1 million, or $0.01 per diluted share, in the fourth
quarter of fiscal 2010. In the fourth quarter of fiscal 2011, Nuance reported non-GAAP net income
of $133.5 million, or $0.42 per diluted share, compared to non-GAAP net income of $100.3 million,
or $0.33 per diluted share, in the fourth quarter of fiscal 2010. Nuances fourth quarter fiscal
2011 non-GAAP operating margin was 36.1%, up from 35.2% in the fourth quarter of fiscal 2010.
Nuance reported cash flow from operations of $97.9 million in the fourth quarter of fiscal 2011,
compared to $111.6 million in the fourth quarter of fiscal 2010.
In fiscal year 2011, Nuance reported GAAP revenue of $1,318.7 million, a 17.9% increase over
$1,118.9 million in fiscal 2010. The company reported non-GAAP revenue of $1,393.9 million in
fiscal 2011, which includes $75.2 million in revenue lost to accounting treatment in conjunction
with acquisitions. Fiscal 2011 non-GAAP revenue grew 16.6% over non-GAAP revenue of $1,195.7
million in fiscal 2010.
In fiscal year 2011, Nuance recognized GAAP net income of $38.2 million, or $0.12 per diluted
share, compared with a GAAP net loss of ($19.1) million, or ($0.07) per share in fiscal 2010. In
fiscal 2011, the company recognized non-GAAP net income of $430.7 million, or $1.36 per diluted
share, compared to non-GAAP net income of $359.1 million, or $1.19 per diluted share in fiscal
2010. Fiscal 2011 non-GAAP operating margin increased to 33.9%, compared to 33.2% in fiscal 2010.
In fiscal 2011, Nuance
reported cash flow from operations of $357.4 million, a 20.6% increase over cash flow from
operations of $296.3 million in fiscal 2010. Nuance ended fiscal 2011 with a balance of cash and
marketable securities of $478.5 million.
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.
In the fourth quarter, Nuance delivered 23% revenue growth, driven by strong performance in our
mobile and consumer business lines as well as improved trends in our enterprise business line,
said Paul Ricci, chairman and CEO of Nuance. Recent high-profile speech applications in the
smartphone market have increased interest in our solutions, from both manufacturers and users. In
fiscal 2011, Nuance delivered double-digit organic revenue growth and 21% growth in operating cash
flow. Improved momentum across our markets, as well as strong fourth quarter bookings for our
healthcare and mobile solutions, position Nuance for continued growth in fiscal 2012.
Highlights from the quarter include:
| Healthcare For Nuances healthcare solutions, fourth quarter non-GAAP revenue was $148.7 million, up 22.6%, as reported, from the same quarter last year, and FY 11 non-GAAP revenue was $526.8 million, up 17.2%, as reported, from FY 10. During the fourth quarter, new bookings included large eScription, Dragon Medical and radiology contracts. Key healthcare customers included Baycare, Carle Foundation, Cerner, Diversified Radiology, FED, Kern Medical, Lahey Clinic, New Hanover, Piedmont Healthcare, and VA Hospital. | ||
| Mobile & Consumer For Nuances mobile and consumer solutions, fourth quarter non-GAAP revenue was $118.7 million, up 31.6%, as reported, from the same quarter last year, and FY 11 non-GAAP revenue was $393.3 million, up 27.1%, as reported, from FY 10. Key mobile customers, new bookings or design wins in the quarter included Amazon, CIBC, Comcast, Daimler, Diebold, Ford, Kyocera, LGE, Nokia, NTT DoCoMo, On-Star, Renault, Samsung, Sony Ericsson, State of Maryland, Time Warner Cable, Tom Tom, and ZTE. | ||
| Enterprise For Nuances enterprise solutions, fourth quarter non-GAAP revenue was $80.0 million, up 2.6%, as reported, from the same quarter last year, and FY 11 non-GAAP revenue was $296.4 million, up 0.1%, as reported, from FY 10. Key enterprise customers in the quarter included Aetna, AT&T, Banco Itau, Bank of America, Blue Cross/Blue Shield of Michigan, CIGNA, Citibank, Comcast, Energex, Farmers Insurance, IBM, Kaiser Permanente, Nordea, NTT, On-Star, Standard Insurance, Telekom Deutschland, Telenor, Telstra, USAA, US Cellular, Vodafone, and Walgreens. | ||
| Imaging For Nuances document imaging solutions, fourth quarter non-GAAP revenue was $52.1 million, up 47.2%, as reported, from the same quarter last year, and FY 11 non-GAAP revenue was $177.4 million, up 26.0% as reported, from FY 10. Nuance achieved key fourth quarter bookings and design wins with Canon, Deloitte, Ricoh, US Securities and Exchange Commission, Visma and Xerox. |
Financial Analyst Day
Nuance has scheduled a financial analyst day in Boston, MA on Thursday, December 8, 2011 and via
Webcast. For registration information, please contact kevin.faulkner@nuance.com.
