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JDA Software Group, Inc. NEWS RELEASE |
Contact Information at End of Release |
JDA Software Announces Fourth Quarter and Full Year 2011 Results
Scottsdale, Ariz. - January 31, 2012 - JDA® Software Group, Inc. (NASDAQ: JDAS), The Supply Chain Company®, today announced financial results for the fourth quarter ended December 31, 2011. JDA reported record fourth quarter revenue of $174.2 million, a 3 percent increase from $168.8 million of revenue reported in fourth quarter 2010. Adjusted EBITDA increased 7 percent to a record $51.8 million in fourth quarter 2011 compared to $48.5 million in the fourth quarter of 2010, generating an increase in adjusted EBITDA margin to 30 percent in the current quarter compared to 29 percent in the fourth quarter of 2010.
JDA also reported adjusted non-GAAP earnings per share for fourth quarter 2011 of $0.65, a 7 percent increase from $0.61 per share reported in fourth quarter 2010. Adjusted non-GAAP earnings exclude amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation and costs related to the acquisition and transition of i2 Technologies, Inc. (i2). Adjusted non-GAAP earnings for the fourth quarter also exclude a pre-tax charge of $35 million in 2011 and $14 million in 2010 associated with a litigation matter, which was resolved in November 2011. GAAP net loss attributable to common shareholders for fourth quarter 2011 was $1.4 million or ($0.03) per diluted share, compared to net income of $5.8 million or $0.14 per share in fourth quarter 2010.
“High single-digit revenue growth in all lines of business drove record earnings and cash flow for JDA in 2011,” said JDA Software President and Chief Executive Officer Hamish Brewer. “With the backdrop of continued global economic uncertainty, increasing volatility in the global supply chain and changes in consumer spending habits, JDA could be very well placed in 2012 to support vital deployments of advanced technologies that have the potential to help our customers deal with these significant and continuing challenges.”
Software and Subscription
Software and subscription revenue was $37.6 million in fourth quarter 2011 compared to $42.0 million in fourth quarter 2010. The decrease was primarily due to a 31 percent decline in the Americas region, partially offset by continued strength in the Europe, Middle East and Africa (EMEA) region, where fourth quarter 2011 sales increased 61 percent, and a 19 percent increase in the Asia-Pacific region. The Company closed eight deals in excess of $1 million in fourth quarter 2011, compared to 10 deals valued at more than $1 million, in fourth quarter 2010. Additionally, the average sales price for the year ended December 31, 2011 increased to $821,000 from $601,000 for the year ended December 31, 2010.
Maintenance and Support Services
Maintenance revenue increased 5 percent to $67.4 million in fourth quarter 2011 from $64.4 million in fourth quarter 2010. This increase was due to a continued strong retention rate of 95 percent and the high level of attachment of maintenance contracts to new license deals.
Consulting Services
Consulting services revenue increased 11 percent to $69.1 million in fourth quarter 2011 compared to $62.4 million in fourth quarter 2010. The increase in the quarter was primarily due to continued growth in professional services revenue as well as growth in managed service revenue. Consulting services gross margins increased to 28 percent in fourth quarter 2011 from 18 percent in fourth quarter 2010 as a result of the increased revenues and improvements in both utilization and billable rates.
JDA Software Announces Fourth Quarter and Full Year 2011 Results
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Other Financial Data
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| • | Operating expenses as a percent of revenue continue to reflect disciplined cost management. Product development expenses as a percent of revenue remained relatively constant at 10.6 percent in fourth quarter 2011 compared to 10.7 percent in fourth quarter 2010, reflecting the ongoing commitment to enhancing the Company's technology and solutions. Sales and marketing expenses as a percent of revenue increased to 15.5 percent in fourth quarter 2011 compared to 15.1 percent in fourth quarter 2010, reflecting the current year investment in the sales organization. General and administrative expenses as a percent of revenue increased slightly to 10.4 percent in fourth quarter 2011 from 10.2 percent in fourth quarter 2010. |
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| • | The Company recorded a $35 million pre-tax charge in fourth quarter 2011 related to a litigation matter, for which it had previously accrued $19 million. The $54 million net payment was made in December 2011 for full and final resolution of this matter. |
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| • | Cash flow provided by operations increased to $32.2 million in fourth quarter 2011, after adjusting for the $54 million litigation settlement, from $26.2 million in fourth quarter 2010 driven primarily by improvements in working capital. |
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| • | Cash and cash equivalents, including restricted cash, increased $88.4 million to $294.9 million at December 31, 2011, from $206.5 million at December 31, 2010. |
Fourth Quarter 2011 Highlights
The following presents a high-level summary of JDA's regional software sales performance:
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| • | JDA reported $21.3 million in software license and subscription revenues in its Americas region during fourth quarter 2011, compared to $31.0 million in fourth quarter 2010. Companies signing new software licenses in fourth quarter 2011 include: Coca-Cola Bottling Co. Consolidated, Express, Inc., Team Foods Columbia S.A., Servicios Liverpool S.A. de C.V., and Polyone Corporation. |
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| • | Software license and subscription revenues in the Europe, Middle East and Africa (EMEA) region increased 61 percent to $12.7 million in fourth quarter 2011 from $7.9 million in fourth quarter 2010. New software deals in the EMEA region include: Dimar SpA, Dohle Handelsgruppe Svc GmbH, Engen, Fromageries Bel, Gloria Jeans, Gruppo Concorde SpA, IKEA IT AB, Krones AG, Merck Serono S.A., Poundland Limited, Shoprite Checkers (PTY) Ltd., and Woolworths Pty Ltd. |
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| • | JDA's Asia-Pacific region posted software license and subscription revenues of $3.6 million in fourth quarter 2011, a 19 percent increase, compared to $3.0 million in fourth quarter 2010. New software deals in the Asia-Pacific region include: JFE Steel Corporation and Super Retail Group Limited. |
Full Year Ended December 31, 2011 Results
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| • | Revenue for the year ended December 31, 2011 increased 9 percent to $671.8 million from $617.2 million for the year ended December 31, 2010. The overall revenue increase was driven by an 8 percent increase in software and subscription revenue, an 8 percent increase in maintenance revenue, and a 10 percent increase in services revenue. |
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| • | Adjusted EBITDA increased 12 percent to $179.6 million for the year ended December 31, 2011 from $160.9 million for the full year 2010. Adjusted EBITDA margins improved to 27 percent in 2011 from 26 percent in 2010. |
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| • | Adjusted non-GAAP earnings per share for the year ended December 31, 2011 increased 13 percent to $2.20 compared to $1.95 per share for the year ended December 31, 2010. Adjusted non-GAAP earnings exclude amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation and costs related to the acquisition and transition of i2. Adjusted non-GAAP earnings for the year ended December 31, 2011 also exclude a $37.5 million pre-tax credit associated with the favorable settlement of the patent infringement case against Oracle Corporation, and a $35 million pre-tax charge in 2011 and a $14 million pre-tax charge in 2010 related to the settlement of a litigation matter brought against |
JDA Software Announces Fourth Quarter and Full Year 2011 Results
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i2.
