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8-K - FORM 8-K - Nuance Communications, Inc. | b87614e8vk.htm |
EX-99.2 - EX-99.2 - Nuance Communications, Inc. | b87614exv99w2.htm |
Exhibit 99.1
News Release From Nuance Communications |
||
For Immediate Release | ||
Contacts: | ||
For Investors Kevin Faulkner Nuance Communications, Inc. Tel: 408-992-6100 Email: kevin.faulkner@nuance.com |
For Press and Investors Richard Mack Nuance Communications, Inc. Tel: 781-565-5000 Email: richard.mack@nuance.com |
Nuance Announces Third Quarter Fiscal 2011 Results
BURLINGTON, Mass., August 9, 2011 Nuance Communications, Inc. (NASDAQ: NUAN) today
announced financial results for its third quarter of fiscal 2011, ended June 30, 2011.
Nuance reported GAAP revenue of $328.9 million in the third quarter of fiscal 2011, a 20.4%
increase over GAAP revenue of $273.2 million in the third quarter of fiscal 2010. Nuance reported
non-GAAP revenue of $345.1 million, which includes $16.2 million in revenue lost to accounting
treatment in conjunction with acquisitions. Third quarter fiscal 2011 non-GAAP revenue grew 17.6%
over non-GAAP revenue of $293.4 million in the same quarter last year.
In the third quarter of fiscal 2011, Nuance recognized GAAP net income of $41.6 million, or $0.13 per diluted share,
compared to GAAP net loss of ($1.5) million, or ($0.01) per share, in the third quarter of fiscal 2010. Nuances Q3 11
net income per share included a one-time benefit of $0.11 per share from non-cash taxes related to an acquisition completed
during Q3 11. In the third quarter of fiscal 2011, Nuance reported non-GAAP net income of $111.2 million, or $0.35 per
diluted share, compared to non-GAAP net income of $91.3 million, or $0.30 per diluted share, in the third quarter of fiscal
2010. Nuances non GAAP operating margin was 35.4% for the third quarter of fiscal 2011, compared to 32.9%, in the third
quarter of fiscal 2010.
Nuance reported cash flow from operations of $100.1 million in the third quarter of fiscal 2011,
compared to $64.1 million in the third quarter of fiscal 2010. Nuance ended the third quarter of
fiscal 2011 with a balance of cash and marketable securities of $483.6 million.
Please refer to the Discussion of Non-GAAP Financial Measures and to the GAAP to Non-GAAP
Reconciliations, included elsewhere in this release, for more information regarding the companys
use of non-GAAP measures.
In the third quarter, Nuance delivered double-digit year-over-year organic revenue growth,
highlighted by our mobile & consumer, healthcare and imaging businesses. In addition, strong
bookings in our healthcare and mobile businesses position us for continued growth, said Paul
Ricci, chairman and CEO of Nuance. We continued our investments targeted at accelerating growth in
fiscal 2012, enabled by increased revenue, operating margins and operating cash flow.
Highlights from the quarter include:
| Healthcare For Nuances healthcare solutions, third quarter non-GAAP revenue was $139.3 million, up 21.9%, as reported, from the same quarter last year. During the third quarter, new bookings included large eScription, Dragon Medical and radiology contracts. Key healthcare customers included 3M, Carolinas, Catholic Health Partners, CHS, Dolbey, Health Region West, Medquist, Premier, Sutter Health, University of Pittsburgh Medical Center, WinScribe and Yale. | ||
| Mobile & Consumer For Nuances mobile & consumer solutions, third quarter non-GAAP revenue was $93.1 million, up 28.9%, as reported, from the same quarter last year. Key mobile customers, new bookings or design wins in the quarter included Amazon, BMW, Coupons.com, eBay, Ford, GM, Harman Becker, HTC, Huawei, Hyundai, Landrover, Lenovo, Mobis, Motorola, Pantech, SK Telecom, T-Mobile, Telstra, Time Warner Cable, Vodafone and Volvo. | ||
| Enterprise For Nuances enterprise solutions, third quarter non-GAAP revenue was $69.9 million, down 1.7%, as reported, from the same quarter last year. Key enterprise customers in the quarter included Axa, Barclaycard, Cigna Healthcare, Citigroup, Farmers Insurance, HP, IBM, Kaiser Permanente, Lenovo, Michigan BCBS, PayPal, Suntrust Bank, USAA and US Airways. | ||
| Imaging For Nuances document imaging solutions, third quarter non-GAAP revenue was $42.8 million, up 19.6%, as reported, from the same quarter last year. Key third quarter imaging customers included Canon, HP, Konica Minolta, Kroger, Marathon Oil, Ricoh and Xerox. |
Conference Call and Prepared Remarks
Nuance is providing a copy of prepared remarks in combination with its press release. These
remarks are offered to provide shareholders and analysts with additional time and detail for
analyzing results in advance of the companys quarterly conference call. The remarks will be
available at http://www.nuance.com/earnings-results/ in conjunction with the press release.