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
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advance of the companys quarterly conference call. The remarks will be available at
http://www.nuance.com/earnings-results/ in conjunction with the press release.
As previously scheduled, the conference call will begin today, November 22, 2011 at 5:00 pm EST 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 conference 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, Inc
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.
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.
Safe Harbor and Forward-Looking Statements
Statements in this document regarding continued growth in fiscal 2012 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, 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
-3-
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 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. 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
-4-
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
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 agreement. 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
-5-
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 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.
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 | Twelve months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Product and licensing |
$ | 179,177 | $ | 138,232 | $ | 607,358 | $ | 473,460 | ||||||||
Professional services and hosting |
132,063 | 125,769 | 509,141 | 463,567 | ||||||||||||
Maintenance and support |
55,801 | 45,762 | 202,242 | 181,921 | ||||||||||||
Total revenues |
367,041 | 309,763 | 1,318,741 | 1,118,948 | ||||||||||||
Cost of revenues: |
||||||||||||||||
Product and licensing |
17,651 | 15,424 | 65,601 | 49,618 | ||||||||||||
Professional services and hosting |
93,052 | 74,376 | 341,055 | 280,725 | ||||||||||||
Maintenance and support |
11,412 | 7,934 | 38,057 | 31,269 | ||||||||||||
Amortization of intangible assets |
14,570 | 12,663 | 55,111 | 47,758 | ||||||||||||
Total cost of revenues |
136,685 | 110,397 | 499,824 | 409,370 | ||||||||||||
Gross profit |
230,356 | 199,366 | 818,917 | 709,578 | ||||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
49,479 | 38,274 | 179,377 | 152,071 | ||||||||||||
Sales and marketing |
80,622 | 69,528 | 306,439 | 266,208 | ||||||||||||
General and administrative |
43,332 | 33,418 | 147,603 | 122,061 | ||||||||||||
Amortization of intangible assets |
22,998 | 22,033 | 88,219 | 87,819 | ||||||||||||
Acquisition-related costs, net |
7,956 | 3,719 | 21,866 | 30,611 | ||||||||||||
Restructuring and other charges, net |
17,519 | 1,647 | 22,862 | 17,891 | ||||||||||||
Total operating expenses |
221,906 | 168,619 | 766,366 | 676,661 | ||||||||||||
Income from operations |
8,450 | 30,747 | 52,551 | 32,917 | ||||||||||||
Other expense, net |
(6,798 | ) | (15,067 | ) | (22,534 | ) | (33,982 | ) | ||||||||
Income (loss) before income taxes |
1,652 | 15,680 | 30,017 | (1,065 | ) | |||||||||||
Provision (benefit) for income taxes |
6,761 | 13,575 | (8,221 | ) | 18,034 | |||||||||||
Net income (loss) |
$ | (5,109 | ) | $ | 2,105 | $ | 38,238 | $ | (19,099 | ) | ||||||
Net income (loss) per share: |
||||||||||||||||
Basic |
$ | (0.02 | ) | $ | 0.01 | $ | 0.13 | $ | (0.07 | ) | ||||||
Diluted |
$ | (0.02 | ) | $ | 0.01 | $ | 0.12 | $ | (0.07 | ) | ||||||
Weighted average common shares
outstanding: |
||||||||||||||||
Basic |
306,541 | 293,971 | 302,277 | 287,412 | ||||||||||||