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| • | The GAAP net income applicable to common shareholders for the year ended December 31, 2011 was $71.0 million or $1.66 per share, compared to net income of $17.7 million or $0.42 per share for the year ended December 31, 2010. Results for the year ended December 31, 2010 include the completion of the acquisition of i2 as of January 28, 2010. |
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| • | Cash flow from operations increased to $110.8 million for the year ended December 31, 2011 from $65.2 million for the year ended December 31, 2010. Adjusting for the $16.5 million net cash outflow from the litigation settlements in 2011, cash flow from operations was $127.3 million. The increase in operating cash flow in the current period was primarily due to higher earnings. |
Securities and Exchange Commission Inquiry
JDA has received notice from the U.S. Securities and Exchange Commission requesting information related to revenue recognition and other accounting and financial reporting matters for certain past fiscal years. JDA is actively cooperating with the SEC and is committed to addressing any questions the SEC may have.
Conference Call Information
JDA will host a conference call at 4:45 p.m. EDT today to discuss earnings results for its fourth quarter ended December 31, 2011. To participate in the call, dial 1-877-941-1427 (United States) or 1-480-629-9664 (International) and ask the operator for the "JDA Software Group, Inc. Fourth Quarter 2011 Earnings Conference Call." A live audio webcast of the conference call and detailed slide deck can be accessed by logging onto www.jda.com in the Investor Relations section.
A replay of the conference call will begin on January 31, 2012 at approximately 7:45 p.m. EDT and will end on February 29, 2012. To hear a replay of the call over the Internet, access JDA's website at www.jda.com.
About JDA Software Group, Inc.
JDA® Software Group, Inc. (NASDAQ: JDAS), The Supply Chain Company®, is a leading global provider of innovative supply chain management, merchandising and pricing excellence solutions. JDA empowers more than 6,000 companies of all sizes to make optimal decisions that improve profitability and achieve real results in the discrete and process manufacturing, wholesale distribution, transportation, retail, and services industries. With an integrated solutions offering that spans the entire supply chain from materials to the consumer, JDA leverages the powerful heritage and knowledge capital of acquired market leaders including i2 Technologies®, Manugistics®, E3®, Intactix® and Arthur®. JDA's multiple service options, delivered via the JDA® Private Cloud, provide customers with flexible configurations, rapid time-to-value, lower total cost of ownership and 24/7 functional and technical support and expertise. To learn more, visit www.jda.com or e-mail info@jda.com.
JDA Investor Relations Contact:
Mike Burnett, GVP, Treasury and Investor Relations
mike.burnett@jda.com
480-308-3392
JDA Corporate Communications Contact:
Beth Elkin, Sr. Director, Corporate Communications
beth.elkin@jda.com
469-357-4225
JDA Software Announces Fourth Quarter and Full Year 2011 Results
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| JDA SOFTWARE GROUP, INC. |
| Q4 2011 FINANCIAL RESULTS |
| CONSOLIDATED STATEMENT OF OPERATIONS |
| ($ in thousands, except per share data, unaudited) |
| | | | | | | | |
| | Three Months Ended December 31, | |
| | 2011 | | % of Revenues | 2010 | | % of Revenues | % Increase (Decrease) |
| | | | | | | | |
| REVENUES: | | | | | | | |
| Software licenses | $ | 33,410 |
| | 19% | $ | 36,681 |
| | 22% | -9% |
| Subscriptions and other recurring revenues | 4,181 |
| | 2% | 5,292 |
| | 3% | -21% |
| Maintenance services | 67,443 |
| | 39% | 64,401 |
| | 38% | 5% |
| Product revenues | 105,034 |
| | 60% | 106,374 |
| | 63% | -1% |
| | | | | | | | |
| Consulting services | 62,973 |
| | 36% | 56,213 |
| | 33% | 12% |
| Reimbursed expenses | 6,167 |
| | 4% | 6,175 |
| | 4% | 0% |
| Services revenue | 69,140 |
| | 40% | 62,388 |
| | 37% | 11% |
| | | | | | | | |
| Total Revenues | 174,174 |
| | 100% | 168,762 |
| | 100% | 3% |
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| COST OF REVENUES: | | | | | | | |
| Cost of software licenses | 1,019 |
| | 1% | 1,236 |
| | 1% | -18% |
| Amortization of acquired software technology | 1,702 |
| | 1% | 1,835 |
| | 1% | -7% |
| Cost of maintenance services | 13,568 |
| | 8% | 13,351 |
| | 8% | 2% |
| Cost of product revenues | 16,289 |
| | 9% | 16,422 |
| | 10% | -1% |
| | | | | | | | |
| Cost of consulting services | 43,383 |
| | 25% | 44,839 |
| | 27% | -3% |
| Reimbursed expenses | 6,167 |
| | 4% | 6,175 |
| | 4% | 0% |
| Cost of service revenue | 49,550 |
| | 28% | 51,014 |
| | 30% | -3% |
| | | | | | | | |
| Total Cost of Revenues | 65,839 |
| | 38% | 67,436 |
| | 40% | -2% |
| | | | | | | | |
| GROSS PROFIT | 108,335 |
| | 62% | 101,326 |
| | 60% | 7% |
| | | | | | | | |
| OPERATING EXPENSES: | | | | | | | |
| Product development | 18,484 |
| | 11% | 18,027 |
| | 11% | 3% |
| Sales and marketing | 26,922 |
| | 15% | 25,499 |
| | 15% | 6% |
| General and administrative | 18,097 |
| | 10% | 17,255 |
| | 10% | 5% |
| Amortization of intangibles | 9,549 |
| | 5% | 9,968 |
| | 6% | -4% |
| Restructuring charges | 924 |
| | 1% | 4,453 |
| | 3% | -79% |
| Acquisition-related costs | — |
| | 0% | 34 |
| | 0% | -100% |
| Litigation provision and settlements, net | 35,000 |
| | 20% | 14,000 |
| | 8% | 150% |
| | | | | | | | |
| Total Operating Expenses | 108,976 |
