Exhibit 99.1
Serena media and investor contact:
Robert Pender
Chief Financial Officer
Serena Software
650-522-6604
bpender@serena.com
SERENA SOFTWARE REPORTS FOURTH QUARTER AND FISCAL 2007 RESULTS
Company announces intent to amend Credit Agreement
San Mateo, CA–March 22, 2007– Serena Software, Inc. today announced results for the fourth quarter and fiscal year ending January 31, 2007.
Total revenue was $76.5 million in the fourth quarter of fiscal year 2007 and represented a 9% increase over total revenue in the fourth quarter of fiscal year 2006. Software license revenue was $30.5 million, maintenance revenue was $37.0 million and service revenue was $9.0 million for the fourth quarter of fiscal year 2007. For fiscal year 2007, total revenue was $255.3 million, software license revenue was $86.5 million, maintenance revenue was $134.6 million, and service revenue was $34.2 million. Excluded from revenue is $1.5 million and $12.5 million of maintenance revenue written down in the purchase accounting for our merger with Spyglass Merger Corporation, an affiliate of Silver Lake Partners, for the fourth quarter and full fiscal year of 2007, respectively.
Net (loss) income computed in accordance with generally accepted accounting principles (“GAAP”) for fiscal year 2007 was $(57.2) million compared to $35.3 million in fiscal year 2006. Included in the fiscal year 2007 results were $43.8 million of transaction costs related to the merger transaction involving Silver Lake Partners.
Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) for the fourth quarter of fiscal year 2007 increased 32% to $34.5 million from $26.0 million in the fourth quarter of fiscal year 2006. Adjusted EBITDA for fiscal year 2007 increased 12% to $103.3 million from $92.0 million for fiscal year 2006.
Adjusted EBITDA excludes amortization of intangible assets and charges relating to the purchase accounting adjustments for the merger transaction involving Silver Lake Partners, stock-based compensation, depreciation, amortization of acquired technology and other intangible assets, restructuring, acquisition and other charges, and acquired in-process research and development. Adjusted EBITDA also excludes the revenue impact of the deferred maintenance write-down to fair value. A reconciliation of Adjusted EBITDA to GAAP financial results is included in this press release.
Total cash and equivalents as of January 31, 2007 was $68.5 million and total deferred revenue was $78.4 million.
Serena also announced today that it expects to amend its existing credit agreement in order to reduce the interest rate on the term loan. The amendment will require the approval of certain term loan lenders in accordance with the terms of the credit agreement.
FORWARD-LOOKING STATEMENTS:This press release contains statements regarding our intent to amend our senior secured credit agreement, which may be considered forward-looking within the meaning of the U.S. federal securities laws. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from results expressed or implied in this press release. Such risk factors include our ability to obtain approval of the requisite term loan lenders in accordance with the terms of the credit agreement, market fluctuations in interest rates and other risk factors contained in our Form 10-Q for the quarter ended October 31, 2006. Actual results may differ materially from those contained in the forward-looking statements in this press release. Additional information concerning these and other risk factors is contained in the Risk Factors section of our Form 10-Q for the quarter ended October 31, 2006. We assume no obligation to update any forward-looking information contained in this press release.
NON-GAAP FINANCIAL INFORMATION: Serena’s management evaluates and makes operating decisions using various operating measures, including earnings before interest, taxes and amortization (EBITA). Serena’s management uses EBITA as a supplemental financial measure in evaluating the performance of Serena’s business, making forecasting, budgeting and operating decisions and establishing operating targets, budgets and performance-based compensation arrangements. In addition, our lenders use similar operating measures to evaluate our operating performance and compliance with certain financial covenants. One such measure used by our lenders is Adjusted EBITDA, which is calculated in accordance with the debt covenants under our credit agreement. Adjusted EBITDA differs from GAAP operating income in that it excludes amortization of acquired technology and intangible assets, write down of maintenance revenue and acquired in-process research and development and other charges relating to purchase accounting adjustments from our merger with Spyglass Merger Corporation and our acquisition of Pacific Edge Software, Inc.; restructuring, acquisition and other charges; stock based compensation under SFAS 123R; and depreciation. Adjusted EBITDA is not an alternative to operating income as calculated in accordance with GAAP. Lenders and investors should not rely on the use of Adjusted EBITDA as a substitute for any GAAP financial measure. In addition, our calculation of Adjusted EBITDA may or may not be consistent with that of other companies. Lenders and investors are encouraged to review the reconciliations to the comparable GAAP financial measures that are included below and not to rely on any single financial measure to evaluate our business.
About Serena Software, Inc.
Serena Software provides software and services to more than 15,000 organizations around the world—including 96 of the Fortune 100 and 90 of the Global 100. Recognized by IDC as the largest software provider focused exclusively on change, Serena offers a new approach to change that enables businesses to efficiently, consistently, and successfully control change across the enterprise. Serena helps companies capitalize on change to achieve transformative business results. Serena, a portfolio company of Silver Lake Partners, has more than 800 employees worldwide and is headquartered in San Mateo, California, with offices throughout the U.S., Europe, and Asia Pacific. For more information, please visit www.serena.com.
– FINANCIAL TABLES TO FOLLOW –
SERENA Software, Inc.
