Exhibit 99.1
News Release
FOR IMMEDIATE RELEASE
| | |
Contact: | | Damon Wright Sr. Director, Investor Relations Epicor Software Corporation 949/585-4509 dswright@epicor.com |
Epicor® Reports 2008 Third Quarter Results
IRVINE, Calif., October 29, 2008 — Epicor Software Corporation (NASDAQ: EPIC), a leading provider of enterprise business software solutions for the midmarket and divisions of Global 1000 companies, today reported financial results for its third quarter ended September 30, 2008. All results should be considered preliminary pending the Company’s filing of its quarterly report on Form 10-Q.
Epicor President and CEO Thomas Kelly commented, “Epicor performed well in the face of what turned out to be one of the most challenging third quarters that the world’s financial markets have seen in years. We continue to benefit from our large, stable customer base, with growing recurring maintenance revenues helping to generate $18.7 million in free cash flow1. Customer retention rates remained near all time highs at 94%, and we won back 142 customers, who had previously gone off maintenance, representing an incremental $3.1 million in recurring annual maintenance revenues. While we did experience delays on a number of license deals at the end of the quarter due to the unprecedented economic turmoil, this revenue loss was offset by increases in other areas and we did a good job of managing our expenses to market conditions.
“As illustrated by the addition of 155 new name customers during the third quarter, Epicor remains uniquely positioned as a leading provider of business software solutions that help our customers save money and drive operational effectiveness and efficiencies throughout their businesses, “ Kelly continued. “We offer a low total cost of ownership and can clearly articulate a near-term return on investment. While Epicor is not immune to the economic turmoil and uncertainty, there is much to be excited about. We have a strong slate of new products being introduced over the next several quarters, which we believe will provide excellent near
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and long term opportunities to gain share by attacking new markets, while also providing the latest upgrade and migration path for our installed base of more than 20,000 customers worldwide. We will continue to prudently tune our business model in order to be flexible enough to respond to whatever market conditions we may face, while ensuring that we are able to capitalize on opportunities for growth.”
Kelly concluded, “In this economic environment, Epicor is focused on three primary goals; supporting and growing our customer base by providing the high value products our customers need at the lowest total overall cost of ownership, increasing focus on expense management and driving efficiencies across the business, and targeting investment into the highest priority opportunities.”
GAAP Results: GAAP revenue for the 2008 third quarter was $135.8 million, with net income of $3.8 million, or $0.06 per diluted share. This compares to 2007 third quarter GAAP revenue of $103.1 million, and GAAP net income of $8.1 million, or $0.14 per diluted share.
Non-GAAP Results2: Non-GAAP revenue for the 2008 third quarter was $137.7 million, with non-GAAP net income of $11.3 million, or $0.19 per diluted share. This compares to GAAP revenue of $103.1 million, and non-GAAP net income of $12.7 million, or $0.22 per diluted share, in the 2007 third quarter.
2008 Third Quarter Revenue by Segment: 2008 third quarter non-GAAP license revenue was $22.4 million, compared to GAAP license revenue of $24.1 million in the 2007 third quarter. Non-GAAP consulting revenue was $41.8 million in the 2008 third quarter, which excludes approximately $0.1 million in fair value adjustments for NSB purchase accounting, compared to GAAP consulting revenue $32.8 million in the 2007 third quarter. Non-GAAP maintenance revenue for the 2008 third quarter hit another record growing to $52.0 million, which excludes approximately $1.8 million in fair value adjustments for NSB purchase accounting, compared to GAAP maintenance revenue of $40.1 million in the same period in the prior year. GAAP hardware and other revenue for the 2008 third quarter was $21.6 million, up significantly from GAAP hardware and other revenue of $6.1 million in the prior year’s third quarter.
