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EX-2.1 - EX-2.1 - ART TECHNOLOGY GROUP INCb83268exv2w1.htm
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EX-4.1 - EX-4.1 - ART TECHNOLOGY GROUP INCb83268exv4w1.htm
EX-99.1 - EX-99.1 - ART TECHNOLOGY GROUP INCb83268exv99w1.htm
Exhibit 99.2
CONTACT:
Kim Maxwell
Director, Investor Relations
617/386-1006
kmaxwell@atg.com
ORACLE TO ACQUIRE ATG; ATG REPORTS THIRD QUARTER 2010 FINANCIAL RESULTS
CAMBRIDGE, Mass. – November 2, 2010 — Art Technology Group, Inc. (NASDAQ: ARTG), the leading provider of eCommerce software and related on demand commerce optimization applications, today announced that it has agreed to be acquired by Oracle Corporation for $6.00 per share in cash, or approximately $1.0 billion. The transaction is subject to stockholder and regulatory approval and other customary closing conditions and is expected to close by early 2011.
ATG’s eCommerce software platform is the industry’s top-ranked cross-channel commerce solution and is highly complementary to Oracle’s CRM, ERP, Retail, and Supply Chain applications, as well as its portfolio of middleware and business intelligence technologies. Together Oracle and ATG expect to help businesses grow revenue, strengthen customer loyalty, improve brand value, achieve better operating results, and increase business agility across online and traditional commerce environments.
“Driven by the convergence of online and traditional commerce and the need to increase revenue and improve customer loyalty, organizations across many industries are looking for a unified commerce and CRM platform to provide a seamless experience across all commerce channels,” said Thomas Kurian, Executive Vice President Oracle Development. “Bringing together the complementary technologies and products from Oracle and ATG will enable the delivery of next-generation, unified cross-channel commerce and CRM.”
“More than 1,000 global enterprises rely on ATG’s solutions to help increase the value of their online customer interactions,” said Bob Burke, President and CEO, ATG. “This combination will enhance the ability to bring all their commerce activities together – creating a more consistent and relevant experience for their customers across all interaction channels, including online, in stores, via mobile devices and with call centers.”
“The addition of ATG, which brings market-leading products used by some of the largest and most well-known retailers and brands, furthers Oracle’s strategy of delivering industry-specific enterprise applications,” said Bob Weiler, Executive Vice President, Oracle Global Business Units. “This acquisition builds upon our dedication to offer the most complete and integrated suite of best-of-breed software applications and technologies required to power the most demanding companies in the world in every industry.”


 

Page 2

Third Quarter Financial Results
ATG’s revenue for the third quarter of 2010 grew to $50.3 million, a 16% increase over third quarter 2009 revenue of $43.4 million.
Product license bookings, a non-GAAP measure which the company defines as the sale of perpetual licenses, grew 37% to $14.2 million for the third quarter from $10.4 million in the year ago quarter. Approximately 26% of product license bookings were deferred in the third quarter of 2010 and will be recognized in future periods.
Net income in accordance with GAAP for the third quarter of 2010 was $4.2 million, or $0.03 per diluted share, compared with net income of $4.0 million, or $0.03 per diluted share, in the third quarter of 2009.
Non-GAAP net income was $8.0 million for the third quarter of 2010, or $0.05 per diluted share, compared with non-GAAP net income of $5.5 million, or $0.04 per diluted share, for the third quarter of 2009.
Cash flow from operations for the third quarter of 2010 was $14.9 million, a 51% increase over cash flow from operations of $9.9 million in the third quarter of 2009.
Quarterly Conference Call
ATG management will host a conference call for investors at 10:00 a.m. ET today. The conference call will be broadcast live over the Internet. Investors interested in listening to the webcast should log on to the “Investors” section of the ATG website, www.atg.com. The live conference call also can be accessed by dialing (866) 723-3575 (or (706) 634-8872 for international calls) and using conference ID No. 15475307. A replay of the call will be available on the company’s website later in the day.
About ATG
ATG (Nasdaq: ARTG) provides the most advanced cross-channel commerce software and services to fuel the growth of the world’s best brands. Offering the industry’s leading commerce solution, ATG works in partnership with clients to drive sales via a personalized customer experience — unifying and optimizing interactions across the Web, contact center, mobile devices, social media, physical stores, and other key channels. Exclusively focused on online and cross-channel commerce, ATG is uniquely capable of powering the most innovative and successful commerce experiences, with results that outperform industry norms. ATG Commerce is the commerce platform and business user application solution top-rated by industry analysts for powering results-driven, personalized, and innovative e-commerce sites. ATG’s platform-neutral optimization solutions for live help, lead performance, and product recommendations can be easily added to any website to quickly and measurably grow revenue, boost loyalty, and unlock profits and insight. ATG is headquartered in Cambridge, Massachusetts, with additional locations throughout North America and Europe. For more information, please visit http://www.atg.com.
© 2010 Art Technology Group, Inc. ATG and Art Technology Group are registered trademarks of Art Technology Group, Inc. All other product names, service marks, and trademarks mentioned herein are trademarks of their respective owners.


