Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On July 16, 2013, Progress Software Corporation (the "Company") completed the sale of its Apama product line to Software AG. The sale of the Apama product line was completed pursuant to the terms of a Master Asset Purchase Agreement, dated June 11, 2013. As contemplated by the Master Asset Purchase Agreement, the Company assigned various assets associated with the Apama product line, including fixed assets, intellectual property and customer and vendor agreements, to Software AG, and Software AG assumed related liabilities.
The aggregate purchase price paid to the Company for the Apama product line was $44.3 million. There are no relationships between the Company or any of its affiliates, or any director or officer of the Company, or any associate of any such director or officer, and Software AG, or any of their respective affiliates.
The Company's Quarterly Report on Form 10-Q for the period ended May 31, 2013 reflects the assets and liabilities of the Apama product line as held for sale in the unaudited condensed consolidated balance sheet as of May 31, 2013, and reflects the results of operations for the six months ended May 31, 2013 and 2012, as discontinued operations. The unaudited pro forma condensed consolidated financial information presented in the balance sheet and income statements below has been presented as if the sale described above occurred on May 31, 2013 (in the case of the condensed consolidated balance sheet) or December 1, 2009 (in the case of the condensed consolidated statements of income). The unaudited financial information presented should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended November 30, 2012, and the Quarterly Report on Form 10-Q for the quarter ended May 31, 2013.
The unaudited pro forma condensed consolidated financial information is presented for illustrative purposes only and does not
purport to represent what the results of operations or financial position of the Company would actually have been had the transaction described above occurred on the dates noted above, or to project the results of operations or financial position of the Company for any future period. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable. The pro forma adjustments are directly attributable to the transaction and are expected to have a continuing impact on the results of operations of the Company. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma financial information have been made.
Unaudited Condensed Consolidated Balance Sheet
As of May 31, 2013
| (In thousands, except per share data) | Historical (1) | Pro Forma Adjustments (2) | Pro Forma | ||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 218,387 | $ | 40,500 | (a), (c) | $ | 258,887 | ||||
| Short-term investments | 37,417 | — | 37,417 | ||||||||
| Total cash, cash equivalents and short-term investments | 255,804 | 40,500 | 296,304 | ||||||||
| Accounts receivable, net | 50,772 | — | 50,772 | ||||||||
| Other current assets | 26,782 | — | 26,782 | ||||||||
| Deferred tax assets | 13,254 | — | 13,254 | ||||||||
| Asset held for sale | 11,236 | (11,236 | ) | (b) | — | ||||||
| Total current assets | 357,848 | 29,264 | 387,112 | ||||||||
| Property and equipment, net | 59,352 | — | 59,352 | ||||||||
| Intangible assets, net | 11,430 | — | 11,430 | ||||||||
| Goodwill | 224,440 | — | 224,440 | ||||||||
| Deferred tax assets | 26,776 | — | 26,776 | ||||||||
| Investments in auction rate securities | 26,500 | — | 26,500 | ||||||||
| Other assets | 4,747 | 4,500 | (d) | 9,247 | |||||||
| Total assets | $ | 711,093 | $ | 33,764 | $ | 744,857 | |||||
| Liabilities and shareholders' equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | 6,594 | 2,010 | (e) | 8,604 | |||||||
| Accrued compensation and related taxes | 23,053 | — | 23,053 | ||||||||
| Income taxes payable | 154 | 15,419 | (f) | 15,573 | |||||||
| Other accrued liabilities | 29,480 | — | 29,480 | ||||||||
| Short-term deferred revenue | 102,094 | 44 | (c) | 102,138 | |||||||
| Liabilities held for sale | 4,012 | (4,012 | ) | (b) | — | ||||||
| Total current liabilities | 165,387 | 13,461 | 178,848 | ||||||||
| Long-term deferred revenue | 1,293 | 88 | (c) | 1,381 | |||||||
| Deferred tax liabilities | 515 | (141 | ) | (g) | 374 | ||||||
| Other noncurrent liabilities | 1,660 | — | 1,660 | ||||||||
| Commitments and contingencies | — | ||||||||||
| Shareholders' equity: | — | ||||||||||
| Preferred stock, $0.01 par value; authorized, 1,000,000 shares; issued, none | — | — | — | ||||||||
| Common stock, $0.01 par value, and additional paid-in capital; authorized, 200,000,000 shares; issued and outstanding, 54,046,817 shares | 232,838 | — | 232,838 | ||||||||
| Retained earnings, including accumulated other comprehensive loss of $13,139 | 309,400 | 20,356 | (c), (g), (h) | 329,756 | |||||||
| Total shareholders' equity | 542,238 | 20,356 | 562,594 | ||||||||
| Total liabilities and shareholders' equity | $ | 711,093 | $ | 33,764 | $ | 744,857 | |||||
(1) Historical results represent balances as reported in the Company's unaudited condensed consolidated balance sheet included in the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2013.