| | 63% | 89,236 |
| | 53% | 22% |
| | | | | | | | |
| OPERATING (LOSS) INCOME | (641 | ) | | 0% | 12,090 |
| | 7% | -105% |
| Interest expense and amortization of loan fees | 6,415 |
| | 4% | 6,321 |
| | 4% | 1% |
| Interest income and other, net | (1,155 | ) | | (1)% | (644 | ) | | 0% | NM |
| | | | | | | | |
| (LOSS) INCOME BEFORE INCOME TAXES | (5,901 | ) | | (3)% | 6,413 |
| | 4% | -192% |
| Income tax (benefit) provision | (4,471 | ) | | (3)% | 566 |
| | —% | -890% |
| | | | | | | | |
| NET (LOSS) INCOME | $ | (1,430 | ) | | (1)% | $ | 5,847 |
| | 3% | -124% |
| | | | | | | | |
| EARNINGS PER SHARE: | | | | | | | |
| Basic | $ | (0.03 | ) | | | $ | 0.14 |
| | | (121)% |
| Diluted | $ | (0.03 | ) | | | $ | 0.14 |
| | | (121)% |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | | | | | | | |
| Basic | 42,644 |
| | | 41,868 |
| | | 2% |
| Diluted | 42,644 |
| | | 42,280 |
| | | 1% |
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| Note: Subtotals may not add due to rounding. | | | | | | | |
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JDA Software Announces Fourth Quarter and Full Year 2011 Results
Page 5
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| JDA SOFTWARE GROUP, INC. |
| 2011 FINANCIAL RESULTS |
| CONSOLIDATED STATEMENT OF OPERATIONS |
| ($ in thousands, except per share data, unaudited) |
| | | | | | | | |
| | Year Ended December 31, | |
| | 2011 | | % of Revenues | 2010 (1) | | % of Revenues | % Increase (Decrease) |
| | | | | | | | |
| REVENUES: | | | | | | | |
| Software licenses | $ | 124,944 |
| | 19% | $ | 109,546 |
| | 18% | 14% |
| Subscriptions and other recurring revenues | 16,763 |
| | 2% | 21,143 |
| | 3% | -21% |
| Maintenance services | 266,572 |
| | 40% | 246,241 |
| | 40% | 8% |
| Product revenues | 408,279 |
| | 61% | 376,930 |
| | 61% | 8% |
| | | | | | | | |
| Consulting services | 240,042 |
| | 36% | 220,417 |
| | 36% | 9% |
| Reimbursed expenses | 23,432 |
| | 3% | 19,862 |
| | 3% | 18% |
| Services revenue | 263,474 |
| | 39% | 240,279 |
| | 39% | 10% |
| | | | | | | | |
| Total Revenues | 671,753 |
| | 100% | 617,209 |
| | 100% | 9% |
| | | | | | | | |
| COST OF REVENUES: | | | | | | | |
| Cost of software licenses | 4,158 |
| | 1% | 4,256 |
| | 1% | -2% |
| Amortization of acquired software technology | 7,095 |
| | 1% | 7,047 |
| | 1% | 1% |
| Cost of maintenance services | 55,930 |
| | 8% | 52,543 |
| | 9% | 6% |
| Cost of product revenues | 67,183 |
| | 10% | 63,846 |
| | 10% | 5% |
| | | | | | | | |
| Cost of consulting services | 182,381 |
| | 27% | 169,826 |
| | 28% | 7% |
| Reimbursed expenses | 23,432 |
| | 3% | 19,862 |
| | 3% | 18% |
| Cost of service revenue | 205,813 |
| | 31% | 189,688 |
| | 31% | 9% |
| | | | | | | | |
| Total Cost of Revenues | 272,996 |
| | 41% | 253,534 |
| | 41% | 8% |
| | | | | | | | |
| GROSS PROFIT | 398,757 |
| | 59% | 363,675 |
| | 59% | 10% |
| | | | | | | | |
| OPERATING EXPENSES: | | | | | | | |
| Product development | 77,373 |
| | 12% | 72,158 |
| | 12% | 7% |
| Sales and marketing | 104,670 |
| | 16% | 91,329 |
| | 15% | 15% |
| General and administrative | 72,517 |
| | 11% | 72,299 |
| | 12% | 0% |
| Amortization of intangibles | 38,421 |
| | 6% | 38,415 |
| | 6% | 0% |
| Restructuring charges | 2,673 |
| | 0% | 20,931 |
| | 3% | -87% |
| Acquisition-related costs | — |
| | 0% | 8,115 |
| | 1% | -100% |
| Litigation provision and settlements, net | (2,500 | ) | | 0% | 14,000 |
| | 2% | -118% |
| | | | | | | | |
| Total Operating Expenses | 293,154 |
| | 44% | 317,247 |
| | 51% | -8% |
| | | | | | | | |
| OPERATING INCOME | 105,603 |
| | 16% | 46,428 |
| | 8% | 127% |
| Interest expense and amortization of loan fees | 25,500 |
| | 4% | 24,758 |
| | 4% | 3% |
| Interest income and other, net | (3,827 | ) | | -1% | (1,683 | ) | | 0% | NM |
| | | | | | | | |
| INCOME BEFORE INCOME TAXES | 83,930 |
| | 12% | 23,353 |
| | 4% | 259% |
| Income tax provision | 12,910 |
| | 2% | 5,635 |
| | 1% | 129% |
| | | | | | | | |
| NET INCOME | $ | 71,020 |
| | 11% | $ | 17,718 |
| | 3% | 301% |
| | | | | | | | |
| EARNINGS PER SHARE: | | | | | | | |
| Basic | $ | 1.67 |
| | | $ | 0.43 |
| | | 288% |
| Diluted | $ | 1.66 |
| | | $ | 0.42 |
| | | 295% |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | | | | | | | |
| Basic | 42,412 |
| | | 41,173 |
| | | 3% |
| Diluted | 42,761 |
| | | 41,710 |
| | | 3% |
| | | | | | | | |
| (1) Includes results of i2 acquisition as of January 28, 2010. | | | | |
| Note: Subtotals may not add due to rounding. | | | | | | | |
JDA Software Announces Fourth Quarter and Full Year 2011 Results
Page 6
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| | | | | | | | | | | | |
| JDA SOFTWARE GROUP, INC. |
| Q4 2011 FINANCIAL RESULTS |
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1) |
| ($ in thousands, except per share data, unaudited) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Three Months Ended December 31, | %Increase (Decrease) |
| | 2011 GAAP | | Adj. | | 2011 Non-GAAP | 2010 GAAP | | Adj. | | 2010 Non-GAAP | Non-GAAP |
| | | | | | | | | | | | |
| TOTAL COST OF REVENUES | $ | 65,839 |
| | $ | (2,127 | ) | | $ | 63,712 |
| $ | 67,436 |
| | $ | (2,300 | ) | | $ | 65,136 |
| -2% |
| Stock-based compensation: | | | | | | | | | | | |
| Cost of maintenance services | 13,568 |
| | (87 | ) | | 13,481 |
| 13,351 |
| | (79 | ) | | 13,272 |
| |
| Cost of consulting services | 43,383 |
| | (338 | ) | | 43,045 |
| 44,839 |
| | (386 | ) | | 44,453 |
| |
| | | | | | | | | | | | |
| Amortization: | | | | | | | | | | | |
| Amortization of acquired software technology | 1,702 |
| | (1,702 | ) | | — |