Diluted |
306,541 | 307,382 | 315,960 | 287,412 | ||||||||||||
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Nuance Communications, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
Unaudited
Condensed Consolidated Balance Sheets
(in thousands)
Unaudited
September 30, 2011 | September 30, 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 447,224 | $ | 516,630 | ||||
Restricted cash |
6,799 | 24,503 | ||||||
Marketable securities |
31,244 | 5,044 | ||||||
Accounts receivable, net |
280,186 | 217,587 | ||||||
Acquired unbilled accounts receivable |
670 | 7,412 | ||||||
Prepaid expenses and other current assets |
88,804 | 70,466 | ||||||
Total current assets |
854,927 | 841,642 | ||||||
Land, building and equipment, net |
78,218 | 62,083 | ||||||
Marketable securities |
| 28,322 | ||||||
Goodwill |
2,347,880 | 2,077,943 | ||||||
Intangible assets, net |
731,577 | 685,865 | ||||||
Other assets |
82,691 | 73,844 | ||||||
Total assets |
$ | 4,095,293 | $ | 3,769,699 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt and capital leases |
$ | 6,905 | $ | 7,764 | ||||
Contingent and deferred acquisition payments |
23,783 | 2,131 | ||||||
Accounts payable and accrued expenses |
258,777 | 230,237 | ||||||
Deferred and unearned revenue |
185,605 | 142,340 | ||||||
Total current liabilities |
475,070 | 382,472 | ||||||
Long-term portion of debt and capital leases |
853,020 | 851,014 | ||||||
Long-term deferred revenue |
90,382 | 76,598 | ||||||
Other long term liabilities |
183,450 | 162,419 | ||||||
Total liabilities |
1,601,922 | 1,472,503 | ||||||
Stockholders equity |
2,493,371 | 2,297,196 | ||||||
Total liabilities and stockholders equity |
$ | 4,095,293 | $ | 3,769,699 | ||||
-8-
Nuance Communications, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Three months ended | Twelve months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Cash flows from operating activities: |
||||||||||||||||
Net income (loss) |
$ | (5,109 | ) | $ | 2,105 | $ | 38,238 | $ | (19,099 | ) | ||||||
Adjustments to reconcile net income (loss) to net cash provided
by operating activities: |
||||||||||||||||
Depreciation and amortization |
45,214 | 40,418 | 170,933 | 157,156 | ||||||||||||
Stock-based compensation |
37,791 | 27,271 | 147,296 | 100,139 | ||||||||||||
Non-cash interest expense |
2,986 | 3,209 | 12,510 | 12,955 | ||||||||||||
Non-cash restructuring and other expense |
11,725 | | 11,725 | 6,833 | ||||||||||||
Deferred tax (benefit) provision |
(8,163 | ) | 6,063 | (43,890 | ) | 3,742 | ||||||||||
Other |
12,233 | (95 | ) | 16,492 | 1,576 | |||||||||||
Changes in operating assets and liabilities, net of effects
from acquisitions: |
||||||||||||||||
Accounts receivable |
(21,851 | ) | 12,250 | (25,530 | ) | (773 | ) | |||||||||
Prepaid expenses and other assets |
5,302 | 1,029 | (11,793 | ) | (3,840 | ) | ||||||||||
Accounts payable |
1,806 | 8,670 | (8,193 | ) | 4,710 | |||||||||||
Accrued expenses and other liabilities |
3,175 | 1,065 | (6,775 | ) | (6,760 | ) | ||||||||||
Deferred revenue |
12,795 | 9,599 | 56,398 | 39,643 | ||||||||||||
Net cash provided by operating activities |
97,904 | 111,584 | 357,411 | 296,282 | ||||||||||||
Cash flows from investing activities: |
||||||||||||||||
Capital expenditures |
(10,640 | ) | (9,690 | ) | (34,907 | ) | (25,974 | ) | ||||||||
Payments for acquisitions, net of cash acquired |
(82,991 | ) | (47,847 | ) | (402,290 | ) | (203,729 | ) | ||||||||
Payments for equity investments |
| | | (14,970 | ) | |||||||||||
