Exhibit 99.1
Actuate Reports Record Fiscal 2006 Revenues and Earnings
Record Total Revenues of $128.6 Million
Record Non-GAAP Operating Margin of 15%
Record Non-GAAP Diluted EPS of $0.23
Record GAAP Diluted EPS of $0.21
Record Cash Flow from Operations of $19.9 Million
SOUTH SAN FRANCISCO, Calif.--(BUSINESS WIRE)--Jan. 29, 2007--Actuate
Corporation (NASDAQ:ACTU), the leader in Business Intelligence, Performance
Management and Reporting Applications, today announced its financial results for
the quarter and year ended December 31, 2006.
Revenues for the fourth quarter of 2006 were $35.1 million, a 20% increase
from the fourth quarter of 2005. License revenues for the fourth quarter of 2006
were $14.2 million, a 38% increase from the year-ago quarter. The year-over-year
growth in both quarterly license revenues and total revenues marks the fourth
consecutive quarter of double-digit growth. Services revenues for the fourth
quarter of 2006 grew by 11% to a record $21.0 million from the fourth quarter of
2005. Total revenues for the fiscal year of 2006 were a record $128.6 million, a
21% increase over total revenues in fiscal year 2005. 2006 annual license
revenues were $46.9 million, a 27% increase from 2005 license revenues of $36.9
million.
Net income for the fourth quarter of 2006, as reported in accordance with
U.S. generally accepted accounting principles (GAAP), was a record $10.2
million, or $0.15 per diluted share, compared with net income of $4.1 million or
$0.07 per diluted share in the fourth quarter of 2005. Net income for fiscal
year of 2006 under GAAP was a record $13.8 million, or $0.21 per diluted share,
compared with net income of $11.6 million, or $0.18 per diluted share for fiscal
year of 2005. Fourth quarter and fiscal year 2006 results included stock-based
compensation charges related to FAS 123R of $1.7 million and $6.5 million,
respectively. Because of our solid operating performance over the past two years
and expectations for generating future taxable income, we recorded a non-cash
benefit of approximately $6.4 million in the fourth quarter of 2006 associated
with the partial reversal of our valuation allowance against deferred tax
assets, approximately $5.6 million of which flowed through the provision for
income taxes and $0.8 million was credited to goodwill.
Cash flow from operations was a record $10.4 million for the fourth quarter
of 2006 and a record $19.9 million for fiscal year 2006. Cash, cash equivalents
and short-term investments increased to a record $60.1 million at December 31,
2006.
Non-GAAP net income for the fourth quarter of 2006 was a record $5.6
million, or $0.08 per diluted share, compared with non-GAAP net income of $3.5
million, or $0.06 per diluted share in the fourth quarter of 2005. Non-GAAP net
income for fiscal 2006 was a record $15.3 million, or $0.23 per diluted share,
compared with a non-GAAP net income of $11.1 million, or $0.18 per diluted share
for fiscal 2005. Non-GAAP operating margin for the fourth quarter of 2006 was a
record 20% compared with non-GAAP operating margin of 15% in the fourth quarter
of 2005. Non-GAAP operating margin for fiscal year 2006 was a record 15%
compared with non-GAAP operating margin of 14% in fiscal 2005.
Non-GAAP financial measures discussed in this release exclude the following
items: a) amortization charges for purchased technology and other intangible
assets resulting from the company's acquisition transactions; b) stock-based
compensation expense; c) restructuring charges; d) loss on investment; e)
in-process R&D charges resulting from the company's acquisition charges; f)
legal costs related to our litigation with MicroStrategy, Inc., which has since
been resolved and g) an adjustment to the income tax provision. All of these
expenses are included in Actuate's GAAP results. The income tax rate used to
compute the fourth quarter 2006 and fourth quarter 2005 non-GAAP net income was
30%.
"Our record breaking performance in 2006 validates our strategy for
growth," said Pete Cittadini, Actuate's president and CEO. "On the strength of a
very positive fourth quarter, Actuate set new records for revenue, net and
operating margins, earnings per share and cash flow from operations in 2006."
