Exhibit 99.1
Actuate Reports Third Quarter Financial Results
Double-Digit License Revenue Growth for the Seventh Consecutive
Quarter
Record $0.09 Non-GAAP Earnings Per Share
Record Non-GAAP Operating Margin of 23%
SAN MATEO, Calif.--(BUSINESS WIRE)--Oct. 29, 2007--Actuate
Corporation (NASDAQ:ACTU), the leader in Business Intelligence,
Performance Management and Reporting Applications, today announced its
financial results for the quarter ended September 30, 2007.
License revenues for the third quarter of 2007 were $13.4 million,
a 16% increase from the year-ago quarter. Total revenues for the third
quarter of 2007 were $34.7 million, an increase of 9% compared with
the third quarter of 2006.
Net income for the third quarter of 2007, as reported in
accordance with U.S. generally accepted accounting principles (GAAP),
was $4.6 million, or $0.07 per diluted share, an increase of 83%
compared with net income of $2.5 million or $0.04 per diluted share in
the third quarter of 2006.
Non-GAAP operating margin for the third quarter of 2007 was 23%
compared with a non-GAAP operating margin of 18% for the third quarter
of 2006. Non-GAAP net income for the third quarter of 2007 was a
record $6.0 million, or $0.09 per diluted share, an increase of 35%
compared with non-GAAP net income of $4.5 million, or $0.07 per
diluted share in the third quarter of 2006.
For the first nine months of 2007, revenues totaled a record
$101.4 million, an increase of 9% compared with the first nine months
of 2006. License revenues totaled $39.5 million, an increase of 21%
compared with the first nine months of 2006. For the first nine months
of 2007, GAAP operating income was a record $9.5 million, GAAP net
income was a record $9.4 million and GAAP diluted earnings per share
was a record $0.14. Non-GAAP net income for the first nine months of
2007 totaled a record $14.8 million, or $0.21 per diluted share, an
increase of 53% compared with non-GAAP net income of $9.7 million, or
$0.14 per diluted share reported for the first nine months of 2006.
For the first nine months of 2007, cash flow from operations was a
record $18.1 million, compared with $9.5 million for the first nine
months of 2006.
Cash, cash equivalents and short-term investments at September 30,
2007 totaled $69.5 million, an increase of $9.4 million from December
31, 2006. This amount is net of a $14.2 million cash outlay during the
first nine months of 2007 in furtherance of Actuate's ongoing
open-market share repurchase program.
"Actuate extended the number of consecutive quarters of double
digit year-over-year growth for both license revenue and non-GAAP net
income to seven in the third quarter," said Pete Cittadini, Actuate's
president and CEO. "Growth in license revenue continues to be fueled
by extranet customer self-service applications and intranet strategic
and operational performance management applications."
"At the end of September, we launched BIRT Exchange
(www.birt-exchange.com), a dedicated resource for the Eclipse BIRT
developer community and the Actuate BIRT product line. BIRT Exchange
is gaining traction in terms of registered users and software
downloads including trial versions of commercial products."
Third Quarter Financial Highlights
-- Grew license revenues by 16% on a year-over-year basis, the
seventh consecutive quarter of double-digit year-over-year
license growth;
-- Revenues outside the U.S. represented a record 32% of total
revenues;
-- Grew non-GAAP operating income 37% on a year-over-year basis;
-- Achieved a 23% non-GAAP operating margin, an increase of five
percentage points over the third quarter of 2006 and a
quarterly record for the company;
-- Increased non-GAAP services margin to a record 73%;
-- Repurchased approximately 666,000 shares at a total cost of
approximately $4.6 million.
Third Quarter Customer Highlights
During the third quarter, Actuate received significant new and
repeat business from, among others, Ameriprise Auto and Home
Insurance, AT&T, AXA Rosenberg, Bank Fund Staff Federal Credit Union,
Bridgepoint Health, Cayenta, Defence Estates, Deltek Systems, DWS
Holding & Service GmbH, E.ON U.S, First Health Group, FundWorks,
Genentech, Good Samaritan Society, Gottschalks, IBM UK, Lawrence
Livermore National Laboratory, Lehman Brothers Holdings, MFS
Investment Management, Northwest Airlines, Odyssey Asset Management,
Olm Systems, PayPal, Primavera Systems and Wells Fargo.
Third Quarter Business Highlights
-- Launched BIRT Exchange (www.birt-exchange.com), where BIRT
developers can easily share code and knowledge with peers,
find solutions to their deployment challenges and learn about
Actuate's product, support and service offerings for Eclipse
BIRT;
-- 11th annual Actuate International User Conference (AIUC) took
place on August 13 to 15 in Las Vegas. It was the biggest
gathering of Actuate customers ever with attendees from over
180 organizations and featured 60 customer presentations. The
conference featured the first BIRT Live Day, focused on
Eclipse BIRT and Thought Leadership Day focused on Sustainable
Performance Management;
-- Outlined a potential differentiated business model that
expands Actuate's market and accelerates revenues. By
harnessing open source disruption to advance the company's
leadership in the Business Intelligence (BI) market, the
company can substantially lower its cost of sales and
marketing to drive overall earnings growth;
-- Shipped Actuate 9 Service Pack 2, the only platform that meets
the entire range of reporting requirements from pixel-perfect
reporting, through ad hoc query and web-based collaborative
reporting, to spreadsheet and analytics reporting. Actuate 9
SP2, like other Actuate products, provides full support for
the Eclipse BIRT (Business Intelligence and Reporting Tools)
open source development framework;
-- Announced that version 7 of the Actuate Performancesoft Suite
has added over 280 customers to its customer base,
predominantly in areas across the public sector, including
over 130 Federal, State and Local Government, Departments and
Agencies, as well as Government Services and Education
organizations.