Balance Sheet Summary
The Company’s balance sheet at September 30, 2008, included cash and cash equivalents of $95.7 million. The balance sheet benefited from free cash flow of $18.7 million during the 2008 third quarter, which helped support a $46.8 million pay down on the Company’s credit facility during the quarter. The pay down is expected to result in a quarter percentage
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point reduction of the current interest rate on the credit facility to 2.25% above LIBOR. The Company’s total debt balance as of September 30, 2008, consists of $8.5 million in current debt primarily related to the current portion of the Company’s outstanding term loan from the Company’s credit facility, which helped to fund the NSB acquisition, and long-term debt of $331.3 million, consisting primarily of the $230 million obligation to holders of the Company’s 2.375% senior convertible notes and $100.9 million from the Company’s credit facility.
At the end of the 2008 third quarter, net accounts receivable was approximately $95.4 million. The Company had strong cash collections of $142.9 million during the 2008 third quarter, helping to marginally lower days sales outstanding (DSOs) to 65, down from 66 in the second quarter of 2008. Deferred revenue at the end of the 2008 third quarter was $92.3 million.
Business Outlook
The Company is updating its 2008 fourth quarter and full-year guidance for non-GAAP revenue, non-GAAP earnings per share and free cash flow expectations due to the uncertainty and limited visibility surrounding the global economy, IT spending and exchange rate fluctuations. Any prior guidance provided by the Company with respect to the 2008 fourth quarter and full year should no longer be relied upon.
2008 fourth quarter non-GAAP total revenue is expected to be $125 to $140 million, with 2008 full-year revenue expected to be $497 to $512 million. Non-GAAP earnings per share for the 2008 fourth quarter is expected to be $0.18 to $0.28, with 2008 full-year non-GAAP earnings per share expected to be $0.61 to $0.71. Free cash flow for the 2008 fourth quarter is expected to be $17 to $27 million, with 2008 full-year free cash flow expected to be $52 to $62 million.
The Company said that it is providing its 2008 fourth quarter and full-year guidance on a non-GAAP basis. 2008 fourth quarter and full-year non-GAAP revenue guidance does not include an expected fair value adjustment of deferred revenue as a result of NSB purchase accounting in accordance with GAAP reporting. The Company’s 2008 fourth quarter non-GAAP earnings per share guidance excludes current expectations for fourth quarter amortization of intangible assets of approximately $8.4 million and fourth quarter stock-based compensation expense of approximately $2.4 million. 2008 fourth quarter non-GAAP earnings per share expectations assume a weighted average share count of 60.1 million shares. The Company’s 2008 full-year non-GAAP earnings per share guidance excludes current expectations for full-year amortization of intangible assets of approximately $33.0 million, full-year stock-based compensation expense of approximately $8.6 million, the loss on settlement of option contracts to hedge foreign currency risk on the purchase price of the acquisition of NSB, an in-process research and development charge and restructuring and other charges. 2008 full-year non-GAAP earnings per share expectations assume a weighted average share count of 59.2 million shares.
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Earnings Conference Call
The Company will hold an investor and analyst conference call today at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time.
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| When: | | Wednesday, October 29, 2008 |
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| Time: | | 2:00 p.m. PT |
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| Dial in: | | +1 (877) 856-1956; outside the U.S. +1 (719) 325-4805 |
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| Conf ID: | | Epicor 2008 Third Quarter Earnings Call |
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| Webcast: | | http://ir.epicor.com |
On the call, president and CEO Thomas Kelly and senior vice president and principal accounting officer Russ Clark, will review 2008 third quarter earnings. Investors and analysts are invited to participate on the call. Please dial in approximately ten minutes prior to start time. A live audio-only webcast of the call will be made available to the public on the Company’s Web site athttp://ir.epicor.com and will be archived for thirty days following the call on the Company’s Web site.