 

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ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(UNAUDITED)
                                 
    September 30,     June 30,     December 31,     September 30,  
    2010     2010     2009     2009  
ASSETS
                               
Current Assets:
                               
Cash, cash equivalents and marketable securities (including restricted cash of $50 at September 30, 2010, June 30, 2010, and December 31, 2009 and $0 at September 30, 2009)
  $ 152,008     $ 145,184     $ 79,094     $ 73,972  
Accounts receivable, net
    44,307       44,963       41,522       31,850  
Deferred costs, current
    1,502       1,588       767       1,660  
Prepaid expenses and other current assets
    6,493       6,298       3,789       2,910  
 
                       
 
                               
Total current assets
    204,310       198,033       125,172       110,392  
 
                               
Property and equipment, net
    15,220       14,017       9,934       10,168  
Intangible assets, net
    7,205       8,391       4,064       4,991  
Deferred costs, less current portion
    4,058       3,241       1,387       1,391  
Marketable securities (including restricted cash of $738 at September 30, 2010, June 30, 2010, and December 31, 2009 and $419 at September 30, 2009)
    30,518       25,823       6,439       4,129  
Other assets
    2,228       2,274       1,357       1,483  
Goodwill
    77,689       77,442       65,683       65,683  
 
                       
 
                               
Total long-term assets
    136,918       131,188       88,864       87,845  
 
                               
Total assets
  $ 341,228     $ 329,221     $ 214,036     $ 198,237  
 
                       
 
                               
LIABILITIES AND STOCKHOLDERS’ EQUITY
                               
 
                               
Current Liabilities:
                               
Accounts payable
  $ 2,916     $ 4,657     $ 5,720     $ 4,245  
Accrued expenses
    18,474       15,772       18,873       16,203  
Deferred revenue, current portion
    47,045       44,549       42,640       40,025  
 
                       
 
                               
Total current liabilities
    68,435       64,978       67,233       60,473  
 
                               
Other liabilities
    1,527       1,346       536       249  
Deferred revenue, less current portion
    23,136       22,616       10,356       9,956  
 
                       
 
                               
Total long-term liabilities
    24,663       23,962       10,892       10,205  
 
                               
Stockholders’ equity
    248,130       240,281       135,911       127,559  
 
                       
 
                               
Total liabilities and stockholders’ equity
  $ 341,228     $ 329,221     $ 214,036     $ 198,237  
 
                       


 

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ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(UNAUDITED)
                                         
    Three months ended     Nine months ended  
    September 30,     June 30,     September 30,     September 30,     September 30,  
    2010     2010     2009     2010     2009  
Revenue:
                                       
Product licenses
  $ 13,729     $ 16,351     $ 10,890     $ 42,937     $ 37,396  
Recurring services
    30,165       27,211       24,904       84,046       72,035  
Professional and education services
    6,441       5,601       7,587       17,239       20,288  
 
                             
 
                                       
Total revenue
    50,335       49,163       43,381       144,222       129,719  
 
                                       
Cost of Revenue:
                                       
Product licenses
    735       512       399       1,781       1,246  
Recurring services
    10,878       10,254       9,393       30,848       27,012  
Professional and education services
    5,759       4,807       6,029       15,406       16,836  
 
                             
 
                                       
Total cost of revenue
    17,372       15,573       15,821       48,035       45,094  
 
