Progress Software 8K Reports 2013 Fiscal Third Quarter Results | PRGS 25 Sep 13



		Exhibit 99.1

P R E S S A N N O U N C E M E N T



Investor Contact:		Press Contact:
Brian Flanagan		Rick Lacroix
Progress Software		Progress Software
+1 781 280 4817		+1 781 280 4604
flanagan@progress.com		rlacroix@progress.com

Progress Software Reports 2013 Fiscal Third Quarter Results

BEDFORD, MA, September 25, 2013 (BUSINESSWIRE) — Progress Software Corporation (NASDAQ: PRGS), a global software company that simplifies and enables the development, deployment and management of business applications, today announced results for its fiscal third quarter ended August 31, 2013.

Revenue from continuing operations was $77.6 million compared to $74.4 million in the same quarter last year, a year over year increase of 4% on an actual and constant currency basis.

Additional financial highlights included:

On a GAAP basis in the fiscal third quarter of 2013:


•	Income from operations was $9.7 million compared to $11.3 million in the same quarter last year;


•	Income from continuing operations was $7.2 million compared to $7.7 million in the same quarter last year;


•	Net income was $24.8 million compared to $5.8 million in the same quarter last year, and includes the pre-tax gain on the divestiture of the Apama product line of $35.9 million; and


•	Diluted earnings per share from continuing operations was $0.13 compared to $0.12 in the same quarter last year.

On a non-GAAP basis in the fiscal third quarter of 2013:


•	Income from operations was $21.4 million compared to $17.8 million in the same quarter last year;


•	Operating margin was 28% compared to 24% in the same quarter last year;


•	Income from continuing operations was $14.7 million compared to $12.4 million in the same quarter last year; and


•	Diluted earnings per share from continuing operations was $0.27 compared to $0.19 in the same quarter last year.

Phil Pead, President and Chief Executive Officer of Progress Software, said, “Our third quarter performance continues to demonstrate solid progress as we execute on our strategic plan to be a leading Platform as a Service company. We exceeded our operating margin objectives and the announcement of Progress Pacific is resonating with our customers and partners. Revenue growth for the quarter was also positive as customers and partners continued to upgrade their existing applications and take advantage of new functionality across all of our solutions.”

Other fiscal third quarter 2013 metrics and recent results included:


•	Net cash received from the divestiture of the Apama product line was $37.7 million;


•	Under the previously announced and implemented 10b5-1 plan to repurchase $100.0 million of common stock by December 31, 2013, the company has repurchased 2.7 million shares for $67.9 million through August 31, 2013;


•	Cash, cash equivalents and short-term investments were $242.0 million;


•	Cash outflows from operations were $1.9 million, including $14.6 million in tax payments for the gain realized on the Apama product line divestiture, compared to cash inflows from operations of $22.0 million in the same quarter in fiscal year 2012; and


•	DSO from continuing operations was 62 days, compared to 56 days in the fiscal second quarter of 2013.

Business Outlook

Progress Software provides the following guidance for the fiscal fourth quarter ending November 30, 2013:


•	On a constant currency basis, revenue is expected to be between 4% and 6% growth compared to the fiscal fourth quarter of 2012; and


•	Non-GAAP operating margin is expected to be 35%.

The non-GAAP operating margin guidance excludes the items we traditionally exclude from our non-GAAP reporting metrics: amortization of intangible assets of $0.7 million, stock-based compensation of $5.4 million, and $1.0 million of acquisition related costs, for a GAAP operating margin of 27%.

Conference Call

The Progress Software quarterly investor conference call to review its fiscal third quarter of 2013 will be broadcast live at 5:00 p.m. ET on Wednesday, September 25, 2013 on the investor relations section of the company’s website, located at www.progress.com. Additionally, you can listen to the call by telephone by dialing 1-888-428-9480, pass code 9841658. The conference call will include only brief comments followed by questions and answers. An archived version of the conference call and supporting materials will be available on the Progress Software website within the investor relations section after the live conference call.