1 | Free cash flow is a non-GAAP measure. The Company calculates free cash flow by taking adjusted EBITDA, adding back stock-based compensation, and subtracting capital expenditures, cash paid for taxes and net interest. Please refer to the table below for a complete reconciliation. |
2 | Please see the reconciliations to GAAP measures provided at the end of this press release. |
About Epicor Software Corporation
Epicor is a global leader dedicated to providing integrated enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM) and professional services automation (PSA) software solutions to the midmarket and divisions of Global 1000 companies. Founded in 1984, Epicor serves over 20,000 customers in more than 140 countries, providing solutions in over 30 languages. Employing innovative service-oriented architecture (SOA) and Web services technology, Epicor delivers end-to-end, industry-specific solutions for manufacturing, distribution, retail, hospitality and services that enable companies to drive increased efficiency, improve performance and build competitive advantage. Epicor solutions provide the scalability and flexibility to meet today’s business challenges, while empowering enterprises for even greater success tomorrow. Epicor offers a comprehensive range of services with its solutions, providing a single point of accountability to promote rapid return on investment and low total cost of ownership. Epicor’s worldwide headquarters are located in Irvine, California with offices and affiliates around the world. For more information, visitwww.epicor.com.
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Epicor is a registered trademark of Epicor Software Corporation. Other trademarks referenced are the property of their respective owners. The product and service offerings depicted in this document are produced by Epicor Software Corporation.
Forward-Looking Statements
This press release contains certain statements which constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding expected GAAP and non-GAAP revenues (including growth rates), earnings and earnings per share (including on a non-GAAP basis), non-GAAP free cash flow, the launch of Epicor 9, market share, business model, cross selling and other potential synergies and the accretive affect of the NSB transaction, sales pipelines and opportunities, target market, customer renewal rates, technology lead, competitive advantage and other statements that are not historical fact. These forward-looking statements are based on currently available competitive, financial and economic data together with management’s views and assumptions regarding future events and business performance as of the time the statements are made and are subject to risks and uncertainties. Actual results may differ materially from those expressed or implied in the forward-looking statements.
Such risks and uncertainties include but are not limited to changes in the demand for enterprise resource planning products, particularly in light of competitive offerings; the timely availability and market acceptance of new products and upgrades, including Epicor 9; the impact of competitive products and pricing; the discovery of undetected software errors; changes in the financial condition of Epicor’s major commercial customers and Epicor’s future ability to continue to develop and expand its product and service offerings to address emerging business demand and technological trends; Epicor’s ability to integrate the NSB acquisition and recognize expected revenue synergies; Epicor’s ability to continue to support NSB’s customers and add functionality to NSB’s products; and other factors discussed in Epicor’s annual report on Form 10K for the year ended December 31, 2007 and quarterly report of Form 10Q for the quarter ended June 30, 2008. As a result of these factors the business or prospects expected by the Company as part of this announcement may not occur. Epicor undertakes no obligation to revise or update publicly any forward-looking statements.
Non-GAAP Financial Measures
This press release contains 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.
Non-GAAP Earnings and Revenue Measure.The Company uses non-GAAP earnings and revenue measures, adjusted EBITDA and free cash flow in this press release. Management believes these non-GAAP measures help indicate the Company’s baseline performance before gains, losses or charges that are considered by management to be outside on-going operating results. Accordingly, management uses these non-GAAP measures to gain a better understanding of the Company’s comparative operating performance from period-to-period and as a basis for planning and forecasting future periods. Management believes these non-GAAP measures, when read in conjunction with the Company’s GAAP financials, provides useful information to investors by offering:
| | • | | the ability to make more meaningful period-to-period comparisons of the Company’s on-going operating results; |
| | • | | the ability to better identify trends in the Company’s underlying business and perform related trend analysis; |
| | • | | a better understanding of how management plans and measures the Company’s underlying business; and, |
| | • | | an easier way to compare the Company’s most recent results of operations against investor and analyst financial models. |
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The non-GAAP guidance measures for 2008 used by the Company is defined to include deferred revenues from NSB that are expected to be adjusted to fair value as required by purchase accounting in accordance with GAAP reporting, and to exclude amortization of intangible assets, stock-based compensation expense, the write-off of in-process research and development, loss on settlement of option contracts to hedge foreign currency risk on the purchase price of NSB and restructuring and other non-recurring expenses.