                             
 
                                       
Gross Profit
    32,963       33,590       27,560       96,187       84,625  
 
                                       
Operating Expenses:
                                       
Research and development
    8,983       8,149       7,599       25,793       22,732  
Sales and marketing
    15,205       15,450       12,503       45,084       37,332  
General and administrative
    5,165       5,114       4,831       15,404       13,990  
Restructuring charges
          352             352        
 
                             
 
                                       
Total operating expenses
    29,353       29,065       24,933       86,633       74,054  
 
                             
 
                                       
Income from operations
    3,610       4,525       2,627       9,554       10,571  
Interest and other income (expense), net
    838       76       (314 )     694       236  
 
                             
 
                                       
Income before income taxes
    4,448       4,601       2,313       10,248       10,807  
Provision (benefit) for income taxes
    275       427       (1,650 )     (158 )     (750 )
 
                             
Net income
  $ 4,173     $ 4,174     $ 3,963     $ 10,406     $ 11,557  
 
                             
 
                                       
Basic net income per share
  $ 0.03     $ 0.03     $ 0.03     $ 0.07     $ 0.09  
 
                             
 
                                       
Diluted net income per share
  $ 0.03     $ 0.03     $ 0.03     $ 0.06     $ 0.09  
 
                             
 
                                       
Basic weighted average common shares outstanding
    158,232       157,437       127,224       153,986       126,742  
 
                             
 
                                       
Diluted weighted average common shares outstanding
    164,139       164,618       134,736       161,141       132,409  
 
                             


 

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Art Technology Group, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)
                                         
    Three months ended     Nine Months Ended  
    September 30,     June 30,     September 30,     September 30,     September 30,  
    2010     2010     2009     2010     2009  
Cash Flows from Operating Activities:
                                       
 
                                       
Net income
  $ 4,173     $ 4,174     $ 3,963     $ 10,406     $ 11,557  
Adjustments to reconcile net income to net cash provided by operating activities:
                                       
Depreciation and amortization
    3,133       3,063       2,149       8,960       6,829  
Non-cash stock-based compensation expense
    2,863       2,502       2,463       7,725       6,820  
Amortization of investment premiums
    1,041       1,023             2,373        
Non-cash tax benefit
    (253 )           (1,871 )     (1,326 )     (1,871 )
Net changes in operating assets and liabilities
    3,899       (2,693 )     3,237       4,336       (345 )
 
                             
 
                                       
Net cash provided by operating activities
    14,856       8,069       9,941       32,474       22,990  
 
                                       
Cash Flows from Investing Activities:
                                       
Purchases of marketable securities
    (38,982 )     (38,100 )     (19,433 )     (161,100 )     (28,287 )
Maturities of marketable securities
    47,509       12,850       5,400       63,327       14,725  
Purchases of property and equipment
    (3,068 )     (4,518 )     (978 )     (9,929 )     (4,620 )
Increase in other assets
    27       63             (913 )      
Payment of acquisition costs, net of cash acquired
          (37 )           (15,174 )      
 
                             
 
                                       
Net cash provided by (used in) investing activities
    5,486       (29,742 )     (15,011 )     (123,789 )     (18,182 )
 
                                       
Cash Flows from Financing Activities:
                                       
Proceeds from exercise of stock options
    879       607       915       1,962       1,428  
Proceeds from employee stock purchase plan
    302       314       279       914       797  
Net proceeds from equity offering
                      94,968        
Repayment of acquired debt
                      (1,573 )      
Repurchase of common stock
    (1,478 )             (4,265 )     (1,478 )     (4,265 )
Payment of employee restricted stock tax withholdings
          (1,184 )     (45 )     (2,174 )     (873 )
 
                             
 
                                       
Net cash provided by (used in) financing activities
    (297 )     (263 )     (3,116 )     92,619       (2,913 )
 
                                       
Effect of foreign exchange rate changes on cash and cash equivalents
    759       (275 )     388       219       1,130  
Net increase (decrease) in cash and cash equivalents
    20,804       (22,211 )     (7,798 )     1,523       3,025  
Cash and cash equivalents, beginning of period
    38,038       60,249       58,236       57,319       47,413  
 
                             
 