"Looking ahead to 2007, we expect to continue to see strong demand for BI,
Performance Management and Reporting applications as IT regains traction in
terms of spending and new projects, particularly in Financial Services and
Public Sector. Open Source BI is gaining significant awareness and adoption, led
by Actuate's work with the Eclipse Foundation on the BIRT project. Performance
Management remains a key initiative across enterprises. All these market trends
should be favorable for Actuate in 2007."
Fourth Quarter 2006 Financial Highlights
-- Grew license revenues and total revenues by 38% and 20%, respectively,
marking four consecutive quarters of double-digit growth;
-- Achieved a record 20% non-GAAP operating margin;
-- Grew GAAP net income and EPS to a record $10.2 million and $0.15 per
diluted share, respectively;
-- Grew non-GAAP net income and non-GAAP EPS to a record $5.6 million and
$0.08 per diluted share, respectively;
-- Increased cash, cash equivalents and short-term investments to a
record $60.1 million at December 31, 2006;
-- Generated a record $10.4 million in cash flow from operations;
-- Increased deferred revenue to a record $40.9 million at December 31,
2006.
Fiscal Year 2006 Financial Highlights
-- Grew annual total revenues by 21% to a record $128.6 million;
-- Achieved record non-GAAP operating and net margins of 15% and 12%
respectively;
-- Grew GAAP net income and EPS to a record $13.8 million and $0.21 per
diluted share, respectively;
-- Grew non-GAAP net income and non-GAAP EPS to a record $15.3 million
and $0.23 per diluted share, respectively;
-- Generated a record $19.9 million in cash flow from operations;
-- Repurchased approximately 1.1 million shares at a total cost of
approximately $4.6 million.
Fourth Quarter Customer Highlights
During the fourth quarter, Actuate received significant new and repeat
business from, among others, American Electric Power, AstraZeneca, Banca
Nazionale del Lavoro, Barclays Bank, BNP Paribas, Capital Group Companies,
Carlson Wagonlit Travel, CGI Group, City of Chicago, City of Long Beach,
Computer Associates, EDN Sovintel, Educational Testing Service, Evangelical
Lutheran Good Samaritan Society, Harland Financial, IBM, Johnson Controls,
Kintetsu World Express (U.S.A.), Lucent Technologies, MetLife, New York State
Department of Taxation and Finance, Northwest Airlines, Oracle, Parsons
Corporation, SaskTel, State of Wyoming, TIAA-CREF, U.S. Foodservice, U.S. Health
Resources and Services Administration, UBS and Verizon.
Fourth Quarter Business Highlights
-- Shipped GA version of Actuate 9 Service Pack 1 at the end of December;
-- Exceeded 160,000 downloads of BIRT and Actuate BIRT during Q4 2006,
bringing the total number of BIRT and Actuate BIRT downloads to over
500,000 in 2006;
-- Announced a three year agreement extending delivery of Actuate-based
reporting capabilities within Oracle's Siebel Customer Relationship
Management platform;
-- Completed a reseller agreement that will enable Wipro Technologies,
the global IT services division of Wipro Limited, to resell Actuate's
products in North America.;
-- Teamed with Zend Technologies, the PHP company, to allow PHP
developers to quickly add reporting capabilities to web applications
using Actuate BIRT;
-- Introduced new commercial education offerings designed to help
developers and project managers develop valuable skills in report
development using BIRT;
-- Listed on the annual FinTech rankings of the top 100 global technology
and service providers to the financial services industry by American
Banker, SourceMedia's flagship publication for banking and financial
services professionals, and Financial Insights, an IDC Company, an
independent research services firm;
-- Announced deployment of Actuate products at Matrix Absence Management,
Universal Health Services, Gainesville Regional Utilities and Achieve
Healthcare Technologies as well as a technology and marketing
collaboration agreement with Webalo to deliver integrated,
analysis-ready, managed spreadsheets to mobile devices.