Management believes that the expense associated with the amortization of acquisition-related intangible assets is appropriate to be excluded because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have short lives and exclusion of the amortization expense allows comparisons of operating results that are consistent over time for both the Company’s newly acquired and long-held businesses. Management also believes that the exclusion of stock-based compensation allows for more accurate comparisons of our operating results to our peer companies because of varying available valuation methodologies, subjective assumptions and the variety of award types which effect the calculations of stock-based compensation. Finally, management believes it is appropriate to exclude costs associated with the in-process research and development charge and the loss on settlement of option contracts to hedge foreign currency risk on the purchase price of NSB, as well restructuring and other charges, which included costs associated with the integration of NSB into Epicor, because these charges are not related to the Company’s ongoing business operations and it allows for more accurate comparisons of our operating results to our peer companies.
General.These non-GAAP measures have limitations, however, because they do not include all items of income and expense that impact the Company’s operations. Management compensates for these limitations by also considering the Company’s GAAP results. The non-GAAP financial measures the Company uses are not prepared in accordance with, and should not be considered an alternative to, measurements required by GAAP, such as operating income, net income and income per share, and should not be considered measures of the Company’s liquidity. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. In addition, these non-GAAP financial measures may not be comparable to similar measures reported by other companies.
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EPICOR SOFTWARE CORPORATION
PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| | | | | | | | |
| | | September 30,
2008 | | | December 31,
2007 | |
| | | (Unaudited) | | | | |
ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 95,724 | | | $ | 75,158 | |
Short-term investments | | | — | | | | 1,371 | |
Accounts receivable, net | | | 95,363 | | | | 98,533 | |
Deferred income taxes | | | 8,217 | | | | 7,060 | |
Inventory, net | | | 10,753 | | | | 4,539 | |
Prepaid expenses and other current assets | | | 25,181 | | | | 9,184 | |
| | | | | | | | |
Total current assets | | | 235,238 | | | | 195,845 | |
| | |
Property and equipment, net | | | 28,179 | | | | 14,762 | |
Deferred income taxes | | | 45,773 | | | | 45,025 | |
Intangible assets, net | | | 122,906 | | | | 46,524 | |
Goodwill | | | 367,748 | | | | 169,267 | |
Cash designated for acquisition | | | — | | | | 161,000 | |
Other assets | | | 16,154 | | | | 12,958 | |
| | | | | | | | |
Total assets | | $ | 815,998 | | | $ | 645,381 | |
| | | | | | | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 26,028 | | | $ | 14,640 | |
Accrued expenses | | | 60,309 | | | | 54,927 | |
Current portion of accrued restructuring costs | | | 3,814 | | | | 614 | |
Current portion of long-term debt | | | 8,544 | | | | 145 | |
Current portion of deferred revenue | | | 91,861 | | | | 70,378 | |
| | | | | | | | |
Total current liabilities | | | 190,556 | | | | 140,704 | |
| | | | | | | | |
| | |
Long-term debt, less current portion | | | 331,255 | | | | 230,491 | |
Long-term portion of accrued restructuring costs | | | 5,312 | | | | 356 | |
Long-term portion of deferred revenue | | | 421 | | | | 823 | |