Purchases of marketable securities |
| (33,529 | ) | (10,776 | ) | (33,529 | ) | |||||||||
Proceeds from sales and maturities of marketable securities |
5,000 | | 11,650 | | ||||||||||||
Payments for acquired technology |
(6,000 | ) | (450 | ) | (6,715 | ) | (15,300 | ) | ||||||||
Change in restricted cash balance |
| | 17,184 | (22,070 | ) | |||||||||||
Net cash used in investing activities |
(94,631 | ) | (91,516 | ) | (425,854 | ) | (315,572 | ) | ||||||||
Cash flows from financing activities: |
||||||||||||||||
Payments of debt and capital leases |
(1,671 | ) | (2,084 | ) | (7,535 | ) | (8,460 | ) | ||||||||
Payments of debt issuance costs |
(2,553 | ) | | (2,553 | ) | | ||||||||||
Proceeds from issuance of common stock, net of issuance costs |
| | | 12,350 | ||||||||||||
Payments of other long-term liabilities |
(2,849 | ) | (2,550 | ) | (10,643 | ) | (9,870 | ) | ||||||||
Proceeds on settlement of share-based derivatives, net |
| 915 | 9,414 | 7,306 | ||||||||||||
Excess tax benefits on employee equity awards |
9,300 | 1,060 | 17,520 | 1,060 | ||||||||||||
Proceeds from issuance of common stock from employee stock plans |
14,955 | 6,678 | 36,667 | 29,510 | ||||||||||||
Cash used to net share settle employee equity awards |
(6,881 | ) | (3,977 | ) | (36,908 | ) | (22,016 | ) | ||||||||
Net cash provided by financing activities |
10,301 | 42 | 5,962 | 9,880 | ||||||||||||
Effects of exchange rate changes on cash and cash equivalents |
(13,331 | ) | 4,446 | (6,925 | ) | (998 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents |
243 | 24,556 | (69,406 | ) | (10,408 | ) | ||||||||||
Cash and cash equivalents at beginning of period |
446,981 | 492,074 | 516,630 | 527,038 | ||||||||||||
Cash and cash equivalents at end of period |
$ | 447,224 | $ | 516,630 | $ | 447,224 | $ | 516,630 | ||||||||
-9-
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 | Twelve months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
GAAP revenue |
$ | 367,041 | $ | 309,763 | $ | 1,318,741 | $ | 1,118,948 | ||||||||
Acquisition-related revenue adjustments: product and licensing |
22,140 | 12,351 | 53,961 | 57,077 | ||||||||||||
Acquisition-related revenue adjustments: professional services and
hosting |
7,844 | 1,820 | 15,429 | 11,452 | ||||||||||||
Acquisition-related revenue adjustments: maintenance and support |
2,510 | 924 | 5,807 | 8,193 | ||||||||||||
Non-GAAP revenue |
$ | 399,535 | $ | 324,858 | $ | 1,393,938 | $ | 1,195,670 | ||||||||
GAAP cost of revenue |
$ | 136,685 | $ | 110,397 | $ | 499,824 | $ | 409,370 | ||||||||
Cost of revenue from amortization of intangible assets |
(14,570 | ) | (12,663 | ) | (55,111 | ) | (47,758 | ) | ||||||||
Cost of revenue adjustments: product and licensing (1,2) |
2,680 | 2,552 | 9,487 | 11,472 | ||||||||||||
Cost of revenue adjustments: professional services and hosting (1,2) |
(7,300 | ) | (2,182 | ) | (26,864 | ) | (9,268 | ) | ||||||||
Cost of revenue adjustments: maintenance and support (1,2) |
(641 | ) | (174 | ) | (2,186 | ) | (756 | ) | ||||||||
Non-GAAP cost of revenue |
$ | 116,854 | $ | 97,930 | $ | 425,150 | $ | 363,060 | ||||||||
GAAP gross profit |
$ | 230,356 | $ | 199,366 | $ | 818,917 | $ | 709,578 | ||||||||
Gross profit adjustments |
52,325 | 27,562 | 149,871 | 123,032 | ||||||||||||
Non-GAAP gross profit |
$ | 282,681 | $ | 226,928 | $ | 968,788 | $ | 832,610 | ||||||||
GAAP income from operations |
$ | 8,450 | $ | 30,747 | $ | 52,551 | $ | 32,917 | ||||||||
Gross profit adjustments |
52,325 | 27,562 | 149,871 | 123,032 | ||||||||||||