Conference Call Information
Actuate will be holding a conference call at 2:00 p.m. Pacific Time, today,
January 29, 2007 to further discuss these results. The dial-in number for the
call is 973-528-0008. The conference call will be simultaneously broadcast live
in the Investor Relations section of Actuate's web site at
http://phx.corporate-ir.net/phoenix.zhtml?c=64401&p=irol-irhome and will be
available as an archived replay at the same location until approximately
February 12, 2007.
Discussion of Non-GAAP Financial Measures
This press release contains financial measures that are not calculated in
accordance with U.S. generally accepted accounting principles (GAAP). Actuate
management evaluates and makes operating decisions using various performance
measures. In addition to our GAAP results, we also consider adjusted net income,
which we refer to as non-GAAP net income. We further consider various components
of non-GAAP net income such as non-GAAP gross margin and non-GAAP operating
expense. Non-GAAP net income is generally based on the revenues of our product,
maintenance and services business operations and the costs of those operations,
such as cost of revenue, research and development, sales and marketing and
general and administrative expenses, that management considers in evaluating our
ongoing core operating performance. Non-GAAP net income consists of net income
excluding amortization of intangible assets, merger and acquisition charges,
restructuring charges, equity plan-related compensation expenses and charges and
gains which management does not consider reflective of our core operating
business. Intangible assets consist primarily of purchased technology, trade
names, customer relationships, employment agreements and other intangible assets
issued in connection with acquisitions. Merger and acquisition charges represent
in-process research and development charges related to products in development
that had not reached technological feasibility at the time of acquisition.
Restructuring charges consist of severance and benefits, excess facilities and
asset-related charges, and also include strategic reallocations or reductions of
personnel resources. Equity plan-related compensation expenses represent the
fair value of all share-based payments to employees, including grants of
employee stock options, as required under SFAS No. 123 (revised 2004),
"Share-Based Payment" (SFAS 123R). Management does not consider these unusual
expenses associated with a financial transaction to be part of core operating
performance. For purposes of comparability across other periods and against
other companies in our industry, non-GAAP net income is adjusted by the amount
of additional taxes or tax benefit that the company would accrue using a
normalized effective tax rate applied to the non-GAAP results.
Non-GAAP net income is a supplemental measure of our performance that is
not required by, nor presented in accordance with, GAAP. Moreover, it should not
be considered as an alternative to net income, operating income, or any other
performance measure derived in accordance with GAAP, or as an alternative to
cash flow from operating activities or as a measure of our liquidity. We present
non-GAAP net income because we consider it an important supplemental measure of
our performance.
Management excludes from non-GAAP net income certain recurring items to
facilitate its review of the comparability of the company's core operating
performance on a period to period basis because such items are not related to
the company's ongoing core operating performance as viewed by management.
Management uses this view of its operating performance for purposes of
comparison with its business plan and individual operating budgets and
allocations of resources. Additionally, when evaluating potential acquisitions,
management excludes the items described above from its consideration of target
performance and valuation. More specifically, management adjusts for the
excluded items for the following reasons:
a) amortization charges for purchased technology and other intangible
assets resulting from the company's acquisition transactions; b) stock-based
compensation expense; c) restructuring charges; d) loss on investment; e)
in-process R&D charges related to the company's acquisition transactions; f)
legal costs associated with our litigation with MicroStrategy Inc., which has
since been resolved; and g) an adjustment to the income tax provision.
The Company believes that, in general, these items possess one or more of
the following characteristics: their magnitude and timing is largely outside of
the Company's control; they are unrelated to the ongoing operation of the
business in the ordinary course; they are unusual and the Company does not
expect them to occur in the ordinary course of business; or they are
non-operational, or non-cash expenses involving stock option grants.