Legal Notice Regarding Non-GAAP Financial Information

Progress Software provides non-GAAP financial information as additional information for investors. These non-GAAP measures are not in accordance with, or an alternative to, generally accepted accounting principles in the United States (GAAP). Progress Software believes that the non-GAAP results described in this release are useful for an understanding of its ongoing operations and provide additional detail and an alternative method of assessing its operating results. Management uses these non-GAAP results to compare the company's performance to that of prior periods for analysis of trends and for budget and planning purposes. A reconciliation of non-GAAP adjustments to the company's GAAP financial results is included in the tables below. Additional information regarding the company's non-GAAP financial information is contained in the company's Current Report on Form 8-K filed with the Securities and Exchange Commission in connection with this press release, which is available on the Progress website at www.progress.com within the investor relations section.

Note Regarding Forward-Looking Statements

This press release contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Progress has identified some of these forward-looking statements with words like “believe,” “may,” “could,” “would,” “might,” “should,”“expect,” “intend,” “plan,” “target,” “anticipate” and “continue,” the negative of these words, other terms of similar meaning or the use of future dates.

Forward-looking statements in this press release include, but are not limited to, statements regarding

Progress's strategic plan; acquisitions; future revenue growth, operating margin and cost savings; product development, strategic partnering and marketing initiatives; the growth rates of certain markets; and other statements regarding the future operation, direction and success of Progress's business. There are a number of factors that could cause actual results or future events to differ materially from those anticipated by the forward-looking statements, including, without limitation:

(1) Market acceptance of Progress's strategic plan and product development initiatives; (2) pricing pressures and the competitive environment in the software industry and Platform-as-a-Service market; (3) Progress' ability to successfully manage transitions to new business models and markets, including our increased emphasis on a cloud and subscription strategy; (4) Progress's ability to make technology acquisitions and to realize the expected benefits and anticipated synergies from such acquisitions; (5) the continuing uncertainty in the U.S. and international economies, which could result in fewer sales of Progress's products and may otherwise harm Progress's business; (6) business and consumer use of the Internet and the continuing adoption of Cloud technologies; (7) the receipt and shipment of new orders; (8) Progress's ability to expand its relationships with channel partners and to manage the interaction of channel partners with its direct sales force; (9) the timely release of enhancements to Progress's products and customer acceptance of new products; (10) the positioning of Progress's products in its existing and new markets; (11) variations in the demand for professional services and technical support; (12)

Progress's ability to penetrate international markets and manage its international operations; and (13) changes in exchange rates. For further information regarding risks and uncertainties associated with Progress's business, please refer to Progress's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended November 30, 2012 and its Quarterly Reports on Form 10-Q for the fiscal quarters ended February 28, 2013 and May 31, 2013. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

Progress Software Corporation

Progress Software Corporation (NASDAQ: PRGS) is a global software company that simplifies the development, deployment and management of business applications on-premise or in the cloud, on any platform or device, to any data source, with enhanced performance, minimal IT complexity and low total cost of ownership. Progress Software can be reached at www.progress.com or 1-781-280-4000.

Progress is a trademark or registered trademarks of Progress Software Corporation or one of its subsidiaries or affiliates in the U.S. and other countries. Any other trademarks contained herein are the property of their respective owners.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME



	Three Months Ended							Nine Months Ended
(In thousands, except per share data)	August 31, 2013		August 31, 2012			% Change		August 31, 2013			August 31, 2012			% Change
Revenue:
Software licenses	$	25,666	$	22,637		13	%	$	84,920		$	72,816		17	%
Maintenance and services	51,912		51,734			—	%	158,096			158,154			—	%
Total revenue	77,578		74,371			4	%	243,016			230,970			5	%
Costs of revenue:
Cost of software licenses	1,587		1,375			15	%	5,033			4,117			22	%
Cost of maintenance and services	6,403		7,974			(20	)%	21,043			22,013			(4	)%
Amortization of acquired intangibles	529		139			281	%	811			522			55	%
Total costs of revenue	8,519		9,488			(10	)%	26,887			26,652			1	%
Gross profit	69,059		64,883			6	%	216,129			204,318			6	%
Operating expenses:
Sales and marketing	24,554		24,970			(2	)%	79,086			67,085			18	%
Product development	14,615		12,631			16	%	42,908			33,330			29	%
General and administrative	13,660		14,375			(5	)%	42,390			47,789			(11	)%
Amortization of acquired intangibles	211		207			2	%	549			622			(12	)%
Restructuring expenses	5,401		1,411			283	%	9,127			6,147			48	%
Acquisition-related expenses	957		—			100	%	2,229			215			937	%
Total operating expenses	59,398		53,594			11	%	176,289			155,188			14	%
Income from operations	9,661		11,289			(14	)%	39,840			49,130			(19	)%
Other (expense) income, net	177		357			(50	)%	(663		)	876			(176	)%
Income from continuing operations before income taxes	9,838		11,646			(16	)%	39,177			50,006			(22	)%
Provision for income taxes	2,634		3,902			(32	)%	14,018			17,546			(20	)%
Income from continuing operations	7,204		7,744			(7	)%	25,159			32,460			(22	)%
Income (loss) from discontinued operations, net	17,639		(1,906		)	1,025	%	34,712			(21,041		)	265	%
Net income	$	24,843	$	5,838		326	%	$	59,871		$	11,419		424	%