As previously scheduled, the conference call will begin today, Aug. 9, 2011 at 5:00 pm EDT and will
include only brief comments followed by questions and answers. The prepared remarks will not be
read on the call. To access the live broadcast, please visit the Investor Relations section of
Nuances Website at www.nuance.com. The call can also be heard by dialing (800) 398-9402 or (612)
332-0523 at least five minutes prior to the call and referencing conference code 210912. A replay
will be available within 24 hours of the announcement by dialing (800) 475-6701 or (320) 365-3844
and using the access code 210912.
About Nuance Communications, Inc
Nuance Communications, Inc. (NASDAQ: NUAN) is a leading provider of voice and language solutions
for businesses and consumers around the world. Its technologies, applications and services make
the user experience more compelling by transforming the way people interact with devices and
systems. Every day, millions of users and thousands of businesses experience Nuances proven
applications. For more information, please visit www.nuance.com.
Trademark reference: Nuance, the Nuance logo, Dragon Medical and eScription are registered
trademarks or trademarks of Nuance Communications, Inc. or its affiliates in the United States
and/or other countries. All other trademarks referenced herein are the property of their respective
owners.
Safe Harbor and Forward-Looking Statements
Statements in this document regarding sustained growth for fiscal 2011 and Nuance managements
future expectations, beliefs, goals, plans or prospects constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are
not statements of historical fact (including statements containing the words believes, plans,
anticipates, expects, or estimates or similar expressions) should also be considered to be
forward-looking statements. There are a number of important factors that could cause actual results
or events to differ materially from those
- 2 -
indicated by such forward-looking statements, including: fluctuations in demand for Nuances
existing and future products; economic conditions in the United States and abroad; Nuances ability
to control and successfully manage its expenses and cash position; the effects of competition,
including pricing pressure; possible defects in Nuances products and technologies; the ability of
Nuance to successfully integrate operations and employees of acquired businesses; the ability to
realize anticipated synergies from acquired businesses; and the other factors described in Nuances
annual report on Form 10-K for the fiscal year ended September 30, 2010 and Nuances quarterly
reports on Form 10-Q filed with the Securities and Exchange Commission. Nuance disclaims any
obligation to update any forward-looking statements as a result of developments occurring after the
date of this document.
The information included in this press release should not be viewed as a substitute for full GAAP
financial statements.
Discussion of Non-GAAP Financial Measures
Management utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing
and assessing the overall performance of the business, for making operating decisions and for
forecasting and planning for future periods. Our annual financial plan is prepared both on a GAAP
and non-GAAP basis, and the non-GAAP annual financial plan is approved by our board of directors.
Continuous budgeting and forecasting for revenue and expenses are conducted on a consistent
non-GAAP basis (in addition to GAAP) and actual results on a non-GAAP basis are assessed against
the annual financial plan. The board of directors and management utilize these non-GAAP measures
and results (in addition to the GAAP results) to determine our allocation of resources. In
addition and as a consequence of the importance of these measures in managing the business, we use
non-GAAP measures and results in the evaluation process to establish managements compensation.