The Company believes that the presentation of these non-GAAP financial
measures is warranted for several reasons:
1) Such non-GAAP financial measures provide 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;
2) 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;
3) These non-GAAP financial 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;
4) These non-GAAP financial measures facilitate comparisons to the
operating results of other companies in our industry, which use similar
financial measures to supplement their GAAP results, thus enhancing the
perspective of investors who wish to utilize such comparisons in their analysis
of the Company's performance.
Set forth below are additional reasons why specific items are excluded from
the Company's non-GAAP financial measures:
a) Amortization charges for purchased technology and other intangible
assets are excluded because they are inconsistent in amount and frequency and
are significantly impacted by the timing and magnitude of the Company's
acquisition transactions. We analyze and measure our operating results without
these charges when evaluating our core performance. Generally, the impact of
these charges to the Company's net income tends to diminish over time following
an acquisition;
b) While stock-based compensation calculated in accordance with SFAS 123R
constitutes an ongoing and recurring expense of the Company, it is not an
expense that typically requires or will require cash settlement by the company.
We therefore exclude these charges for purposes of evaluating our core
performance as well as with respect to evaluating any potential acquisition.
c) Restructuring charges are primarily related to severance costs and/or
the disposition of excess facilities driven by modifications of business
strategy. These costs are excluded because they are inherently variable in size,
and are not specifically included in the company's annual operating plan and
related budget due to the rapidly changing facts and circumstances typically
associated with such modifications of business strategy;
d) Loss on investment charges are excluded because they inherently vary in
size and are not specifically included in the Company's annual operating plan.
Furthermore, these charges do not typically require any cash outlay and the
timing of such impairments is largely outside the Company's control;
e) Merger and acquisition charges are in-process R&D charges which are
excluded because they often vary significantly in size and amount, and are
disregarded when acquisition decisions are made;
f) Certain legal costs were incurred in the successful defense of the
Company from trade secret litigation brought by a competitor, MicroStrategy,
Inc. These costs are excluded because the origin of this litigation was outside
the Company's control, the litigation was outside the normal course and scope of
the Company's ongoing legal operations and the size and timing of the legal
costs were dependent on the particular stage of litigation at any given time;
g) Income tax expense is adjusted by the amount of additional expense or
benefit that we would accrue if we used non-GAAP results instead of GAAP results
in the calculation of our tax liability, taking into consideration the company's
long-term tax structure. Prior to the quarter ended September 30, 2005, the
Company used a normalized effective tax rate of 37.5%. Starting in the quarter
ended September 30, 2005, the company began to use a normalized effective tax
rate of 30%. This item is excluded because the rate remains subject to change
based on several factors, including variations over time in the geographic
business mix and statutory tax rates.
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.
As stated above, the Company presents non-GAAP financial measures because
it considers them to be important supplemental measures of performance. However,
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 incur expenses similar to the
non-GAAP adjustments described above and expects to continue reporting non-GAAP
financial measures excluding such items. Some of the limitations in relying on
non-GAAP financial measures are:
-- Amortization of 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.
-- The company may engage in acquisition transactions in the future.
Merger and acquisition related charges may therefore continue to be
incurred and should not be viewed as non-recurring.
-- The Company's stock option and stock purchase plans are important
components of our incentive compensation arrangements and will be
reflected as expenses in our GAAP results for the foreseeable future
under SFAS 123R.
-- The company's income tax expense will be ultimately based on its GAAP
taxable income and actual tax rates in effect, which may differ
significantly from the 30% rate assumed in our non-GAAP presentation.
-- 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.
Pursuant to the requirements of SEC Regulation G, a detailed reconciliation
between the Company's GAAP and non-GAAP financial results is provided in this
press release and is also available in the investor relations section of the
Company's web site at www.actuate.com. Investors are advised to carefully review
and consider this information strictly as a supplement to the GAAP results that
are contained in this press release and in the Company's SEC filings.