Long-term deferred income and other taxes | | | 20,843 | | | | 10,082 | |
Other long-term liabilities | | | 2,190 | | | | — | |
| | | | | | | | |
Total long-term liabilities | | | 360,021 | | | | 241,752 | |
| | | | | | | | |
| | |
Stockholders’ equity: | | | | | | | | |
Common stock | | | 61 | | | | 60 | |
Additional paid-in capital | | | 376,829 | | | | 366,737 | |
Less: treasury stock at cost | | | (18,421 | ) | | | (13,883 | ) |
Accumulated other comprehensive income (loss) | | | (1,168 | ) | | | 61 | |
Accumulated deficit | | | (91,880 | ) | | | (90,050 | ) |
| | | | | | | | |
Total stockholders’ equity | | | 265,421 | | | | 262,925 | |
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Total liabilities and stockholders’ equity | | $ | 815,998 | | | $ | 645,381 | |
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Epicor Reports Q3 2008 Results
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EPICOR SOFTWARE CORPORATION
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | |
Revenues: | | | | | | | | | | | | | | | | |
License | | $ | 22,405 | | | $ | 24,094 | | | $ | 65,266 | | | $ | 71,229 | |
Consulting | | | 41,616 | | | | 32,752 | | | | 114,043 | | | | 99,575 | |
Maintenance | | | 50,126 | | | | 40,149 | | | | 144,992 | | | | 118,902 | |
Hardware and other | | | 21,615 | | | | 6,105 | | | | 41,630 | | | | 20,429 | |
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Total revenues | | | 135,762 | | | | 103,100 | | | | 365,931 | | | | 310,135 | |
| | | | | | | | | | | | | | | | |
| | | | |
Cost of revenues | | | 68,180 | | | | 46,284 | | | | 186,020 | | | | 141,340 | |
Amortization of intangible assets | | | 8,513 | | | | 4,474 | | | | 24,513 | | | | 12,959 | |
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Total cost of revenues | | | 76,693 | | | | 50,758 | | | | 210,533 | | | | 154,299 | |
| | | | | | | | | | | | | | | | |
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Gross profit | | | 59,069 | | | | 52,342 | | | | 155,398 | | | | 155,836 | |
| | | | | | | | | | | | | | | | |
| | | | |
Operating expenses: | | | | | | | | | | | | | | | | |
Sales and marketing | | | 20,519 | | | | 18,300 | | | | 63,149 | | | | 55,745 | |
Software development | | | 13,561 | | | | 9,129 | | | | 40,885 | | | | 27,379 | |
General and administrative | | | 13,982 | | | | 12,800 | | | | 39,490 | | | | 42,634 | |
In-process research and development | | | — | | | | — | | | | 200 | | | | — | |
Restructuring and other | | | 594 | | | | 985 | | | | 4,766 | | | | 1,207 | |
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Total operating expenses | | | 48,656 | | | | 41,214 | | | | 148,490 | | | | 126,965 | |
| | | | | | | | | | | | | | | | |
| | | | |
Income from operations | | | 10,413 | | | | 11,128 | | | | 6,908 | | | | 28,871 | |
Gain on sale of non-strategic asset | | | — | | | | — | | | | — | | | | 1,579 | |
Interest expense | | | (4,519 | ) | | | (1,808 | ) | | | (11,770 | ) | | | (6,660 | ) |
Interest and other income (expense), net | | | (773 | ) | | | 3,380 | | | | 1,052 | | | | 5,973 | |
| | | | | | | | | | | | | | | | |
| | | | |
Income (loss) before income taxes | | | 5,121 | | | | 12,700 | | | | (3,810 | ) | | | 29,763 | |
Provision (benefit) for income taxes | | | 1,295 | | | | 4,623 | | | | (1,980 | ) | | | 10,962 | |
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Net income (loss) | | $ | 3,826 | | | $ | 8,077 | | | $ | (1,830 | ) | | $ | 18,801 | |
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Net income (loss) per share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.07 | | | $ | 0.14 | | | $ | (0.03 | ) | | $ | 0.33 | |
Diluted | | $ | 0.06 | | | $ | 0.14 | | | $ | (0.03 | ) | | $ | 0.32 | |