| 1,835 |
| | (1,835 | ) | | — |
| |
| | | | | | | | | | | | |
| TOTAL OPERATING EXPENSES | $ | 108,976 |
| | $ | (46,998 | ) | | $ | 61,978 |
| $ | 89,236 |
| | $ | (30,650 | ) | | $ | 58,586 |
| 6% |
| Stock-based compensation: | | | | | | | | | | | |
| Product development | 18,484 |
| | (259 | ) | | 18,225 |
| 18,027 |
| | (439 | ) | | 17,588 |
| |
| Sales and marketing | 26,922 |
| | (193 | ) | | 26,729 |
| 25,499 |
| | (336 | ) | | 25,163 |
| |
| General and administrative | 18,097 |
| | (1,073 | ) | | 17,024 |
| 17,255 |
| | (1,420 | ) | | 15,835 |
| |
| | | | | | | | | | | | |
| Amortization of intangibles | 9,549 |
| | (9,549 | ) | | — |
| 9,968 |
| | (9,968 | ) | | — |
| |
| Restructuring charges | 924 |
| | (924 | ) | | — |
| 4,453 |
| | (4,453 | ) | | — |
| |
| Acquisition-related costs | — |
| | — |
| | — |
| 34 |
| | (34 | ) | | — |
| |
| Litigation provision and settlements, net | 35,000 |
| | (35,000 | ) | | — |
| 14,000 |
| | (14,000 | ) | | — |
| |
| | | | | | | | | | | | |
| OPERATING INCOME | $ | (641 | ) | | $ | 49,125 |
| | $ | 48,484 |
| $ | 12,090 |
| | $ | 32,950 |
| | $ | 45,040 |
| 8% |
| | | | | | | | | | | | |
| OPERATING MARGIN % | — | % | | | | 28 | % | 7 | % | | | | 27 | % | 1% |
| | | | | | | | | | | | |
INCOME TAX EFFECTS (2) | $ | (4,471 | ) | | $ | 19,599 |
| | $ | 15,128 |
| $ | 566 |
| | $ | 13,211 |
| | $ | 13,777 |
| 10% |
| | | | | | | | | | | | |
| NET (LOSS) INCOME | $ | (1,430 | ) | | | | $ | 28,096 |
| $ | 5,847 |
| | | | $ | 25,586 |
| 10% |
| | | | | | | | | | | | |
| DILUTED (LOSS) EARNINGS PER SHARE | $ | (0.03 | ) | | | | $ | 0.65 |
| $ | 0.14 |
| | | | $ | 0.61 |
| 7% |
| | | | | | | | | | | | |
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 42,644 |
| | 253 |
| | 42,897 |
| 42,280 |
| | | | 42,280 |
| 1% |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | 2011 Non-Adjusted | | Adj. | | 2011 Adjusted | 2010 Non-Adjusted | | Adj. | | 2010 Adjusted | |
| | | | | | | | | | | | |
| Net (loss) income | (1,430 | ) | | | | | $ | 5,847 |
| | | | | |
| Income tax (benefit) provision | (4,471 | ) | | | | | 566 |
| | | | | |
| Interest expense and amortization of loan fees | 6,415 |
| | | | | 6,321 |
| | | | | |
| Amortization of acquired software technology | 1,702 |
| | | | | 1,835 |
| | | | | |
| Amortization of intangibles | 9,549 |
| | | | | 9,968 |
| | | | | |
| Depreciation | 3,325 |
| | | | | 3,414 |
| | | | | |
| | | | | | | | | | | | |
| EBITDA | $ | 15,090 |
| | | | | $ | 27,951 |
| | | | | |
| | | | | | | | | | | | |
| Restructuring charges | | | 924 |
| | | | | $ | 4,453 |
| | | |
| Stock-based compensation | | | 1,950 |
| | | | | 2,660 |
| | | |
| Acquisition-related costs | | | — |
| | | | | 34 |
| | | |
| Interest income and other, net | | | (1,155 | ) | | | | | (644 | ) | | | |
| Litigation provision and settlements, net | | | 35,000 |
| | | | | 14,000 |
| | | |
| | | | | | | | | | | | |
| EBITDA | $ | 15,090 |
| | $ | 36,719 |
| | $ | 51,809 |
| $ | 27,951 |
| | $ | 20,503 |
| | $ | 48,454 |
| 7% |
| | | | | | | | | | | | |
| EBITDA MARGIN % | 9 | % | | | | 30 | % | 17 | % | | | | 29 | % | |
| | | | | | | | | | | | |
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| (1) This presentation includes Non-GAAP measures. In evaluating the Company's performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under GAAP. Management's presentation of non-GAAP financial measures is intended to be supplemental in nature and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures. |
| | | | | | | | | | | | |
| (2) Non-GAAP income tax effect calculated by using the Federal statutory rate of 35%. |
JDA Software Announces Fourth Quarter and Full Year 2011 Results
Page 7
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| | | | | | | | | | | | |
| JDA SOFTWARE GROUP, INC. |
| 2011 FINANCIAL RESULTS |
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1) |
| ($ in thousands, except per share data, unaudited) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | Year Ended December 31, | %Increase (Decrease) |
| | 2011 GAAP | | Adj. | | 2011 Non-GAAP | 2010 GAAP | | Adj. | | 2010 Non-GAAP | Non-GAAP |
| | | | | | | | | | | | |
| TOTAL COST OF REVENUES | $ | 272,996 |
| | $ | (9,737 | ) | | $ | 263,259 |
| $ | 253,534 |
| | $ | (9,094 | ) | | $ | 244,440 |
| 8% |
| Stock-based compensation: | | | | | | | | | | | |
| Cost of maintenance services | 55,930 |
| | (596 | ) | | 55,334 |
| 52,543 |
| | (482 | ) | | 52,061 |
| |
| Cost of consulting services | 182,381 |
| | (2,046 | ) | | 180,335 |
| 169,826 |
| | (1,565 | ) | | 168,261 |
| |
| | | | | | | | | | | | |
| Amortization: | | | | | | | | | | | |
| Amortization of acquired software technology | 7,095 |
| | (7,095 | ) | | — |
| 7,047 |
| | (7,047 | ) | | — |
| |
| | | | | | | | | | | | |
| TOTAL OPERATING EXPENSES | $ | 293,154 |
| | $ | (50,975 | ) | | $ | 242,179 |
| $ | 317,247 |
| | $ | (92,546 | ) | | $ | 224,701 |
| 8% |
| Stock-based compensation: | | | | | | | | | | | |
| Product development | 77,373 |
| | (1,932 | ) | | 75,441 |
| 72,158 |
| | (1,149 | ) | | 71,009 |
| |
| Sales and marketing | 104,670 |
| | (3,664 | ) | | 101,006 |
| 91,329 |
| | (2,628 | ) | | 88,701 |
| |
| General and administrative | 72,517 |
| | (6,785 | ) | | 65,732 |
| 72,299 |
| | (5,670 | ) | | 66,629 |
| |
| | | | | | | | | | | | |
| Amortization of intangibles | 38,421 |
| | (38,421 | ) | | — |
| 38,415 |
| | (38,415 | ) | | — |
| |
| Restructuring charges | 2,673 |
| | (2,673 | ) | | — |
| 20,931 |
| | (20,931 | ) | | — |
| |
| Acquisition-related costs | — |
| | — |
| | — |
| 8,115 |
| | (8,115 | ) | | — |