About Actuate Corporation
Actuate Corporation, the leader in Business Intelligence, Performance
Management and Reporting Applications, enables organizations to develop
solutions that optimize corporate performance. Applications built on Actuate's
open source-based platform provide all stakeholders inside and outside the
firewall, including employees, customers, partners and citizens with information
that they can easily access and understand to maximize revenue, cut costs,
improve customer satisfaction, streamline operations, create competitive
advantage and make better decisions.
Actuate has over 4,000 customers globally in a diverse range of business
areas including financial services and the public sector. Founded in 1993,
Actuate has headquarters in South San Francisco, California, with offices
worldwide. Actuate is listed on NASDAQ under the symbol ACTU. For more
information on Actuate, visit the company's web site at www.actuate.com.
Cautionary Note Regarding Forward Looking Statements: The statements
contained in this press release that are not purely historical are forward
looking statements within the meaning of Section 21E of the Securities Exchange
Act of 1934. These include statements regarding Actuate's expectations, beliefs,
hopes, intentions or strategies regarding the future. All such forward-looking
statements are based upon information available to Actuate as of the date
hereof, and Actuate disclaims any obligation to update or revise any such
forward-looking statements based on changes in expectations or the circumstances
or conditions on which such expectations may be based. Actual results could
differ materially from Actuate's current expectations. Factors that could cause
or contribute to such differences include, but are not limited to, the general
spending environment for information technology products and services in general
and Enterprise Reporting Application software in particular, quarterly
fluctuations in our revenues and other operating results, our ability to expand
our international operations, our ability to successfully compete against
current and future competitors, the impact of future acquisitions (including the
performancesoft, Inc. acquisition) on the company's financial and/or operating
condition, the ability to increase revenues through our indirect distribution
channels, general economic and geopolitical uncertainties and other risk factors
that are discussed in Actuate's Securities and Exchange Commission filings,
specifically Actuate's 2005 Annual Report on Form 10-K filed on March 13, 2006
and Quarterly Reports on Form 10-Q filed on May 10, 2006, August 9, 2006 and
November 9, 2006.
Copyright(C) 2007 Actuate Corporation. All rights reserved. Actuate and the
Actuate logo are registered trademarks of Actuate Corporation and/or its
affiliates in the U.S. and certain other countries. All other brands, names or
trademarks mentioned may be trademarks of their respective owners.
ACTUATE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
December 31, December 31,
2006 2005
--------------------------
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $ 60,079 $ 54,397
Accounts receivable, net 31,233 26,798
Other current assets 5,233 2,911
--------------------------
Total current assets 96,545 84,106
Property and equipment, net 4,379 4,716
Goodwill and other intangibles, net 40,703 22,129
Other assets 5,962 630
--------------------------
$ 147,589 $ 111,581
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,590 $ 2,101
Current portion of restructuring
liabilities 2,897 2,948
Accrued compensation 6,033 5,306
Other accrued liabilities 9,499 3,108
Income taxes payable 703 279
Deferred revenue 38,525 31,475
--------------------------
Total current liabilities 59,247 45,217
--------------------------
Long term liabilities:
Deferred rent 23 198
Deferred revenue 2,328 913
Deferred tax liability 420 -
Restructuring liabilities 7,761 9,885
--------------------------
Total long term liabilities 10,532 10,996
--------------------------
Stockholders' equity 77,810 55,368
--------------------------
$ 147,589 $ 111,581
==========================
ACTUATE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues:
License fees $ 14,163 $ 10,292 $ 46,919 $ 36,939
Services 20,961 18,869 81,650 69,462
--------- --------- --------- ---------