                                       
Cash and cash equivalents, end of period
  $ 58,842     $ 38,038       50,438     $ 58,842     $ 50,438  
 
                             

 


 

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ART TECHNOLOGY GROUP, INC.
STATEMENTS OF OPERATIONS DATA
(In thousands)
(UNAUDITED)
                                         
    Three months ended     Nine months ended  
    September 30,     June 30,     September 30,     September 30,     September 30,  
    2010     2010     2009     2010     2009  
Equity-Related Compensation:
                                       
 
                                       
Cost of revenue
  $ 560     $ 576     $ 498     $ 1,656     $ 1,396  
Research and development
    489       444       435       1,389       1,237  
Sales and marketing
    805       676       653       2,113       1,774  
General and administrative
    1,009       806       877       2,567       2,413  
 
                             
 
                                       
Total equity-related compensation
  $ 2,863     $ 2,502     $ 2,463     $ 7,725     $ 6,820  
 
                             
 
                                       
Depreciation and Amortization:
                                       
 
                                       
Depreciation
                                       
Cost of revenue
  $ 1,162     $ 1,325     $ 746     $ 3,547     $ 2,474  
Research and development
    307       336       259       966       829  
Sales and marketing
    387       113       152       621       520  
General and administrative
    69       80       65       248       227  
 
                             
 
  $ 1,925     $ 1,854     $ 1,222     $ 5,382     $ 4,050  
 
                             
 
                                       
Amortization
                                       
Cost of revenue
  $ 503     $ 495     $ 401       1,493       1,200  
Sales and marketing
    705       714       526       2,085       1,579  
 
                             
 
  $ 1,208     $ 1,209     $ 927     $ 3,578     $ 2,779  
 
                             
 
                                       
Total depreciation and amortization
  $ 3,133     $ 3,063     $ 2,149     $ 8,960     $ 6,829  
 
                             
 
                                       
Capital Expenditures:
                                       
 
                                       
Purchases of property and equipment
  $ 3,068     $ 4,518     $ 978     $ 9,929     $ 4,620  
 
                             

 


 

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RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(In thousands, except per share data)
(UNAUDITED)
                                         
    Three months ended     Nine months ended  
    September 30,     June 30,     September 30,     September 30,     September 30,  
    2010     2010     2009     2010     2009  
Net income GAAP
  $ 4,173     $ 4,174     $ 3,963     $ 10,406     $ 11,557  
 
Amortization of acquired intangibles
    1,208       1,209       927       3,578       2,779  
Equity-related compensation
    2,863       2,502       2,463       7,725       6,820  
Tax adjustments
    (253 )           (1,871 )     (1,326 )     (1,871 )
Restructuring charges
          352             352        
 
                             
 
                                       
Net income (non-GAAP)
  $ 7,991     $ 8,237     $ 5,482     $ 20,735     $ 19,285  
 
                             
 
                                       
Net income (non-GAAP) per share:
                                       
 
                                       
Basic
  $ 0.05     $ 0.05     $ 0.04     $ 0.13     $ 0.15  
 
                             
Diluted
  $ 0.05     $ 0.05     $ 0.04     $ 0.13     $ 0.15  
 
                             
 
                                       
Shares used in per share calculations:
                                       
 
                                       
Basic
    158,232       157,437       127,224       153,986       126,742  
 
                             
Diluted
    164,139       164,618       134,736       161,141       132,409  
 
                             
Reconciliation of Product License Bookings
(In thousands)
(UNAUDITED)
                                         
    Three months ended     Nine months ended  
    September 30,     June 30,     September 30,     September 30,     September 30,  
    2010     2010     2009     2010     2009  
Product license bookings
  $ 14,224     $ 18,185     $ 10,436     $ 46,259     $ 39,396  
 
                                       
Increase in product license deferred revenue
    (3,664 )     (5,632 )     (4,321 )     (14,515 )     (16,299 )
 
                                       
Product license deferred revenue recognized
    3,169       3,798       4,775       11,193       14,299  
 
                             
 
                                       
Product license revenue
  $ 13,729     $ 16,351     $ 10,890     $ 42,937     $ 37,396  
 
                             

 


 