(2) Pro forma adjustments relate to the divestiture of the Apama product line, which was sold to Software AG in July 2013. The Apama product line assets and liabilities were presented as held for sale in the Company's Quarterly Report on Form 10-Q for the quarter ended May 31, 2013.
Unaudited Condensed Consolidated Statement of Income
Year Ended November 30, 2012
| (In thousands, except per share data) | Historical (1) | Pro Forma Adjustments (2) | Pro Forma | ||||||||
| Revenue: | |||||||||||
| Software licenses | $ | 113,270 | $ | (6,644 | ) | (a) | $ | 106,626 | |||
| Maintenance and services | 221,935 | (10,949 | ) | (a) | 210,986 | ||||||
| Total revenue | 335,205 | (17,593 | ) | 317,612 | |||||||
| Costs of revenue: | |||||||||||
| Cost of software licenses | 6,112 | (336 | ) | (a) | 5,776 | ||||||
| Cost of maintenance and services | 36,192 | (6,314 | ) | (a) | 29,878 | ||||||
| Amortization of acquired intangibles | 1,259 | (599 | ) | (a) | 660 | ||||||
| Total costs of revenue | 43,563 | (7,249 | ) | 36,314 | |||||||
| Gross profit | 291,642 | (10,344 | ) | 281,298 | |||||||
| Operating expenses: | |||||||||||
| Sales and marketing | 117,855 | (19,017 | ) | (a) | 98,838 | ||||||
| Product development | 53,017 | (8,574 | ) | (a) | 44,443 | ||||||
| General and administrative | 62,053 | (64 | ) | (a) | 61,989 | ||||||
| Amortization of acquired intangibles | 962 | (142 | ) | (a) | 820 | ||||||
| Restructuring expenses | 8,100 | (896 | ) | (a) | 7,204 | ||||||
| Acquisition-related expenses | 215 | — | 215 | ||||||||
| Total operating expenses | 242,202 | (28,693 | ) | 213,509 | |||||||
| Income from operations | 49,440 | 18,349 | 67,789 | ||||||||
| Other expense | 196 | — | 196 | ||||||||
| Income from continuing operations before income taxes | 49,636 | 18,349 | 67,985 | ||||||||
| Provision for income taxes | 17,032 | 5,999 | (b) | 23,031 | |||||||
| Income from continuing operations | $ | 32,604 | $ | 12,350 | $ | 44,954 | |||||
| Earnings per share from continuing operations: | |||||||||||
| Basic | $ | 0.52 | $ | 0.71 | |||||||
| Diluted | $ | 0.51 | $ | 0.71 | |||||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 62,881 | 62,881 | |||||||||
| Diluted | 63,741 | 63,741 | |||||||||
(1) Historical results represent balances as reported in the Company's consolidated statement of income included in the Company's Annual Report on Form 10-K for the year ended November 30, 2012.
(2) Pro forma adjustments relate to the divestiture of the Apama product line, which was sold to Software AG in July 2013.
Unaudited Condensed Consolidated Statement of Income
Year Ended November 30, 2011
| (In thousands, except per share data) | Historical (1) | Pro Forma Adjustments (2) | Pro Forma | ||||||||
| Revenue: | |||||||||||
| Software licenses | $ | 125,966 | $ | (16,000 | ) | (a) | $ | 109,966 | |||
| Maintenance and services | 234,738 | (11,094 | ) | (a) | 223,644 | ||||||
| Total revenue | 360,704 | (27,094 | ) | 333,610 | |||||||
| Costs of revenue: | |||||||||||
| Cost of software licenses | 5,430 | (790 | ) | (a) | 4,640 | ||||||
| Cost of maintenance and services | 37,238 | (7,095 | ) | (a) | 30,143 | ||||||
| Amortization of acquired intangibles | 2,600 | (606 | ) | (a) | 1,994 | ||||||
| Total costs of revenue | 45,268 | (8,491 | ) | 36,777 | |||||||
| Gross profit | 315,436 | (18,603 | ) | 296,833 | |||||||
| Operating expenses: | |||||||||||
| Sales and marketing | 102,618 | (18,803 | ) | (a) | 83,815 | ||||||
| Product development | 44,876 | (6,693 | ) | (a) | 38,183 | ||||||
| General and administrative | 61,816 | (44 | ) | (a) | 61,772 | ||||||
| Amortization of acquired intangibles | 966 | (453 | ) | (a) | 513 | ||||||
| Restructuring expenses | 3,383 | (81 | ) | (a) | 3,302 | ||||||
| Acquisition-related expenses | 536 | — | 536 | ||||||||
| Total operating expenses | 214,195 | (26,074 | ) | 188,121 | |||||||
| Income from operations | 101,241 | 7,471 | 108,712 | ||||||||
| Other income | (519 | ) | — | (519 | ) | ||||||
| Income from continuing operations before income taxes | 100,722 | 7,471 | 108,193 | ||||||||
| Provision for income taxes | 34,380 | 2,422 | (b) | 36,802 | |||||||
| Income from continuing operations | $ | 66,342 | $ | 5,049 | $ | 71,391 | |||||
| Earnings per share from continuing operations: | |||||||||||
| Basic | $ | 1.01 | $ | 1.09 | |||||||
| Diluted | $ | 0.98 | $ | 1.06 | |||||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 65,705 | 65,705 | |||||||||
| Diluted | 67,540 | 67,540 | |||||||||
(1) Historical results represent balances as reported in the Company's consolidated statement of income included in the Company's Annual Report on Form 10-K for the year ended November 30, 2012.