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Weighted average common shares outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 58,779 | | | | 57,310 | | | | 58,377 | | | | 57,008 | |
Diluted | | | 59,186 | | | | 58,038 | | | | 58,377 | | | | 57,885 | |
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EPICOR SOFTWARE CORPORATION
PRELIMINARY NON-GAAP NET INCOME RECONCILIATION
(in thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Income (loss) before income taxes | | $ | 5,121 | | | $ | 12,700 | | | $ | (3,810 | ) | | $ | 29,763 | |
| | | | |
Add back (subtract): | | | | | | | | | | | | | | | | |
Amortization of intangible assets | | | 8,513 | | | | 4,524 | | | | 24,513 | | | | 13,119 | |
Stock-based compensation expense | | | 1,824 | | | | 1,525 | | | | 6,219 | | | | 8,219 | |
Loss on foreign currency option contract | | | — | | | | — | | | | 1,610 | | | | — | |
Deferred revenue fair value adjustment | | | 1,977 | | | | — | | | | 6,413 | | | | — | |
Restructuring and other | | | 594 | | | | 985 | | | | 4,766 | | | | 1,207 | |
In-process research and development | | | — | | | | — | | | | 200 | | | | — | |
Debt issuance fees write off | | | — | | | | — | | | | — | | | | 842 | |
Gain on sale of non-strategic asset | | | — | | | | — | | | | — | | | | (1,579 | ) |
| | | | | | | | | | | | | | | | |
| | $ | 12,908 | | | $ | 7,034 | | | $ | 43,721 | | | $ | 21,808 | |
| | | | |
Non-GAAP income before income taxes | | | 18,029 | | | | 19,734 | | | | 39,911 | | | | 51,571 | |
Non-GAAP provision for income taxes1 | | | (6,689 | ) | | | (7,034 | ) | | | (14,622 | ) | | | (18,164 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Non-GAAP net income | | $ | 11,340 | | | $ | 12,700 | | | $ | 25,289 | | | $ | 33,407 | |
| | | | | | | | | | | | | | | | |
| | | | |
Non-GAAP net income per diluted share | | $ | 0.19 | | | $ | 0.22 | | | $ | 0.43 | | | $ | 0.58 | |
| | | | | | | | | | | | | | | | |
| | | | |
Weighted average common shares outstanding: | | | | | | | | | | | | | | | | |
Diluted | | | 59,186 | | | | 58,038 | | | | 59,045 | | | | 57,885 | |
1 | For the third quarter of 2008, the Company utilized a 38% tax rate for the calculation of the Non-GAAP provision for income taxes |
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EPICOR SOFTWARE CORPORATION
PRELIMINARY NET INCOME (LOSS) TO ADJUSTED EBITDA RECONCILIATION
(dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Total revenues | | $ | 135,762 | | | $ | 103,100 | | | $ | 365,931 | | | $ | 310,135 | |
| | | | | | | | | | | | | | | | |
| | | | |
Net income (loss) | | $ | 3,826 | | | $ | 8,077 | | | $ | (1,830 | ) | | $ | 18,801 | |
Provision (benefit) for income taxes | | | 1,295 | | | | 4,623 | | | | (1,980 | ) | | | 10,962 | |
Interest expense | | | 4,519 | | | | 1,808 | | | | 11,770 | | | | 6,660 | |
Amortization of intangible assets | | | 8,513 | | | | 4,524 | | | | 24,513 | | | | 13,119 | |
Depreciation | | | 2,244 | | | | 1,548 | | | | 6,158 | | | | 4,544 | |
Restructuring and other | | | 594 | | | | 985 | | | | 4,766 | | | | 1,207 | |
In-process research and development | | | — | | | | — | | | | 200 | | | | — | |
Gain on sale of non-strategic asset | | | — | | | | — | | | | — | | | | (1,579 | ) |
Deferred revenue fair value adjustment | | | 1,977 | | | | — | | | | 6,413 | | | | — | |
Interest and other income (expense), net | | | 773 | | | | (3,380 | ) | | | (1,052 | ) | | | (5,973 | ) |
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Adjusted EBITDA | | $ | 23,741 | | | $ | 18,185 | | | $ | 48,958 | | | $ | 47,741 | |
| | | | | | | | | | | | | | | | |
| | | | |