Page 8
Use of Non-GAAP Financial Measures
    ATG is providing the non-GAAP historical financial measures presented above as the Company believes that these figures are helpful in allowing individuals to better assess the ongoing nature of ATG’s core operations. A “non-GAAP financial measure” is a numerical measure of a company’s historical or future financial performance that excludes amounts that are included in the most directly comparable measure calculated and presented in the GAAP statement of operations.
    Net income (non-GAAP) and net income per share (non-GAAP), as we present them in the financial data included in this press release, have been normalized to exclude the net effects of amortization of acquired intangible assets, equity-related compensation, non-cash tax adjustments and restructuring charges. Management believes that these normalized non-GAAP financial measures excluding these items better reflect the Company’s operating performance as these non-GAAP figures exclude the effects of non-recurring or certain non-cash expenses. Management believes that these charges are not necessarily representative of underlying trends in the Company’s performance and their exclusion provides investors with additional information to compare the Company’s results over multiple periods.
    ATG considers “product license bookings,” a non-GAAP financial measure which the company defines as the sale of perpetual software licenses regardless of the timing of revenue recognition under GAAP, to be an important indicator of growth in its software license business, as its business increasingly evolves toward a recurring, ratable revenue model.
    The Company uses these non-GAAP financial measures internally to focus management on period-to-period changes in the Company’s core business. Therefore, the Company believes that this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.
    In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, the tables above present the most directly comparable GAAP financial measure and reconcile non-GAAP net income and product license bookings to the comparable GAAP measures.
ATG Statement Under Private Securities Litigation Reform Act
    This press release contains forward-looking statements about the company’s estimated revenue and earnings. These statements involve known and unknown risks and uncertainties that may cause ATG’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. These risks include the effect of weakened or weakening economic conditions or perceived conditions on the level of spending by customers and prospective customers for ATG’s software and services; financial and other effects of cost control measures; quarterly fluctuations in ATG’s revenues or other operating results; customization and deployment delays or errors associated with ATG’s products; the risk of longer sales cycles for ATG’s products and ATG’s ability to conclude sales based on purchasing decisions that are delayed; satisfaction levels of customers regarding the implementation and performance of ATG’s products; ATG’s need to

 


 

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    maintain, enhance, and leverage business relationships with resellers and other parties who may be affected by changes in the economic climate; ATG’s ability to attract and maintain qualified executives and other personnel and to motivate employees; activities by ATG and others related to the protection of intellectual property; potential adverse financial and other effects of litigation (including intellectual property infringement claims) and the release of competitive products and other activities by competitors. Further details on these risks are set forth in ATG’s filings with the Securities and Exchange Commission (SEC), including the company’s annual report on Form 10-K for the period ended December 31, 2009 and its quarterly report on Form 10-Q for the period ended June 30, 2010. These filings are available free of charge on a website maintained by the SEC at http://www.sec.gov.
Additional Information about the Merger and Where to Find It
    In connection with the proposed merger, ATG will file a proxy statement with the SEC. Additionally, ATG and Oracle will file other relevant materials in connection with the proposed acquisition of ATG by Oracle pursuant to the terms of an Agreement and Plan of Merger by and among Oracle, Amsterdam Acquisition Sub Corporation, a wholly-owned subsidiary of Oracle, and ATG. The materials to be filed by ATG with the SEC may be obtained free of charge at the SEC’s web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by ATG by directing a written request to ATG, One Main Street, Cambridge, MA 02142, Attention: Investor Relations.
    Investors and security holders of ATG are urged to read the proxy statement and the other relevant materials when they become available before making any voting or investment decision with respect to the proposed merger because they will contain important information about the merger and the parties to the merger.
ATG and its executive officers and directors may be deemed to be participants in the solicitation of proxies from the security holders of ATG in connection with the proposed merger. Information about those executive officers and directors of ATG and their ownership of ATG common stock is set forth in the proxy statement for ATG’s 2010 Annual Meeting of Stockholders, which was filed with the SEC on April 14, 2010, and is supplemented by other public filings made, and to be made, with the SEC by ATG. Information regarding the direct and indirect interests of ATG, its executive officers and directors and other participants in the solicitation, which may, in some cases, be different from those of ATG security holders generally, will be set forth in the proxy statement relating to the merger when it becomes available.