For example, our annual bonus program payments are based upon the achievement of consolidated
non-GAAP revenue and consolidated non-GAAP earnings per share financial targets. We consider the
use of non-GAAP revenue helpful in understanding the performance of our business, as it excludes
the purchase accounting impact on acquired deferred revenue and other acquisition-related
adjustments to revenue. We also consider the use of non-GAAP earnings per share helpful in
assessing the organic performance of the continuing operations of our business. By organic
performance we mean performance as if we had owned an acquired business in the same period a year
ago. By continuing operations we mean the ongoing results of the business excluding certain
unplanned costs. While our management uses these non-GAAP financial measures as a tool to enhance
their understanding of certain aspects of our financial performance, our management does not
consider these measures to be a substitute for, or superior to, the information provided by GAAP
revenue and earnings per share. Consistent with this approach, we believe that disclosing non-GAAP
revenue and non-GAAP earnings per share to the readers of our financial statements provides such
readers with useful supplemental data that, while not a substitute for GAAP revenue and earnings
per share, allows for greater transparency in the review of our financial and operational
performance. In assessing the overall health of the business during the three and nine months
ended June 30, 2011 and 2010, and, in particular, in evaluating our revenue and earnings per
share, our management has either included or excluded items in six general categories, each of
which are described below.
Acquisition-Related Revenue and Cost of Revenue.
The Company provides supplementary non-GAAP financial measures of revenue, which include
revenue related to acquisitions, primarily from eCopy for the three and nine months ended June 30,
2011, that would otherwise have been recognized but for the purchase accounting treatment of these
transactions. Non-GAAP revenue also includes revenue that the Company would have otherwise
recognized had the Company not acquired intellectual property and other assets from the same
customer during the same quarter. Because GAAP accounting requires the elimination of this revenue,
GAAP results alone do not fully capture all of the Companys economic activities. These non-GAAP
- 3 -
adjustments are intended to reflect the full amount of such revenue. The Company includes
non-GAAP revenue and cost of revenue to allow for more complete comparisons to the financial
results of historical operations, forward-looking guidance and the financial results of peer
companies. The Company believes these adjustments are useful to management and investors as a
measure of the ongoing performance of the business because, although we cannot be certain that
customers will renew their contracts, the Company historically has experienced high renewal rates
on maintenance and support agreements and other customer contracts. Additionally, although
acquisition-related revenue adjustments are non-recurring with respect to past acquisitions, the
Company generally will incur these adjustments in connection with any future acquisitions.
Acquisition-Related Costs, Net.
In recent years, the Company has completed a number of acquisitions, which result in operating
expenses which would not otherwise have been incurred. The Company provides supplementary non-GAAP
financial measures, which exclude certain transition, integration and other acquisition-related
expense items resulting from acquisitions, to allow more accurate comparisons of the financial
results to historical operations, forward-looking guidance and the financial results of less
acquisitive peer companies. The Company considers these types of costs and adjustments, to a great
extent, to be unpredictable and dependent on a significant number of factors that are outside of
the control of the Company. Furthermore, the Company does not consider these acquisition-related
costs and adjustments to be related to the organic continuing operations of the acquired businesses
and are generally not relevant to assessing or estimating the long-term performance of the acquired
assets. In addition, the size, complexity and/or volume of past acquisitions, which often drives
the magnitude of acquisition-related costs, may not be indicative of the size, complexity and/or
volume of future acquisitions. By excluding acquisition-related costs and adjustments from our
non-GAAP measures, management is better able to evaluate the Companys ability to utilize its
existing assets and estimate the long-term value that acquired assets will generate for the
Company. The Company believes that providing a supplemental non-GAAP measure which excludes these
items allows management and investors to consider the ongoing operations of the business both with,
and without, such expenses.
These acquisition-related costs are included in the following categories: (i) transition and
integration costs; (ii) professional service fees; and (iii) acquisition-related adjustments.
Although these expenses are not recurring with respect to past acquisitions, the Company generally
will incur these expenses in connection with any future acquisitions. These categories are further
discussed as follows:
(i) Transition and integration costs. Transition and integration costs include retention
payments, transitional employee costs, earn-out payments treated as compensation expense, as
well as the costs of integration-related services provided by third parties.
(ii) Professional service fees. Professional service fees include direct costs of the
acquisition, as well as post-acquisition legal and other professional service fees associated
with disputes and regulatory matters related to acquired entities.
(iii) Acquisition-related adjustments. Acquisition-related adjustments include adjustments to
acquisition-related items that are required to be marked to fair value each reporting period,
such as contingent consideration, and other items related to acquisitions for which the
measurement period has ended, such as gains or losses on settlements of pre-acquisition
contingencies.
- 4 -
Amortization of Acquired Intangible Assets.