Research and development (1) |
6,101 | 2,650 | 24,289 | 9,381 | ||||||||||||
Sales and marketing (1) |
10,516 | 8,339 | 43,264 | 38,152 | ||||||||||||
General and administrative (1) |
13,226 | 13,235 | 49,707 | 40,779 | ||||||||||||
Amortization of intangible assets |
22,998 | 22,033 | 88,219 | 87,819 | ||||||||||||
Costs associated with IP collaboration agreements |
5,250 | 4,521 | 19,750 | 16,729 | ||||||||||||
Acquisition-related costs, net |
7,956 | 3,719 | 21,866 | 30,611 | ||||||||||||
Restructuring and other charges, net |
17,519 | 1,647 | 22,862 | 17,891 | ||||||||||||
Non-GAAP income from operations |
$ | 144,341 | $ | 114,453 | $ | 472,379 | $ | 397,311 | ||||||||
GAAP provision (benefit) for income taxes |
$ | 6,761 | $ | 13,575 | $ | (8,221 | ) | $ | 18,034 | |||||||
Non-cash taxes |
(2,161 | ) | (11,573 | ) | 26,620 | (4,801 | ) | |||||||||
Non-GAAP provision for income taxes |
$ | 4,600 | $ | 2,002 | $ | 18,399 | $ | 13,233 | ||||||||
GAAP net income (loss) |
$ | (5,109 | ) | $ | 2,105 | $ | 38,238 | $ | (19,099 | ) | ||||||
Acquisition-related adjustment revenue (2) |
32,494 | 15,095 | 75,197 | 76,722 | ||||||||||||
Acquisition-related adjustment cost of revenue (2) |
(2,687 | ) | (3,243 | ) | (10,473 | ) | (13,275 | ) | ||||||||
Acquisition-related costs, net |
7,956 | 3,719 | 21,866 | 30,611 | ||||||||||||
Cost of revenue from amortization of intangible assets |
14,570 | 12,663 | 55,111 | 47,758 | ||||||||||||
Amortization of intangible assets |
22,998 | 22,033 | 88,219 | 87,819 | ||||||||||||
Non-cash stock-based compensation (1) |
37,791 | 27,271 | 147,296 | 100,139 | ||||||||||||
Non-cash interest expense, net |
2,986 | 3,209 | 12,510 | 12,955 | ||||||||||||
Non-cash income taxes |
2,161 | 11,573 | (26,620 | ) | 4,801 | |||||||||||
Costs associated with IP collaboration agreements |
5,250 | 4,521 | 19,750 | 16,729 | ||||||||||||
Change in fair value of share-based instruments |
(2,386 | ) | (309 | ) | (13,230 | ) | (3,972 | ) | ||||||||
Restructuring and other charges, net |
17,519 | 1,647 | 22,862 | 17,891 | ||||||||||||
Non-GAAP net income |
$ | 133,543 | $ | 100,284 | $ | 430,726 | $ | 359,079 | ||||||||
Non-GAAP diluted net income per share |
$ | 0.42 | $ | 0.33 | $ | 1.36 | $ | 1.19 | ||||||||
Diluted weighted average common shares outstanding |
319,198 | 307,382 | 315,960 | 302,657 | ||||||||||||
-10-
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 | Twelve months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(1) Non-Cash Stock-Based Compensation |
||||||||||||||||
Cost of product and licensing |
$ | 7 | $ | 3 | $ | 36 | $ | 28 | ||||||||
Cost of professional services and hosting |
7,300 | 2,870 | 27,814 | 11,043 | ||||||||||||
Cost of maintenance and support |
641 | 174 | 2,186 | 756 | ||||||||||||
Research and development |
6,101 | 2,650 | 24,289 | 9,381 | ||||||||||||
Sales and marketing |
10,516 | 8,339 | 43,264 | 38,152 | ||||||||||||
General and administrative |
13,226 | 13,235 | 49,707 | 40,779 | ||||||||||||
Total |
$ | 37,791 | $ | 27,271 | $ | 147,296 | $ | 100,139 | ||||||||
(2) Acquisition-Related Revenue and Cost of Revenue |
||||||||||||||||
Revenue |
$ | 32,494 | $ | 15,095 | $ | 75,197 | $ | 76,722 | ||||||||
Cost of product and licensing |
(2,687 | ) | (2,555 | ) | (9,523 | ) | (11,500 | ) | ||||||||
Cost of professional services and hosting |
| (688 | ) | (950 | ) | (1,775 | ) | |||||||||
Total |
$ | 29,807 | $ | 11,852 | $ | 64,724 | $ | 63,447 | ||||||||
-11-
Nuance Communications, Inc.