Conference Call Information
Actuate will be holding a conference call at 2:00 p.m. Pacific
Time, today, October 29, 2007 to further discuss these results. The
dial-in number for the call is 866-294-4490 (706-643-0468 for
international participants), passcode 19155359. A listen-only live
webcast of the third quarter 2007 earnings conference call, with an
accompanying slide presentation, will be available at the investor
relations section of the Actuate website at
http://phx.corporate-ir.net/phoenix.zhtml?c=64401&p=irol-irhome, and
will be available in the same location on an archived basis
thereafter.
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, duplicate rent on new corporate headquarters facilities 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 individuals, including grants of employee
stock options, as required under SFAS No. 123 (revised 2004),
"Share-Based Payment" (SFAS 123R). Duplicate rent expense represents
rent payments for the old headquarters that the Company has vacated
and the new headquarters that the Company has occupied. 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 related to the Company's acquisition transactions;
b) equity plan-related compensation expense; c) restructuring charges;
d) in-process research and development charges related to the
Company's acquisition transactions; e) duplicate rent expense, and f)
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 equity plan-related 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) In-process research and development charges 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.
e) Duplicate rent expense is excluded because we have recognized
rent expense on both of our old and new corporate headquarters.
Accounting rules require that we recognize rent expense on our new
headquarters even though our landlord provides us with a rent holiday
for the period during the transition period to the new lease. We
therefore exclude the duplicate rent expense for purposes of
evaluating our core performance.
f) 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. The
Company uses 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. 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 San Mateo, 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 Business Intelligence, Performance Management and
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 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 2006 Annual Report on Form 10-K filed on March
20, 2007 and Quarterly Reports on Form 10-Q filed on May 10, 2007 and
August 9, 2007.
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)
September 30, December 31,
2007 2006
------------- ------------
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $ 69,488 $ 60,079
Accounts receivable, net 29,270 31,233
Other current assets 4,961 5,233
------------- ------------
Total current assets 103,719 96,545
Property and equipment, net 5,053 4,379
Goodwill and other intangibles, net 39,613 40,703
Other assets 6,625 5,962
------------- ------------
$ 155,010 $ 147,589
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,782 $ 1,590
Current portion of restructuring
liabilities 3,570 2,897
Accrued compensation 5,036 6,033
Other accrued liabilities 11,067 9,499
Income taxes payable - 703
Deferred revenue 36,094 38,525
------------- ------------
Total current liabilities 57,549 59,247
------------- ------------
Long term liabilities:
Deferred rent - 23
Deferred revenue 3,086 2,328
Tax liabilities 428 420
Restructuring liabilities 6,050 7,761
------------- ------------
Total long term liabilities 9,564 10,532
------------- ------------
Stockholders' equity 87,897 77,810
------------- ------------
$ 155,010 $ 147,589
============= ============
ACTUATE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
---------------- ----------------
2007 2006 2007 2006
-------- ------- -------- -------
Revenues:
License fees $13,438 $11,585 $ 39,524 $32,756
Services 21,301 20,344 61,890 60,689
-------- ------- -------- -------
Total revenues 34,739 31,929 101,414 93,445
-------- ------- -------- -------
Costs and expenses:
Cost of license fees 423 465 1,359 1,431
Cost of services 6,080 6,788 18,473 21,387
Sales and marketing 13,587 11,879 40,589 35,586
Research and development 5,351 5,166 16,424 15,776
General and administrative 4,315 3,758 13,117 12,021
Amortization of other intangibles 237 237 711 711
In-process R&D - - - 900
Restructuring charges 926 16 1,223 16
-------- ------- -------- -------
Total costs and expenses 30,919 28,309 91,896 87,828
-------- ------- -------- -------
Income from operations 3,820 3,620 9,518 5,617
Interest and other income, net 761 636 2,306 1,314
-------- ------- -------- -------
Income before income taxes 4,581 4,256 11,824 6,931
Provision (benefit) for income taxes (26) 1,745 2,438 3,303
-------- ------- -------- -------
Net income $ 4,607 $ 2,511 $ 9,386 $ 3,628
======== ======= ======== =======
Basic net income per share $ 0.08 $ 0.04 $ 0.15 $ 0.06
======== ======= ======== =======
Shares used in basic per share
calculation. 60,767 60,317 60,696 60,280
======== ======= ======== =======
Diluted net income per share $ 0.07 $ 0.04 $ 0.14 $ 0.05
======== ======= ======== =======
Shares used in diluted per share