Adjusted EBITDA percent of total revenues | | | 17.5 | % | | | 17.6 | % | | | 13.4 | % | | | 15.4 | % |
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Epicor Reports Q3 2008 Results
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EPICOR SOFTWARE CORPORATION
PRELIMINARY FREE CASH FLOW RECONCILIATION
(dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | | | Year Ended
December 31,
2007 | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | | |
Net income (loss) | | $ | 3,826 | | | $ | 8,077 | | | $ | (1,830 | ) | | $ | 18,801 | | | $ | 41,277 | |
Provision (benefit) for income taxes | | | 1,295 | | | | 4,623 | | | | (1,980 | ) | | | 10,962 | | | | 1,257 | |
Interest expense | | | 4,519 | | | | 1,808 | | | | 11,770 | | | | 6,660 | | | | 8,469 | |
Amortization of intangible assets | | | 8,513 | | | | 4,524 | | | | 24,513 | | | | 13,119 | | | | 17,614 | |
Depreciation | | | 2,244 | | | | 1,548 | | | | 6,158 | | | | 4,544 | | | | 6,294 | |
Restructuring and other | | | 594 | | | | 985 | | | | 4,766 | | | | 1,207 | | | | 1,571 | |
In-process research and development | | | — | | | | — | | | | 200 | | | | — | | | | — | |
Gain on sale of non-strategic asset | | | — | | | | — | | | | — | | | | (1,579 | ) | | | (1,579 | ) |
Deferred revenue fair value adjustment | | | 1,977 | | | | — | | | | 6,413 | | | | — | | | | — | |
Interest and other income, net | | | 773 | | | | (3,380 | ) | | | (1,052 | ) | | | (5,973 | ) | | | (6,639 | ) |
| | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 23,741 | | | $ | 18,185 | | | $ | 48,958 | | | $ | 47,741 | | | $ | 68,264 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Adjusted EBITDA | | $ | 23,741 | | | $ | 18,185 | | | $ | 48,958 | | | $ | 47,741 | | | $ | 68,264 | |
Non-cash stock-based compensation | | | 1,824 | | | | 1,525 | | | | 6,219 | | | | 8,219 | | | | 11,694 | |
Capital expenditures | | | (2,215 | ) | | | (2,193 | ) | | | (7,830 | ) | | | (5,464 | ) | | | (7,926 | ) |
Cash paid for taxes | | | (771 | ) | | | (1,243 | ) | | | (4,052 | ) | | | (4,595 | ) | | | (4,728 | ) |
Net interest | | | (3,876 | ) | | | 682 | | | | (8,635 | ) | | | (1,865 | ) | | | (1,311 | ) |
| | | | | | | | | | | | | | | | | | | | |
Free cash flow | | $ | 18,703 | | | $ | 16,956 | | | $ | 34,660 | | | $ | 44,036 | | | $ | 65,993 | |
| | | | | | | | | | | | | | | | | | | | |
-More-
Epicor Reports Q3 2008 Results
Page 12
EPICOR SOFTWARE CORPORATION
PRELIMINARY NON-GAAP REVENUE RECONCILIATION
(dollars in thousands)
(Unaudited)
| | | | | | |
| | | Three Months
Ended
September 30,
2008 | | Nine Months
Ended
September 30,
2008 |
Total license revenue | | $ | 22,405 | | $ | 65,266 |
NSB deferred license revenue fair value adjustment | | | 5 | | | 62 |
| | | | | | |
Total non-GAAP license revenue | | | 22,410 | | | 65,328 |
| | | | | | |
| | |
Total consulting revenue | | | 41,616 | | | 114,043 |
NSB deferred consulting revenue fair value adjustment | | | 141 | | | 455 |
| | | | | | |
Total non-GAAP consulting revenue | | | 41,757 | | | 114,498 |
| | | | | | |
| | |
Total maintenance revenue | | | 50,126 | | | 144,992 |
NSB deferred maintenance revenue fair value adjustment | | | 1,831 | | | 5,896 |
| | | | | | |
Total non-GAAP maintenance revenue | | | 51,957 | | | 150,888 |
| | | | | | |
| | |
Total hardware and other revenue | | | 21,615 | | | 41,630 |
NSB deferred hardware and other revenue fair value adjustment | | | — | | | — |
| | | | | | |
Total non-GAAP hardware and other revenue | | | 21,615 | | | 41,630 |
| | | | | | |
| | |
Total revenue | | | 135,762 | | | 365,931 |
NSB deferred revenue fair value adjustment | | | 1,977 | | | 6,413 |
| | | | | | |
Total non-GAAP revenue | | $ | 137,739 | | $ | 372,344 |
| | | | | | |