Condensed Consolidated Statements of Operations
(In thousands)
(Unaudited)
Three Months Ended January 31, | Year Ended January 31, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Revenue: | ||||||||||||||||
Software licenses | $ | 30,512 | $ | 27,044 | $ | 86,520 | $ | 90,554 | ||||||||
Maintenance | 37,059 | 34,639 | 134,605 | 136,009 | ||||||||||||
Professional services | 8,963 | 8,454 | 34,166 | 29,209 | ||||||||||||
Total revenue | 76,534 | 70,137 | 255,291 | 255,772 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Software licenses | 834 | 843 | 2,735 | 3,211 | ||||||||||||
Maintenance | 3,496 | 3,197 | 13,662 | 13,225 | ||||||||||||
Professional services | 8,041 | 7,472 | 31,758 | 26,628 | ||||||||||||
Amortization of acquired technology | 13,944 | 4,153 | 37,853 | 16,921 | ||||||||||||
Total cost of revenue | 26,315 | 15,665 | 86,008 | 59,985 | ||||||||||||
Gross profit | 50,219 | 54,472 | 169,283 | 195,787 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 18,173 | 20,784 | 72,396 | 74,196 | ||||||||||||
Research and development | 9,097 | 8,449 | 35,803 | 34,678 | ||||||||||||
General and administrative | 1,237 | 4,890 | 18,684 | 18,868 | ||||||||||||
Amortization of intangible assets | 9,203 | 2,560 | 33,639 | 10,516 | ||||||||||||
Acquired in-process research and development | — | — | 4,100 | — | ||||||||||||
Restructuring, acquisition and other charges | 625 | 5,946 | 43,729 | 6,462 | ||||||||||||
Total operating expenses | 38,335 | 42,629 | 208,351 | 144,720 | ||||||||||||
Operating income (loss) | 11,884 | 11,843 | (39,068 | ) | 51,067 | |||||||||||
Interest income | 493 | 2,005 | 3,996 | 6,203 | ||||||||||||
Interest expense | (12,600 | ) | (825 | ) | (45,417 | ) | (3,300 | ) | ||||||||
Fair market value adjustment to the interest rate swap | 1,448 | — | (1,154 | ) | — | |||||||||||
Amortization of debt issuance costs | (450 | ) | (335 | ) | (3,563 | ) | (1,340 | ) | ||||||||
Income (loss) before income taxes | 775 | 12,688 | (85,206 | ) | 52,630 | |||||||||||
Income tax (benefit) expense | (4,405 | ) | 4,587 | (27,994 | ) | 17,363 | ||||||||||
Net income (loss) | $ | 5,180 | $ | 8,101 | $ | (57,212 | ) | $ | 35,267 | |||||||
Serena Software, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
January 31, 2007 | January 31, 2006 | |||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 68,455 | $ | 148,401 | ||
Restricted cash | — | 3,260 | ||||
Short-term investments | 12 | 60,837 | ||||
Accounts receivable, net | 40,894 | 35,464 | ||||
Deferred taxes | 10,593 | 8,658 | ||||
Prepaid expenses and other current assets | 5,051 | 4,638 | ||||
Total current assets | 125,005 | 261,258 | ||||
Long-term investments | — | 13,626 | ||||
Property and equipment, net | 6,931 | 5,927 | ||||
Goodwill, net | 801,770 | 297,775 | ||||
Other intangible assets, net | 402,688 | 87,359 | ||||
Other assets | 11,053 | 2,689 | ||||
Total assets | $ | 1,347,447 | $ | 668,634 | ||
Liabilities and Stockholders’ Equity | ||||||
Current liabilities: | ||||||
Short-term debt and current portion of long term debt | $ | 30,000 | $ | — | ||
Accounts payable | 2,268 | 2,551 | ||||
Income taxes payable | 11,828 | 13,961 | ||||
Accrued expenses | 30,259 | 25,835 | ||||
Accrued interest on term loan and subordinated notes | 9,910 | 413 | ||||
Deferred revenue | 61,642 | 64,138 | ||||
Total current liabilities | 145,907 | 106,898 | ||||
Deferred revenue, net of current portion | 16,759 | 10,608 | ||||
Long-term liabilities | 1,906 | 1,953 | ||||
Deferred taxes | 151,250 | 27,976 | ||||
Term loan | 345,000 | — | ||||
Senior subordinated notes | 200,000 | — | ||||
Convertible subordinated notes | 5 | 220,000 | ||||
Total liabilities | 860,827 | 367,435 | ||||
Stockholders’ equity: | ||||||
Total stockholders’ equity | 486,620 | 301,199 | ||||
Total liabilities and stockholders’ equity | $ | 1,347,447 | $ | 668,634 | ||
The following table reconciles GAAP operating income/loss to Adjusted EBITDA:
Three Months Ended January 31, | Year Ended January 31, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||
GAAP operating income (loss): | $ | 11,884 | $ | 11,843 | $ | (39,068 | ) | $ | 51,067 | |||||
Amortization of acquired technology | 13,944 | 4,153 | 37,853 | 16,921 | ||||||||||
Amortization of intangible assets | 9,203 | 2,560 | 33,639 | 10,516 | ||||||||||
Writedown of maintenance revenue | 1,467 | 229 | 12,485 | 2,430 | ||||||||||
Acquired in-process research and development | — | — | 4,100 | — | ||||||||||
Restructuring, acquisition and other charges | 625 | 5,946 | 43,729 | 6,462 | ||||||||||
Stock-based compensation | (3,498 | ) | 594 | 7,549 | 1,777 | |||||||||
Depreciation | 856 | 700 | 2,999 | 2,799 | ||||||||||
Adjusted EBITDA | $ | 34,481 | $ | 26,025 | $ | 103,286 | $ | 91,972 | ||||||
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