| |
| Non-recurring transition costs to integrate acq. | — |
| | — |
| | — |
| 1,638 |
| | (1,638 | ) | | — |
| |
| Litigation provision and settlements, net | (2,500 | ) | | 2,500 |
| | — |
| 14,000 |
| | (14,000 | ) | | — |
| |
| | | | | | | | | | | | |
| OPERATING INCOME | $ | 105,603 |
| | $ | 60,712 |
| | $ | 166,315 |
| $ | 46,428 |
| | $ | 101,640 |
| | $ | 148,068 |
| 12% |
| | | | | | | | | | | | |
| OPERATING MARGIN % | 16 | % | | | | 25 | % | 8 | % | | | | 24 | % | 1% |
| | | | | | | | | | | | |
INCOME TAX EFFECTS (2) | $ | 12,910 |
| | $ | 37,715 |
| | $ | 50,625 |
| $ | 5,635 |
| | $ | 38,113 |
| | $ | 43,748 |
| 16% |
| | | | | | | | | | | | |
| NET INCOME | $ | 71,020 |
| | | | $ | 94,017 |
| $ | 17,718 |
| | | | $ | 81,245 |
| 16% |
| | | | | | | | | | | | |
| DILUTED EARNINGS PER SHARE | $ | 1.66 |
| | | | $ | 2.20 |
| $ | 0.42 |
| | | | $ | 1.95 |
| 13% |
| | | | | | | | | | | | |
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 42,761 |
| | | | 42,761 |
| 41,710 |
| | | | 41,710 |
| 3% |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | 2011 Non-Adjusted | | Adj. | | 2011 Adjusted | 2010 Non-Adjusted | | Adj. | | 2010 Adjusted | |
| | | | | | | | | | | | |
| Net income | $ | 71,020 |
| | | | | $ | 17,718 |
| | | | | |
| Income tax provision | 12,910 |
| | | | | 5,635 |
| | | | | |
| Interest expense and amortization of loan fees | 25,500 |
| | | | | 24,758 |
| | | | | |
| Amortization of acquired software technology | 7,095 |
| | | | | 7,047 |
| | | | | |
| Amortization of intangibles | 38,421 |
| | | | | 38,415 |
| | | | | |
| Depreciation | 13,322 |
| | | | | 12,783 |
| | | | | |
| | | | | | | | | | | | |
| EBITDA | $ | 168,268 |
| | | | | $ | 106,356 |
| | | | | |
| | | | | | | | | | | | |
| Restructuring charges | | | $ | 2,673 |
| | | | | $ | 20,931 |
| | | |
| Stock-based compensation | | | 15,023 |
| | | | | 11,494 |
| | | |
| Acquisition-related costs | | | — |
| | | | | 8,115 |
| | | |
| Interest income and other, net | | | (3,827 | ) | | | | | (1,683 | ) | | | |
| Non-recurring transition costs to integrate acq. | | | — |
| | | | | 1,638 |
| | | |
| Litigation provision and settlements, net | | | (2,500 | ) | | | | | 14,000 |
| | | |
| | | | | | | | | | | | |
| EBITDA | $ | 168,268 |
| | $ | 11,369 |
| | $ | 179,637 |
| $ | 106,356 |
| | $ | 54,495 |
| | $ | 160,851 |
| 12% |
| | | | | | | | | | | | |
| EBITDA MARGIN % | 25 | % | | | | 27 | % | 17 | % | | | | 26 | % | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
(1) This presentation includes Non-GAAP measures. In evaluating the Company's performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under GAAP. Management's presentation of non-GAAP financial measures is intended to be supplemental in nature and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures. |
(2) Includes results of i2 acquisition as of January 28, 2010. |
(3) Non-GAAP income tax effect calculated by using the Federal statutory rate of 35%. |
JDA Software Announces Fourth Quarter and Full Year 2011 Results
Page 8
|
| | | | | | |
| JDA SOFTWARE GROUP, INC. |
| 2011 FINANCIAL RESULTS |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| ($ in thousands, unaudited) |
| | | |
| | December 31, 2011 | December 31, 2010 |
| | | |
| ASSETS | | |
| | | |
| Current Assets: | | |
| Cash and cash equivalents | $ | 285,512 |
| $ | 171,618 |
|
| Restricted cash | 9,385 |
| 34,855 |
|
| Accounts receivable, net | 114,778 |
| 102,118 |
|
| Deferred tax assets—current portion | 27,637 |
| 43,753 |
|
| Prepaid expenses and other current assets | 22,948 |
| 27,723 |
|
| Total Current Assets | 460,260 |
| 380,067 |
|
| | | |
| Non-Current Assets: | | |
| Property and equipment, net | 51,710 |
| 47,447 |
|
| Goodwill | 226,863 |
| 226,863 |
|
| Other intangibles, net | 141,882 |
| 187,398 |
|
| Deferred tax assets—long-term portion | 263,014 |
| 255,386 |
|
| Other non-current assets | 20,564 |
| 16,367 |
|
| Total Non-Current Assets | 704,033 |
| 733,461 |
|
| | | |
| TOTAL ASSETS | $ | 1,164,293 |
| $ | 1,113,528 |
|
| | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | |
| | | |
| Current Liabilities: | | |
| Accounts payable | $ | 7,987 |
| $ | 21,092 |
|
| Accrued expenses and other liabilities | 67,221 |
| 84,256 |
|
| Deferred revenue—current portion | 102,880 |
| 88,055 |
|
| Total Current Liabilities | 178,088 |
| 193,403 |
|
| | | |
| Non-Current Liabilities: | | |
| Long-term debt | 273,210 |
| 272,695 |
|
| Accrued exit and disposal obligations | 3,926 |
| 7,360 |
|
| Liability for uncertain tax positions | 4,098 |
| 6,873 |
|
| Deferred revenue—long-term portion | 3,073 |
| 9,090 |
|
| Other non-current liabilities | 674 |
| — |
|
| Total Non-Current Liabilities | 284,981 |
| 296,018 |
|
| | | |
| TOTAL LIABILITIES | $ | 463,069 |
| $ | 489,421 |
|
| | | |
| Stockholders' Equity: | | |
| Common stock | 449 |
| 439 |
|
| Additional paid-in capital | 573,819 |
| 550,177 |
|
| Retained earnings | 162,752 |
| 91,732 |
|
| Accumulated other comprehensive income | (2,830 | ) | 8,980 |
|
| Treasury stock | (32,966 | ) | (27,221 | ) |
| Total Stockholders’ Equity | 701,224 |
| 624,107 |
|
| | | |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,164,293 |
| $ | 1,113,528 |
|
| | | |
| | | |
| | | |
JDA Software Announces Fourth Quarter and Full Year 2011 Results
Page 9
|
| | | | | | |
| JDA SOFTWARE GROUP, INC. |
| 2011 FINANCIAL RESULTS |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW |
| ($ in thousands, unaudited) |
| | | |
| | Year Ended December 31, |
| | 2011 | 2010 |
| | | |
| Cash Flows From Operating Activities: | | |
| | | |