The Company excludes the amortization of acquired intangible assets from non-GAAP expense and
income measures. These amounts are inconsistent in amount and frequency and are significantly
impacted by the timing and size of acquisitions. Providing a supplemental measure which excludes
these charges allows management and investors to evaluate results as-if the acquired intangible
assets had been developed internally rather than acquired and, therefore, provides a supplemental
measure of performance in which the Companys acquired intellectual property is treated in a
comparable manner to its internally developed intellectual property. Although the Company excludes
amortization of acquired intangible assets from its non-GAAP expenses, the Company believes that it
is important for investors to understand that such intangible assets contribute to revenue
generation. Amortization of intangible assets that relate to past acquisitions will recur in future
periods until such intangible assets have been fully amortized. Future acquisitions may result in
the amortization of additional intangible assets.
Costs Associated with IP Collaboration Agreement.
In order to gain access to a third partys extensive speech recognition technology and natural
language and semantic processing technology, Nuance has entered into three IP collaboration
agreements, with terms ranging between five and six years. Depending on the agreement, some or all
intellectual property derived from these collaborations will be jointly owned by the two parties.
For the majority of the developed intellectual property, Nuance will have sole rights to
commercialize such intellectual property for periods ranging between two to six years, depending on
the agreement. For non-GAAP purposes, Nuance considers these long-term contracts and the resulting
acquisitions of intellectual property from this third-party over the agreements terms to be an
investing activity, outside of its normal, organic, continuing operating activities, and is
therefore presenting this supplemental information to show the results excluding these expenses.
Nuance does not exclude from its non-GAAP results the corresponding revenue, if any, generated from
these collaboration efforts. Although the Companys bonus program and other performance-based
incentives for executives are based on the non-GAAP results that exclude these costs, certain
engineering senior management are responsible for execution and results of these collaboration
agreements and have incentives based on those results.
Non-Cash Expenses.
The Company provides non-GAAP information relative to the following non-cash expenses: (i)
stock-based compensation; (ii) certain accrued interest; and (iii) certain accrued income taxes.
These items are further discussed as follows:
(i) Stock-based compensation. Because of varying available valuation methodologies, subjective
assumptions and the variety of award types, the Company believes that the exclusion of
stock-based compensation allows for more accurate comparisons of operating results to peer
companies, as well as to times in the Companys history when stock-based compensation was more
or less significant as a portion of overall compensation than in the current period. The
Company evaluates performance both with and without these measures because compensation expense
related to stock-based compensation is typically non-cash and the options and restricted awards
granted are influenced by the Companys stock price and other factors such as volatility that
are beyond the Companys control. The expense related to stock-based awards is generally not
controllable in the short-term and can vary significantly based on the timing, size and nature
of awards granted. As such, the Company does not include such charges in operating plans.
Stock-based compensation will continue in future periods.
(ii and iii) Certain accrued interest and income taxes. The Company also excludes certain
accrued interest and certain accrued income taxes because the Company believes that excluding
these non-cash
- 5 -
expenses provides senior management, as well as other users of the financial statements, with a
valuable perspective on the cash-based performance and health of the business, including the
current near-term projected liquidity. These non-cash expenses will continue in future periods.
Other Expenses.
The Company excludes certain other expenses that are the result of unplanned events to measure
operating performance and current and future liquidity both with and without these expenses; and
therefore, by providing this information, the Company believes management and the users of the
financial statements are better able to understand the financial results of what the Company
considers to be its organic, continuing operations. Included in these expenses are items such as
restructuring charges, asset impairments and other charges (credits), net. These events are
unplanned and arose outside of the ordinary course of continuing operations. These items also
include adjustments from changes in fair value of share-based instruments relating to the
issuance of our common stock with security price guarantees payable in cash.
The Company believes that providing the non-GAAP information to investors, in addition to the
GAAP presentation, allows investors to view the financial results in the way management views
the operating results. The Company further believes that providing this information allows
investors to not only better understand the Companys financial performance, but more
importantly, to evaluate the efficacy of the methodology and information used by management to
evaluate and measure such performance.