(2) Pro forma adjustments relate to the divestiture of the Apama product line, which was sold to Software AG in July 2013.
Unaudited Condensed Consolidated Statement of Income
Year Ended November 30, 2010
| (In thousands, except per share data) | Historical (1) | Pro Forma Adjustments (2) | Pro Forma | ||||||||
| Revenue: | |||||||||||
| Software licenses | $ | 125,680 | $ | (13,523 | ) | (a) | $ | 112,157 | |||
| Maintenance and services | 225,930 | (8,301 | ) | (a) | 217,629 | ||||||
| Total revenue | 351,610 | (21,824 | ) | 329,786 | |||||||
| Costs of revenue: | |||||||||||
| Cost of software licenses | 5,229 | (651 | ) | (a) | 4,578 | ||||||
| Cost of maintenance and services | 30,144 | (6,280 | ) | (a) | 23,864 | ||||||
| Amortization of acquired intangibles | 5,780 | (587 | ) | (a) | 5,193 | ||||||
| Total costs of revenue | 41,153 | (7,518 | ) | 33,635 | |||||||
| Gross profit | 310,457 | (14,306 | ) | 296,151 | |||||||
| Operating expenses: | |||||||||||
| Sales and marketing | 91,974 | (18,446 | ) | (a) | 73,528 | ||||||
| Product development | 50,080 | (10,334 | ) | (a) | 39,746 | ||||||
| General and administrative | 51,413 | (64 | ) | (a) | 51,349 | ||||||
| Amortization of acquired intangibles | 2,803 | (1,046 | ) | (a) | 1,757 | ||||||
| Restructuring expenses | 22,711 | (2,757 | ) | (a) | 19,954 | ||||||
| Total operating expenses | 218,981 | (32,647 | ) | 186,334 | |||||||
| Income from operations | 91,476 | 18,341 | 109,817 | ||||||||
| Other income | 3,758 | — | 3,758 | ||||||||
| Income from continuing operations before income taxes | 95,234 | 18,341 | 113,575 | ||||||||
| Provision for income taxes | 32,666 | 6,357 | (b) | 39,023 | |||||||
| Income from continuing operations | $ | 62,568 | $ | 11,984 | $ | 74,552 | |||||
| Earnings per share from continuing operations: | |||||||||||
| Basic | $ | 0.98 | $ | 1.17 | |||||||
| Diluted | $ | 0.94 | $ | 1.13 | |||||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 63,957 | 63,957 | |||||||||
| Diluted | 66,212 | 66,212 | |||||||||
(1) Historical results represent balances as reported in the Company's consolidated statement of income included in the Company's Annual Report on Form 10-K for the year ended November 30, 2012.
(2) Pro forma adjustments relate to the divestiture of the Apama product line, which was sold to Software AG in July 2013.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Information
Pro Forma Adjustments to the Condensed Consolidated Balance Sheet as of May 31, 2013
(a) To record cash proceeds received from the disposition.
(b) To eliminate assets and liabilities sold in the disposition.
(c) To record proceeds received and associated deferred revenue for an arrangement entered into with Software AG as part of the disposition.
(d) To record amount held in escrow, and expected to be received, to secure the payment of any indemnification claims under the disposition arrangement.
(e) To accrue estimated direct transaction costs associated with the disposition.
(f) To accrue the estimated tax liability associated with the gain on the disposition.
(g) To eliminate the deferred taxes associated with the disposition.
(h) To record the net gain on the disposition.
Pro Forma Adjustments to the Condensed Consolidated Statements of Income for the Years Ended November 30, 2012, 2011 and 2010
(a) To eliminate the revenue and direct expenses of the Apama product line.
(b) To adjust the provision for income taxes for the effects of the pro forma adjustments, at statutory rates.