| Net income | $ | 71,020 |
| $ | 17,718 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: | | |
| Depreciation and amortization | 58,838 |
| 58,246 |
|
| Provision for doubtful accounts | — |
| 1,000 |
|
| Amortization of loan fees | 2,351 |
| 1,970 |
|
| Net loss (gain) on disposal of property and equipment | 105 |
| (9 | ) |
| Stock-based compensation | 15,023 |
| 11,494 |
|
| Deferred income taxes | 8,487 |
| (1,949 | ) |
| Changes in assets and liabilities, net of effects from business acquisition: | | |
| Accounts receivable | (13,652 | ) | (2,613 | ) |
| Prepaid expenses and other assets | (675 | ) | (5,138 | ) |
| Accounts payable | (14,132 | ) | 11,397 |
|
| Accrued expenses and other liabilities | (24,664 | ) | (4,622 | ) |
| Deferred revenue | 8,118 |
| (22,322 | ) |
| Net cash provided by operating activities | $ | 110,819 |
| $ | 65,172 |
|
| | | |
| Cash Flow From Investing Activities: | | |
| | | |
| Change in restricted cash | 25,470 |
| 253,020 |
|
| Purchase of i2 Technologies, Inc. | — |
| (213,427 | ) |
| Payment of direct costs related to acquisitions | (3,475 | ) | (3,625 | ) |
| Purchase of property and equipment | (18,764 | ) | (16,866 | ) |
| Proceeds from disposal of property and equipment | 642 |
| 634 |
|
| Net cash provided by investing activities | $ | 3,873 |
| $ | 19,736 |
|
| | | |
| Cash Flow From Financing Activities: | | |
| Issuance of common stock—equity plans | 7,958 |
| 15,370 |
|
| Purchase of treasury stock and other, net | (5,745 | ) | (5,127 | ) |
| Conversion of warrants | 671 |
| — |
|
| Debt issuance costs | (1,727 | ) | — |
|
| Net cash provided by financing activities | $ | 1,157 |
| $ | 10,243 |
|
| | | |
| Effect of exchange rates on cash and cash equivalents | (1,955 | ) | 493 |
|
| Net increase in cash and cash equivalents | $ | 113,894 |
| $ | 95,644 |
|
| Cash and Cash Equivalents, Beginning of Period | $ | 171,618 |
| $ | 75,974 |
|
| Cash and Cash Equivalents, End of Period | $ | 285,512 |
| $ | 171,618 |
|
| | | |
JDA Software Announces Fourth Quarter and Full Year 2011 Results
Page 10
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| JDA SOFTWARE GROUP, INC. |
| Q4 2011 FINANCIAL RESULTS |
| SUPPLEMENTAL DATA |
| ($ in thousands, unaudited) |
| | | | | | | | | | | | |
| | 2010 (1) | 2011 |
| | Q1 | Q2 | Q3 | Q4 | TOTAL | Q1 | Q2 | Q3 | Q4 | TOTAL | |
| REVENUES: | | | | | | | | | | | |
| Software licenses | $ | 24,437 |
| $ | 32,152 |
| $ | 16,276 |
| $ | 36,681 |
| $ | 109,546 |
| $ | 31,480 |
| $ | 26,915 |
| $ | 33,139 |
| $ | 33,410 |
| $ | 124,944 |
| |
| Subscriptions and other recurring revenues | 4,287 |
| 5,806 |
| 5,758 |
| 5,292 |
| 21,143 |
| 4,994 |
| 3,850 |
| 3,738 |
| 4,181 |
| 16,763 |
| |
| Maintenance services | 57,060 |
| 60,594 |
| 64,186 |
| 64,401 |
| 246,241 |
| 64,768 |
| 66,100 |
| 68,261 |
| 67,443 |
| 266,572 |
| |
| Product revenues | 85,784 |
| 98,552 |
| 86,220 |
| 106,374 |
| 376,930 |
| 101,242 |
| 96,865 |
| 105,138 |
| 105,034 |
| 408,279 |
| |
| | | | | | | | | | | | |
| Consulting services | 43,003 |
| 55,255 |
| 65,947 |
| 56,213 |
| 220,418 |
| 57,644 |
| 59,033 |
| 60,392 |
| 62,973 |
| 240,042 |
| |
| Reimbursed expenses | 2,844 |
| 4,566 |
| 6,276 |
| 6,175 |
| 19,861 |
| 4,720 |
| 6,512 |
| 6,033 |
| 6,167 |
| 23,432 |
| |
| Services revenue | 45,847 |
| 59,821 |
| 72,223 |
| 62,388 |
| 240,279 |
| 62,364 |
| 65,545 |
| 66,425 |
| 69,140 |
| 263,474 |
| |
| Total Revenues | $ | 131,631 |
| $ | 158,373 |
| $ | 158,443 |
| $ | 168,762 |
| $ | 617,209 |
| $ | 163,606 |
| $ | 162,410 |
| $ | 171,563 |
| $ | 174,174 |
| $ | 671,753 |
| |
| | | | | | | | | | | | |
| AS REPORTED REVENUE GROWTH RATES: | | | | | | | | | | |
| Software licenses | 70 | % | 21 | % | 0 | % | 33 | % | 29 | % | 29 | % | -16 | % | 104 | % | -9 | % | 14 | % | |
| Subscriptions and other recurring revenues | 343 | % | 483 | % | 543 | % | 422 | % | 446 | % | 16 | % | -34 | % | -35 | % | -21 | % | -21 | % | |
| Maintenance services | 33 | % | 37 | % | 43 | % | 37 | % | 37 | % | 14 | % | 9 | % | 6 | % | 5 | % | 8 | % | |
| Product revenues | 47 | % | 37 | % | 38 | % | 41 | % | 41 | % | 18 | % | -2 | % | 22 | % | -1 | % | 8 | % | |
| | | | | | | | | | | | |
| Consulting services | 87 | % | 120 | % | 114 | % | 96 | % | 105 | % | 34 | % | 7 | % | -8 | % | 12 | % | 9 | % | |
| Reimbursed expenses | 44 | % | 86 | % | 128 | % | 114 | % | 97 | % | 66 | % | 43 | % | -4 | % | 0 | % | 18 | % | |
| Services revenue | 83 | % | 117 | % | 115 | % | 98 | % | 104 | % | 36 | % | 10 | % | -8 | % | 11 | % | 10 | % | |
| Total Revenues | 58 | % | 59 | % | 65 | % | 58 | % | 60 | % | 24 | % | 3 | % | 8 | % | 3 | % | 9 | % | |
| | | | | | | | | | | | |
| SOFTWARE LICENSE AND SUBSCRIPTION REVENUES: | | | | | | | | | |
| Americas | $ | 18,917 |
| $ | 27,080 |
| $ | 16,590 |
| $ | 31,026 |
| $ | 93,613 |
| $ | 21,104 |
| $ | 20,786 |
| $ | 27,440 |
| $ | 21,282 |
| $ | 90,612 |
| |
| EMEA | 5,403 |
| 4,773 |
| 3,405 |
| 7,901 |
| 21,482 |
| 12,612 |
| 7,402 |
| 7,907 |
| 12,694 |
| 40,615 |
| |
| ASPAC | 4,404 |
| 6,105 |
| 2,039 |
| 3,046 |
| 15,594 |
| 2,758 |
| 2,577 |
| 1,530 |
| 3,615 |
| 10,480 |
| |
| Total Software Revenues | $ | 28,724 |
| $ | 37,958 |
| $ | 22,034 |
| $ | 41,973 |
| $ | 130,689 |
| $ | 36,474 |
| $ | 30,765 |
| $ | 36,877 |
| $ | 37,591 |
| $ | 141,707 |
| |
| | | | | | | | | | | | |
| New sales | $ | 8,415 |
| $ | 8,080 |
| $ | 2,603 |
| $ | 8,042 |
| $ | 27,140 |
| $ | 4,819 |
| $ | 9,537 |
| $ | 7,744 |
| $ | 7,518 |
| $ | 29,619 |
| |
| Install-base sales | 20,309 |
| 29,878 |
| 19,431 |
| 33,931 |
| 103,549 |
| 31,655 |
| 21,228 |
| 29,133 |