Financial Tables Follow
- 6 -
Nuance Communications, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Unaudited
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Unaudited
Three months ended | Nine months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Product and licensing |
$ | 152,745 | $ | 108,840 | $ | 428,181 | $ | 335,228 | ||||||||
Professional services and hosting |
125,347 | 117,875 | 377,078 | 337,798 | ||||||||||||
Maintenance and support |
50,817 | 46,488 | 146,441 | 136,159 | ||||||||||||
Total revenues |
328,909 | 273,203 | 951,700 | 809,185 | ||||||||||||
Cost of revenues: |
||||||||||||||||
Product and licensing |
15,820 | 10,901 | 47,950 | 34,194 | ||||||||||||
Professional services and hosting |
83,301 | 71,353 | 248,003 | 206,349 | ||||||||||||
Maintenance and support |
8,836 | 7,631 | 26,645 | 23,335 | ||||||||||||
Amortization of intangible assets |
13,087 | 11,893 | 40,541 | 35,095 | ||||||||||||
Total cost of revenues |
121,044 | 101,778 | 363,139 | 298,973 | ||||||||||||
Gross profit |
207,865 | 171,425 | 588,561 | 510,212 | ||||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
42,245 | 38,916 | 129,898 | 113,797 | ||||||||||||
Sales and marketing |
73,336 | 67,219 | 225,817 | 196,680 | ||||||||||||
General and administrative |
35,901 | 29,887 | 104,271 | 88,643 | ||||||||||||
Amortization of intangible assets |
20,972 | 21,459 | 65,221 | 65,786 | ||||||||||||
Acquisition-related costs, net |
8,595 | 6,125 | 13,910 | 26,892 | ||||||||||||
Restructuring and other charges, net |
864 | 3,257 | 5,343 | 16,244 | ||||||||||||
Total operating expenses |
181,913 | 166,863 | 544,460 | 508,042 | ||||||||||||
Income from operations |
25,952 | 4,562 | 44,101 | 2,170 | ||||||||||||
Other expense, net |
(7,721 | ) | (4,261 | ) | (15,736 | ) | (18,915 | ) | ||||||||
Income (loss) before income taxes |
18,231 | 301 | 28,365 | (16,745 | ) | |||||||||||
(Benefit) provision for income taxes |
(23,390 | ) | 1,831 | (14,982 | ) | 4,459 | ||||||||||
Net income (loss) |
$ | 41,621 | $ | (1,530 | ) | $ | 43,347 | $ | (21,204 | ) | ||||||
Net income (loss) per share: |
||||||||||||||||
Basic |
$ | 0.14 | $ | (0.01 | ) | $ | 0.14 | $ | (0.07 | ) | ||||||
Diluted |
$ | 0.13 | $ | (0.01 | ) | $ | 0.14 | $ | (0.07 | ) | ||||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic |
303,100 | 291,610 | 300,846 | 285,202 | ||||||||||||
Diluted |
317,803 | 291,610 | 314,791 | 285,202 | ||||||||||||
- 7 -
Nuance Communications, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
Unaudited
Condensed Consolidated Balance Sheets
(in thousands)
Unaudited
June 30, 2011 | September 30, 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 446,981 | $ | 516,630 | ||||
Restricted cash |
7,212 | 24,503 | ||||||
Marketable securities |
36,617 | 5,044 | ||||||
Accounts receivable, net |
247,972 | 217,587 | ||||||
Acquired unbilled accounts receivable |
914 | 7,412 | ||||||
Prepaid expenses and other current assets |
79,339 | 70,466 | ||||||
Total current assets |
819,035 | 841,642 | ||||||
Land, building and equipment, net |
79,623 | 62,083 | ||||||
Marketable securities |
| 28,322 | ||||||
Goodwill |
2,318,555 | 2,077,943 | ||||||
Intangible assets, net |
757,599 | 685,865 | ||||||
Other assets |
75,375 | 73,844 | ||||||
Total assets |
$ | 4,050,187 | $ | 3,769,699 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt and capital leases |
$ | 6,909 | $ | 7,764 | ||||
Contingent and deferred acquisition payments |
34,712 | 2,131 | ||||||
Accounts payable and accrued expenses |
239,867 | 230,237 | ||||||
Deferred and unearned revenue |
183,455 | 142,340 | ||||||
Total current liabilities |
464,943 | 382,472 | ||||||
Long-term portion of debt and capital leases |
852,444 | 851,014 | ||||||
Long-term deferred revenue |