Supplemental Financial Information GAAP to Non-GAAP Reconciliations, continued
(in millions)
Unaudited
Supplemental Financial Information GAAP to Non-GAAP Reconciliations, continued
(in millions)
Unaudited
Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||||||||||||
Healthcare | 2010 | 2010 | 2011 | 2011 | 2011 | 2011 | 2011 | |||||||||||||||||||||
GAAP Revenue |
$ | 119.8 | $ | 444.6 | $ | 117.4 | $ | 120.7 | $ | 135.4 | $ | 141.7 | $ | 515.2 | ||||||||||||||
Adjustment |
$ | 1.5 | $ | 4.7 | $ | 0.4 | $ | 0.3 | $ | 3.9 | $ | 7.0 | $ | 11.6 | ||||||||||||||
Non-GAAP Revenue |
$ | 121.3 | $ | 449.3 | $ | 117.8 | $ | 121.0 | $ | 139.3 | $ | 148.7 | $ | 526.8 | ||||||||||||||
Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||||||||||||
Mobile & Consumer | 2010 | 2010 | 2011 | 2011 | 2011 | 2011 | 2011 | |||||||||||||||||||||
GAAP Revenue |
$ | 89.2 | $ | 297.3 | $ | 86.1 | $ | 93.1 | $ | 91.6 | $ | 107.8 | $ | 378.7 | ||||||||||||||
Adjustment |
$ | 1.0 | $ | 12.1 | $ | 1.6 | $ | 0.6 | $ | 1.5 | $ | 10.9 | $ | 14.6 | ||||||||||||||
Non-GAAP Revenue |
$ | 90.2 | $ | 309.4 | $ | 87.7 | $ | 93.7 | $ | 93.1 | $ | 118.7 | $ | 393.3 | ||||||||||||||
Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||||||||||||
Enterprise | 2010 | 2010 | 2011 | 2011 | 2011 | 2011 | 2011 | |||||||||||||||||||||
GAAP Revenue |
$ | 76.6 | $ | 293.9 | $ | 71.1 | $ | 72.3 | $ | 68.5 | $ | 79.9 | $ | 291.8 | ||||||||||||||
Adjustment |
$ | 1.4 | $ | 2.2 | $ | 1.4 | $ | 1.7 | $ | 1.4 | $ | 0.1 | $ | 4.6 | ||||||||||||||
Non-GAAP Revenue |
$ | 78.0 | $ | 296.1 | $ | 72.5 | $ | 74.0 | $ | 69.9 | $ | 80.0 | $ | 296.4 | ||||||||||||||
Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | ||||||||||||||||||||||
Imaging Revenue | 2010 | 2010 | 2011 | 2011 | 2011 | 2011 | 2011 | |||||||||||||||||||||
GAAP Revenue |
$ | 24.2 | $ | 83.1 | $ | 29.2 | $ | 32.8 | $ | 33.4 | $ | 37.6 | $ | 133.0 | ||||||||||||||
Adjustment |
$ | 11.2 | $ | 57.7 | $ | 10.0 | $ | 10.4 | $ | 9.4 | $ | 14.6 | $ | 44.4 | ||||||||||||||
Non-GAAP Revenue |
$ | 35.4 | $ | 140.8 | $ | 39.3 | $ | 43.2 | $ | 42.8 | $ | 52.1 | $ | 177.4 | ||||||||||||||
Schedules may not add due to rounding.
-12-