| 30,073 |
| 112,088 |
| |
| Total Software Revenues | $ | 28,724 |
| $ | 37,958 |
| $ | 22,034 |
| $ | 41,973 |
| $ | 130,689 |
| $ | 36,474 |
| $ | 30,765 |
| $ | 36,877 |
| $ | 37,591 |
| $ | 141,707 |
| |
| | | | | | | | | | | | |
| As % of Total | | | | | | | | | | | |
| New sales | 29 | % | 21 | % | 12 | % | 19 | % | 21 | % | 13 | % | 31 | % | 21 | % | 20 | % | 21 | % | |
| Install-base sales | 71 | % | 79 | % | 88 | % | 81 | % | 79 | % | 87 | % | 69 | % | 79 | % | 80 | % | 79 | % | |
| Total Software Revenues | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |
| | | | | | | | | | | | |
GROSS PROFIT MARGINS BY LINE OF BUSINESS (2) | | | | | | | | | |
| Software | 91.0 | % | 92.9 | % | 86.7 | % | 92.7 | % | 91.4 | % | 92.4 | % | 90.2 | % | 92.6 | % | 92.8 | % | 92.1 | % | |
| Maintenance | 78.9 | % | 76.5 | % | 79.9 | % | 79.3 | % | 78.7 | % | 78.4 | % | 77.8 | % | 79.9 | % | 79.9 | % | 79.0 | % | |
| Services | 16.9 | % | 24.3 | % | 23.5 | % | 18.2 | % | 21.1 | % | 17.7 | % | 17.5 | % | 23.4 | % | 28.3 | % | 21.9 | % | |
| Overall Gross Profit Margin | 59.9 | % | 60.7 | % | 55.1 | % | 60.0 | % | 58.9 | % | 58.4 | % | 55.8 | % | 60.8 | % | 62.2 | % | 59.4 | % | |
| | | | | | | | | | | | |
| MISCELLANEOUS | | | | | | | | | | | |
Average sales price (ASP) (3) -TTM | $ | 618 |
| $ | 608 |
| $ | 573 |
| $ | 601 |
| | $ | 720 |
| $ | 645 |
| $ | 786 |
| $ | 821 |
| | |
Multiple product deals (3) -TTM | 21 |
| 18 |
| 17 |
| 19 |
| | 21 |
| 24 |
| 24 |
| 21 |
| | |
Large deal count (greater than $1M)(3) -TM | 24 |
| 25 |
| 25 |
| 25 |
| | 23 |
| 26 |
| 34 |
| 32 |
| | |
| Quota carrying sales representatives | 96 |
| 92 |
| 98 |
| 92 |
| | 106 |
| 111 |
| 104 |
| 107 |
| | |
| Maintenance Retention | 98.3 | % | 97.3 | % | 95.9 | % | 95.6 | % | | 98.5 | % | 96.7 | % | 95.7 | % | 95.5 | % | | |
| | | | | | | | | | | | |
FREE CASH FLOW (4) | | | | | | | | | | | |
| GAAP Operating Cash Flow | $ | 12,195 |
| $ | (2,627 | ) | $ | 29,425 |
| $ | 26,179 |
| $ | 65,172 |
| $ | 58,683 |
| $ | 35,477 |
| $ | 38,460 |
| $ | (21,801 | ) | $ | 110,819 |
| |
| Capital Expenditures | (533 | ) | (5,864 | ) | (8,388 | ) | (2,081 | ) | (16,866 | ) | (2,997 | ) | (1,819 | ) | (2,809 | ) | (11,139 | ) | (18,764 | ) | |
Free Cash Flow (5) | $ | 11,662 |
| $ | (8,491 | ) | $ | 21,037 |
| $ | 24,098 |
| $ | 48,306 |
| $ | 55,686 |
| $ | 33,658 |
| $ | 35,651 |
| $ | (32,940 | ) | $ | 92,055 |
| |
| | | | | | | | | | | | |
| % Growth over prior year | -64 | % | -131 | % | 32 | % | 68 | % | -46 | % | 378 | % | 496 | % | 69 | % | -237 | % | 91 | % | |
| | | | | | | | | | | | |
| Free Cash Flow | $ | 11,662 |
| $ | (8,491 | ) | $ | 21,037 |
| $ | 24,098 |
| $ | 48,306 |
| $ | 55,686 |
| $ | 33,658 |
| $ | 35,651 |
| $ | (32,940 | ) | $ | 92,055 |
| |
| Litigation settlements, net | — |
| — |
| — |
| — |
| — |
| (37,500 | ) | — |
| — |
| 54,000 |
| 16,500 |
| |
| Adjusted Free Cash Flow | $ | 11,662 |
| $ | (8,491 | ) | $ | 21,037 |
| $ | 24,098 |
| $ | 48,306 |
| $ | 18,186 |
| $ | 33,658 |
| $ | 35,651 |
| $ | 21,060 |
| $ | 108,555 |
| |
| | | | | | | | | | | | |
| % Growth over prior year | -64 | % | -131 | % | 32 | % | 68 | % | -46 | % | 56 | % | 496 | % | 69 | % | -13 | % | 125 | % | |
| | | | | | | | | | | | |
| (1) Includes results of i2 acquisition as of January 28, 2010. | | | |
| (2) Gross Profit Margins are calculated using line of business Revenue, less line of business Cost of Revenue, divided by line of business Revenue. |
| (3) Trailing twelve months |
| (4) This presentation includes Non-GAAP measures. In evaluating the Company's performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under GAAP. Management's presentation of non-GAAP financial measures is intended to be supplemental in nature and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures. |
| (5)Q1 2011 results Include $37.5 million from the settlement with Oracle Corporation. Q4 2011 includes $54.0 million, net cash paid for the settlement with Dillard's. |
“Safe Harbor” Statement under the U.S. Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally accompanied by words such as “will,” and “expect” and other words with forward-looking connotations. The occurrence of future events may involve a number of risks and uncertainties, including, but not limited to risks detailed from time to time in the “Risk Factors” section of our filings with the Securities and Exchange Commission. Additional information relating to the uncertainty affecting our business is contained in our filings with the SEC. As a result of these and other risks, actual results may differ materially from those predicted. JDA is not under any obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
Use of Non-GAAP Financial Information
This press release and the related conference call contain non-GAAP financial measures. In evaluating the Company's performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under GAAP. Management's presentation of non-GAAP financial measures is intended to be supplemental in nature and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures.
Use and Economic Substance of Non-GAAP Financial Measures Used by JDA