Earnings per share:
Basic:
Continuing operations	$	0.13	$	0.12		8	%	$	0.45		$	0.52		(13	)%
Discontinued operations	0.33		(0.03		)	1,200	%	0.63			(0.33		)	291	%
Net income per share	$	0.46	$	0.09		411	%	1.08			$	0.18		500	%
Diluted:
Continuing operations	$	0.13	$	0.12		8	%	$	0.45		$	0.51		(12	)%
Discontinued operations	0.32		(0.03		)	1,167	%	0.62			(0.33		)	288	%
Net income per share	$	0.46	$	0.09		411	%	$	1.06		$	0.18		489	%
Weighted average shares outstanding:
Basic	53,532		63,469			(16	)%	55,451			62,888			(12	)%
Diluted	54,389		64,105			(15	)%	56,292			63,795			(12	)%

CONDENSED CONSOLIDATED BALANCE SHEETS



(In thousands)	August 31, 2013		November 30, 2012
Assets
Current assets:
Cash, cash equivalents and short-term investments	$	241,982	$	355,217
Accounts receivable, net	53,620		70,793
Other current assets	40,035		32,779
Assets held for sale	—		68,029
Total current assets	335,637		526,818
Property and equipment, net	56,889		63,071
Goodwill and intangible assets, net	234,980		231,229
Other assets	59,084		63,859
Total assets	$	686,590	$	884,977
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable and other current liabilities	$	67,236	$	110,944
Short-term deferred revenue	96,534		103,925
Liabilities held for sale	—		25,285
Total current liabilities	163,770		240,154
Long-term deferred revenue	1,044		2,817
Other long-term liabilities	2,421		3,607
Shareholders’ equity:
Common stock and additional paid-in capital	214,915		300,333
Retained earnings	304,440		338,066
Total shareholders’ equity	519,355		638,399
Total liabilities and shareholders’ equity	$	686,590	$	884,977

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



	Three Months Ended						Nine Months Ended
(In thousands)	August 31, 2013			August 31, 2012			August 31, 2013			August 31, 2012
Cash flows from operating activities:
Net income	$	24,843		$	5,838		$	59,871		$	11,419
Depreciation and amortization	3,897			8,390			11,374			25,369
Stock-based compensation	5,573			7,744			16,360			21,504
Net gains on sales of dispositions	(35,885		)	—			(70,991		)	—
Other non-cash adjustments	2,648			759			447			1,762
Changes in operating assets and liabilities	(2,937		)	(706		)	(30,340		)	15,660
Net cash flows from operating activities	(1,861		)	22,025			(13,279		)	75,714
Capital expenditures	(603		)	(465		)	(2,989		)	(6,606		)
Redemptions and sales of auction-rate-securities	—			2,700			25			2,925
Issuances of common stock, net of repurchases	(47,981		)	3,797			(192,075		)	24,284
Payments for acquisitions, net of cash acquired	—			—			(9,450		)	—
Proceeds from divestitures, net	37,739			—			111,120			—
Other	(1,116		)	(4,098		)	(6,587		)	(5,526		)
Net change in cash, cash equivalents and short-term investments	(13,822		)	23,959			(113,235		)	90,791
Cash, cash equivalents and short-term investments, beginning of period	255,804			328,248			355,217			261,416
Cash, cash equivalents and short-term investments, end of period	$	241,982		$	352,207		$	241,982		$	352,207