Total revenues 35,124 29,161 128,569 106,401
--------- --------- --------- ---------
Costs and expenses:
Cost of license fees 664 490 2,095 2,294
Cost of services 6,527 6,452 27,914 23,723
Sales and marketing 13,423 10,506 49,009 37,070
Research and development 5,279 4,163 21,055 16,533
General and administrative 4,005 3,182 16,026 13,115
Amortization of other
intangibles 237 - 948 487
In-process R&D - - 900 -
Restructuring charges - (86) 16 665
--------- --------- --------- ---------
Total costs and expenses 30,135 24,707 117,963 93,887
--------- --------- --------- ---------
Income from operations 4,989 4,454 10,606 12,514
Interest and other income, net 903 527 2,217 1,436
--------- --------- --------- ---------
Income before income taxes 5,892 4,981 12,823 13,950
Provision (benefit) for income
taxes (4,277) 852 (974) 2,359
--------- --------- --------- ---------
Net income $ 10,169 $ 4,129 $ 13,797 $ 11,591
========= ========= ========= =========
Basic net income per share $ 0.17 $ 0.07 $ 0.23 $ 0.19
========= ========= ========= =========
Shares used in basic per share
calculation. 60,655 60,185 60,375 61,057
========= ========= ========= =========
Diluted net income per share $ 0.15 $ 0.07 $ 0.21 $ 0.18
========= ========= ========= =========
Shares used in diluted per
share calculation 68,483 63,359 66,814 63,269
========= ========= ========= =========
ACTUATE CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, (a) December 31, (a)
----------------- ---- ----------------- -----
2006 2005 Notes 2006 2005 Notes
-------- -------- ------------- -------- -----
GAAP income before
income taxes 5,892 4,981 12,823 13,950
Non-GAAP adjustments:
Amortization of
purchased technology 162 115 (b) 654 914 (b)
Amortization of other
intangibles 237 - (c) 948 487 (c)
Stock compensation
expense under FAS123R 1,694 - (d) 6,492 - (d)
In-process R&D - - 900 -
Legal costs related to
the litigation with
Microstrategy, Inc - - - 186
Restructuring charges - (86) (e) 16 665 (e)
Asset impairment - - (f) - 301 (f)
-------- -------- -------- --------
Non-GAAP income before
income taxes 7,985 5,010 21,833 16,503
Non-GAAP tax provision 2,396 1,503 (g) 6,550 5,430 (g)
-------- -------- -------- --------
Non-GAAP net income 5,589 3,507 15,283 11,073
======== ======== ======== ========
Basic Non-GAAP net
income per share $ 0.09 $ 0.06 $ 0.25 $ 0.18
======== ======== ======== ========
Shares used in basic per
share calculation 60,655 60,185 (h) 60,375 61,057 (h)
======== ======== ======== ========
Diluted Non-GAAP net
income per share $ 0.08 $ 0.06 $ 0.23 $ 0.18
======== ======== ======== ========
Shares used in diluted
per share calculation 69,429 63,359 (h) 67,565 63,269 (h)
======== ======== ======== ========
(a) This table contains financial measures that are not calculated in
accordance with U.S. generally accepted accounting principles (GAAP).
Such measures are intended to serve as a supplement to the GAAP
results presented elsewhere in this press release, and should not be
considered in isolation or as a substitute for such GAAP results. See
the section entitled Discussion of Non-GAAP Financial Measures in
this press release for additional information regarding: the manner
in which management uses these non-GAAP financial measures; the
economic substance behind management's decision to use such measures;
the material limitations associated with use of these non-GAAP
financial measures as compared to the use of the most directly
comparable GAAP financial measure; the manner in which management
compensates for these limitations when using these non-GAAP financial
measures; and the substantive reasons why management believes these
non-GAAP financial measures provide useful information to investors.
(b) Amortization of purchased technology acquired in the
performancesoft, Nimble and Tidestone acquisition transactions on
January of fiscal year 2006, July of fiscal year 2003 and May of
fiscal year 2001, respectively. Purchased technology is amortized
over the estimated life of the underlying asset.
(c) Amortization of other intangibles includes identifiable intangible
assets including trade names, employment agreements and customer
relationships acquired through various acquisition transactions.
Other identified intangibles are amortized over the estimated
remaining life of the underlying intangibles.