calculation 68,710 66,157 68,559 66,191
======== ======= ======== =======
ACTUATE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
September 30,
2007 2006
--------- ---------
Operating activities
Net income $ 9,386 $ 3,628
Adjustments to reconcile net income to net cash
from operating activities:
Stock compensation expense 6,769 4,798
Amortization of other intangibles 1,463 1,478
Depreciation 1,703 1,265
Purchased in-process research & development - 900
Restructuring charges 1,223 16
Net operating loss utilizations associated
with prior acquisitions 42 464
Accretion of discount on short-term
investments (138) 94
Changes in operating assets and liabilities: -
Accounts receivable 1,963 (151)
Other current assets (574) 1,463
Accounts payable 192 (3,360)
Accrued compensation (997) (1,550)
Other accrued liabilities 952 (99)
Deferred tax assets 682 (147)
Deferred tax liabilities (404) -
Income taxes payable (336) (52)
Deferred rent liabilities (23) (130)
Restructuring liabilities (2,085) (1,468)
Deferred revenue (1,673) 2,392
--------- ---------
Net cash provided by operating activities 18,145 9,541
--------- ---------
Investing activities
Purchases of property and equipment (2,347) (671)
Increase in restricted cash (395) -
Proceeds from maturity of short-term
investments 73,312 57,258
Purchases of short-term investments (82,144) (47,524)
Purchases of minority shares of Actuate Japan - (354)
Acquisition of performancesoft, inc, net of
cash acquired - (15,341)
Proceeds from security deposit 209 -
Net change in other assets (112) (965)
--------- ---------
Net cash used in investing activities (11,477) (7,597)
--------- ---------
Financing activities
Tax benefit from exercise of stock options 1,337 1,898
Proceeds from issuance of common stock 6,290 2,061
Stock repurchases (14,179) (3,487)
--------- ---------
Net cash provided by (used in) financing
activities (6,552) 472
--------- ---------
Net increase in cash and cash equivalents 116 2,416
Increase in non-cash PP&E acquisitions (206) -
Effect of exchange rate on cash 379 434
Cash and cash equivalents at the beginning of the
period 31,113 12,490
--------- ---------
Cash and cash equivalents at the end of the period $ 31,402 $ 15,340
========= =========
ACTUATE CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, (a) September 30, (a)
--------------- ----- --------------- -----
2007 2006 Notes 2007 2006 Notes
------- ------- ----- ------- ------- -----
GAAP income (loss) before
income taxes 4,581 4,256 11,824 6,931
Non-GAAP adjustments:
Amortization of purchased
technology 139 164 (b) 424 492 (b)
Amortization of other
intangibles 237 237 (c) 711 711 (c)
Stock compensation
expense under FAS123R 2,519 1,690 (d) 6,769 4,798 (d)
In-process R&D - - (e) - 900 (e)
Restructuring charges 926 16 (f) 1,223 16 (f)
Facilities rent
adjustment 217 - (g) 217 - (g)
------- ------- ------- -------
Non-GAAP income before
income taxes 8,619 6,363 21,168 13,848
Non-GAAP tax provision 2,586 1,909 (h) 6,350 4,154 (h)
------- ------- ------- -------
Non-GAAP net income 6,033 4,454 14,818 9,694
======= ======= ======= =======
Basic non-GAAP net income
per share $ 0.10 $ 0.07 $ 0.24 $ 0.16
======= ======= ======= =======
Shares used in basic per
share calculation 60,767 60,317 (i) 60,696 60,280 (i)
======= ======= ======= =======
Diluted non-GAAP net
income per share $ 0.09 $ 0.07 $ 0.21 $ 0.14
======= ======= ======= =======
Shares used in diluted per
share calculation 69,093 66,841 (i) 69,145 67,068 (i)
======= ======= ======= =======
(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 and Nimble acquisition transactions in January of
fiscal year 2006, and July of fiscal year 2003, 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. 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 September 30, 2007, stock-based expense included approximately
$288, $933, $419, and $879, related to cost of services revenues,
sales and marketing expense, research and development expense, and
general and administrative expense, respectively.
(e) We review our acquisitions to determine if there are any
intangible assets relating to purchased in-process research and
development. Projects that have not achieved technological
feasibility and have no alternative future use are valued at fair
market value using a discounted cash flow analysis and are expensed
in the statement of operations on the date of acquisition.
(f) Fiscal 2007 costs were directly related to the relocation of our
South San Francisco and Iselin, N.J. offices and consisted of early
termination of facility leases.
(g) Duplicate rent expense is excluded because we have recognized rent
expense on both of our old and new corporate headquarters. Accounting
rules require that we recognize rent expense on our new headquarters
even though our landlord provides us with a rent holiday for the
period during the transition period to the new lease. We therefore
exclude the duplicate rent expense for purposes of evaluating our
core performance.
(h) 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. The Company uses
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.
(i) 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.
CONTACT: Actuate Corporation
Keren Ackerman, 650-645-3545
kackerman@actuate.com