SUPPLEMENTAL INFORMATION



Revenue from continuing operations by Type

(In thousands)	Q3 2012		Q4 2012		Q1 2013		Q2 2013		Q3 2013		YTD 2013		YTD 2012
License	$	22,637	$	33,810	$	29,907	$	29,347	$	25,666	$	84,920	$	72,816
Maintenance	50,285		50,891		51,456		50,419		49,752		151,627		151,800
Professional services	1,449		1,941		2,370		1,939		2,160		6,469		6,354
Total revenue	$	74,371	$	86,642	$	83,733	$	81,705	$	77,578	$	243,016	$	230,970

Revenue from continuing operations by Region

(In thousands)	Q3 2012		Q4 2012		Q1 2013		Q2 2013		Q3 2013		YTD 2013		YTD 2012
North America	$	34,548	$	39,179	$	39,309	$	37,540	$	34,596	$	111,445	$	103,480
EMEA	28,155		33,214		32,548		33,481		32,315		98,344		92,352
Latin America	6,905		7,384		6,822		6,526		5,496		18,844		20,951
Asia Pacific	4,763		6,865		5,054		4,158		5,171		14,383		14,187
Total revenue	$	74,371	$	86,642	$	83,733	$	81,705	$	77,578	$	243,016	$	230,970

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES



	Three Months Ended						Nine Months Ended
(In thousands, except per share data)	August 31, 2013			August 31, 2012			August 31, 2013			August 31, 2012
GAAP income from operations	$	9,661		$	11,289		$	39,840		$	49,130
GAAP operating margin	12		%	15		%	16		%	21		%
Amortization of acquired intangibles	740			346			1,360			1,144
Stock-based compensation ⁽¹⁾	4,600			4,759			14,070			14,058
Restructuring expenses	5,401			1,411			9,127			6,147
Acquisition-related expenses	957			—			2,229			215
Litigation settlement	—			—			—			900
Proxy contest-related costs	—			21			—			3,259
Total operating adjustments	11,698			6,537			26,786			25,723
Non-GAAP income from operations	$	21,359		$	17,826		$	66,626		$	74,853
Non-GAAP operating margin	28		%	24		%	27		%	32		%

GAAP income from continuing operations	$	7,204		$	7,744		$	25,159		$	32,460
Operating adjustments (from above)	11,698			6,537			26,786			25,723
Income tax adjustment	(4,230		)	(1,916		)	(8,399		)	(6,686		)
Total income from continuing operations adjustments	7,468			4,621			18,387			19,037
Non-GAAP income from continuing operations	$	14,672		$	12,365		$	43,546		$	51,497

GAAP diluted earnings per share from continuing operations	$	0.13		$	0.12		$	0.45		$	0.51
Income from continuing operations adjustments (from above)	0.14			0.07			0.33			0.30
Non-GAAP diluted earnings per share from continuing operations	$	0.27		$	0.19		$	0.77		$	0.81

Diluted weighted average shares outstanding	54,389			64,105			56,292			63,795


(1) Stock-based compensation is included in the GAAP statements of income, as follows:

Cost of revenue	$	133		$	157		$	500		$	589
Sales and marketing	748			701			2,668			2,848
Product development	999			861			3,687			2,375
General and administrative	2,720			3,040			7,215			8,246
Stock-based compensation from continuing operations	$	4,600		$	4,759		$	14,070		$	14,058



	Three Months Ended				Nine Months Ended
(In thousands, except per share data)	August 31, 2013		August 31, 2012		August 31, 2013		August 31, 2012
GAAP costs of revenue	$	8,519	$	9,488	$	26,887	$	26,652
GAAP operating expenses	59,398		53,594		176,289		155,188
GAAP expenses	67,917		63,082		203,176		181,840
Operating adjustments (from above)	11,698		6,537		26,786		25,723
Non-GAAP expenses	$	56,219	$	56,545	$	176,390	$	156,117

Progress Software (PRGS) 8-KProgress Software Reports 2013 Fiscal Third Quarter Results