The Company uses non-GAAP measures of performance, including adjusted net income, EBITDA (earnings before interest, taxes, depreciation and amortization) and earnings per share, in its public statements. Management uses, and chooses to disclose, these non-GAAP financial measures because (i) such measures provide an additional analytical tool to clarify the Company's results from operations and help the Company to identify underlying trends in its results of operations; (ii) the Company uses non-GAAP earnings measures, including EBITDA, as a measure of profitability because such measures help the Company compare its performance on a consistent basis across time periods; and (iii) these non-GAAP measures are employed by the Company's management in its own evaluation of performance and are utilized in financial and operational decision making processes, such as budget planning and forecasting. The Company also internally uses adjusted EBITDA measures for determining (a) compliance with certain financial covenants in its credit agreement and (b) executive and employee compensation. Set forth below are additional reasons why specific items are excluded from the Company's non-GAAP financial measures:
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• | Amortization charges for acquired software technology are excluded because they result from prior acquisitions, rather than ongoing operations, and absent additional acquisitions, are expected to decline over time. |
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• | Amortization charges for other intangibles are excluded because they are non-cash expenses, and while tangible and intangible assets support our business, we do not believe the related amortization costs are directly attributable to the operating performance of our business. |
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• | Restructuring charges are significant non-routine expenses that cannot be predicted and typically relate to a change in our business model or to a change in our estimate of the costs to complete a plan to exit an activity of an acquired company. The exclusion of these charges promotes period-to-period comparisons and transparency. Such charges are primarily related to severance costs and/or the disposition of excess facilities driven by the changes to our business model. |
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• | Stock-based compensation is not an expense that typically requires or will require cash settlement by the Company. |
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• | Acquisition-related costs associated with the acquisition of i2, the settlement offer related to inherited i2 litigation and the non-recurring transition costs to integrate the acquisition are significant non-routine expenses. Exclusion of these costs promotes period-to-period comparisons and transparency as we do not believe these costs are directly attributable to the operating performance of our business. |
Material Limitations (and Compensation thereof) Associated with the Use of Non-GAAP Financial Measures
Non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for the Company's GAAP results. In the future, the Company expects to continue reporting non-GAAP financial measures excluding items described above and the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above. Accordingly, exclusion of these and other similar items in our non-GAAP presentation should not be construed as an inference that these costs are unusual, infrequent or non-recurring.
Some of the limitations in relying on non-GAAP financial measures are:
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• | Amortization of acquired technology and intangibles, though not directly affecting our current cash position, represent the loss in value as the technology in our industry evolves, is advanced or is replaced over time. The expense associated with this loss in value is not included in the non-GAAP net income presentation and therefore does not reflect the full economic effect of the ongoing cost of maintaining our current technological position in our competitive industry which is addressed through our research and development program. |
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• | The Company may engage in acquisition transactions in the future. In addition, we incur other restructuring charges from time to time when necessary to adjust our business model. Restructuring related charges may therefore continue to be incurred and should not be viewed as non-recurring. |
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• | Stock-based compensation is an important component of our incentive compensation arrangements and will be reflected as expenses in our GAAP results for the foreseeable future. |
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• | Other companies, including other companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting their usefulness as a comparative measure. |
We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP financial measures only supplementally. We also provide reconciliations of each non-GAAP financial measure to our most directly comparable GAAP measure, and we encourage investors to review carefully those reconciliations.
Usefulness of Non-GAAP Financial Measures to Investors
The Company believes that the presentation of these non-GAAP financial measures is warranted for several reasons. First, such non-GAAP financial measures provide investors and management an additional analytical tool for understanding the Company's financial performance by excluding the impact of items which may obscure trends in the core operating performance of the business. Third, since the Company has historically reported non-GAAP results to the investment community, the Company believes the inclusion of non-GAAP numbers provides consistency and enhances investors' ability to compare the Company's performance across financial reporting periods.
JDA Software Group, Inc.
14400 N. 87th Street
Scottsdale, Ariz. 85260