(d) Prior to January 1, 2006, Actuate accounted for stock compensation
under Accounting Principles Board, Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25"). In accordance with APB 25,
Actuate historically used the intrinsic value method to account for
stock compensation expense. As of January 1, 2006 Actuate accounts
for stock compensation expense under the fair value method. As
Actuate adopted the modified prospective transition method, results
for prior periods have not been restated under the fair value method
for GAAP purposes. Actuate is presenting a non-GAAP adjusted net
income per diluted share financial measure which excludes stock based
compensation expense for all periods presented. For the three months
ended December 31, 2006, stock-based expense included approximately
$231, $590, $303, and $570, related to cost of services revenues,
research and development expense, sales and marketing expense and
general and administrative expense, respectively.
(e) Restructuring charges. These costs were directly related to our
restructuring plan which we had initiated in the fourth quarter of
fiscal year 2004 and primarily consisted of charges related to
employee matters and estimated settlement costs stemming from
employee litigation, partially offset by an early termination of the
facility lease.
(f) Loss on investment is associated with a $500,000 investment in a
privately held company that was made in December of fiscal year 2000.
This investment was periodically evaluated and we determined that it
was appropriate to record a $301,000 loss on investment in fiscal
year 2005.
(g) Income tax expense is adjusted by the amount of additional expense
or benefit that we would accrue if we used non-GAAP results instead
of GAAP results in the calculation of our tax liability, taking into
consideration the company's long-term tax structure. Prior to the
quarter ended September 30, 2005, the Company used a normalized
effective tax rate of 37.5%. Starting in the quarter ended September
30, 2005, the company began to use a normalized effective tax rate of
30%. This item is excluded because the rate remains subject to change
based on several factors, including variations over time in the
geographic business mix and statutory tax rates.
(h) Shares used in calculating basic and diluted earnings per share
have been adjusted to reflect what the share amounts would have been
if they were calculated using non-GAAP results.
ACTUATE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Twelve Months Ended
December 31,
2006 2005
--------------------
Operating activities
Net income $ 13,797 $ 11,591
Adjustments to reconcile net income to net cash
from operating activities:
Stock compensation expense 6,492 -
Amortization of other intangibles 1,986 1,400
Depreciation 1,794 1,892
Tax benefit from exercise of stock options - 2,117
Purchased in-process research & development 900 -
Restructuring charges 16 -
Deferred Tax Asset Utilization (1,245) -
Net operating loss utilizations associated
with prior acquisitions 1,547 -
Unrealized investment loss - 301
Changes in operating assets and liabilities:
Accounts receivable (3,344) (2,022)
Other current assets 2,320 (431)
Accounts payable (3,337) 214
Accrued compensation 207 62
Other accrued liabilities 858 (1,888)
Deferred tax assets (7,369) -
Income taxes payable 394 (67)
Deferred tax liabilities 406 -
Deferred rent liabilities (174) (122)
Restructuring liabilities (2,191) (3,402)
Deferred revenue 6,809 3,625
--------------------
Net cash provided by operating activities 19,866 13,270
--------------------
Investing activities
Purchases of property and equipment (968) (450)
Proceeds from maturity of short-term
investments 76,880 71,783
Purchases of short-term investments (63,869) (73,812)
Purchases of minority shares of Actuate Japan (354) (366)
Acquisition of performancesoft, Inc., net of
cash acquired (15,666) -
Net change in other assets (1,106) (46)
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Net cash used in investing activities (5,083) (2,891)
--------------------
Financing activities
Tax benefit from exercise of stock options 2,274 -
Deferred tax assets related to equity
compensation 1,744 -
Proceeds from issuance of common stock 3,907 1,959
Stock repurchases (4,609) (7,078)
--------------------
Net cash provided by (used in) financing
activities 3,316 (5,119)
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Net increase in cash and cash equivalents 18,099 5,260
Effect of exchange rate on cash 524 (111)
Cash and cash equivalents at the beginning of the
period 12,490 7,341
--------------------
Cash and cash equivalents at the end of the
period $ 31,113 $ 12,490
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CONTACT: Actuate Corporation
Keren Ackerman, 650-837-4545
kackerman@actuate.com