81,502 | 76,598 | ||||||
Other long term liabilities |
188,514 | 162,419 | ||||||
Total liabilities |
1,587,403 | 1,472,503 | ||||||
Stockholders equity |
2,462,784 | 2,297,196 | ||||||
Total liabilities and stockholders equity |
$ | 4,050,187 | $ | 3,769,699 | ||||
- 8 -
Nuance Communications, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Consolidated Statements of Cash Flows
(in thousands)
Unaudited
Three months ended | Nine months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Cash flows from operating activities: |
||||||||||||||||
Net income (loss) |
$ | 41,621 | $ | (1,530 | ) | $ | 43,347 | $ | (21,204 | ) | ||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||||||||||
Depreciation and amortization |
40,996 | 38,761 | 125,719 | 116,738 | ||||||||||||
Stock-based compensation |
33,788 | 28,094 | 109,505 | 72,868 | ||||||||||||
Non-cash interest expense |
3,155 | 3,222 | 9,524 | 9,746 | ||||||||||||
Non-cash restructuring and other expense |
| | | 6,833 | ||||||||||||
Deferred tax provision |
(36,291 | ) | (1,210 | ) | (35,727 | ) | (2,321 | ) | ||||||||
Other |
3,559 | 1,005 | 4,259 | 1,671 | ||||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions: |
||||||||||||||||
Accounts receivable |
(1,160 | ) | (4,482 | ) | (3,679 | ) | (13,023 | ) | ||||||||
Prepaid expenses and other assets |
(5,899 | ) | (1,150 | ) | (17,095 | ) | (4,869 | ) | ||||||||
Accounts payable |
(8,553 | ) | (1,711 | ) | (9,999 | ) | (3,960 | ) | ||||||||
Accrued expenses and other liabilities |
21,085 | 2,532 | (9,950 | ) | (7,825 | ) | ||||||||||
Deferred revenue |
7,758 | 587 | 43,603 | 30,044 | ||||||||||||
Net cash provided by operating activities |
100,059 | 64,118 | 259,507 | 184,698 | ||||||||||||
Cash flows from investing activities: |
||||||||||||||||
Capital expenditures |
(7,703 | ) | (8,434 | ) | (24,267 | ) | (16,284 | ) | ||||||||
Payments for acquisitions, net of cash acquired |
(302,491 | ) | 3,470 | (319,299 | ) | (155,882 | ) | |||||||||
Payments for acquired technology |
| (7,500 | ) | (715 | ) | (14,850 | ) | |||||||||
Payments for equity investments |
| | | (14,970 | ) | |||||||||||
Purchases of marketable securities |
| | (10,776 | ) | | |||||||||||
Proceeds from sales of marketable securities |
| | 6,650 | | ||||||||||||
Change in restricted cash balance |
| (22,070 | ) | 17,184 | (22,070 | ) | ||||||||||
Net cash used in investing activities |
(310,194 | ) | (34,534 | ) | (331,223 | ) | (224,056 | ) | ||||||||
Cash flows from financing activities: |
||||||||||||||||
Payments of debt and capital leases |
(1,773 | ) | (2,312 | ) | (5,864 | ) | (6,376 | ) | ||||||||
Payments of other long-term liabilities |
(2,520 | ) | (2,501 | ) | (7,794 | ) | (7,319 | ) | ||||||||
Proceeds on settlement of share-based derivatives, net |
10,042 | 2,607 | 9,414 | 6,391 | ||||||||||||
Excess tax benefits on employee equity awards |
4,200 | | 8,220 | | ||||||||||||
Proceeds from issuance of common stock, net of issuance costs |
| 12,350 | | 12,350 | ||||||||||||
Proceeds from issuance of common stock from employee stock plans |
7,101 | 4,009 | 21,712 | 22,832 | ||||||||||||
Cash used to net share settle employee equity awards |
(3,601 | ) | (8,256 | ) | (30,027 | ) | (18,040 | ) | ||||||||
Net cash provided by (used in) financing activities |
13,449 | 5,897 | (4,339 | ) | 9,838 | |||||||||||
Effects of exchange rate changes on cash and cash equivalents |
1,955 | (5,211 | ) | 6,406 | (5,444 | ) | ||||||||||
Net (decrease) increase in cash and cash equivalents |
(194,731 | ) | 30,270 | (69,649 | ) | (34,964 | ) | |||||||||
Cash and cash equivalents at beginning of period |
641,712 | 461,804 | 516,630 | 527,038 | ||||||||||||
Cash and cash equivalents at end of period |
$ | 446,981 | $ | 492,074 | $ | 446,981 | $ | 492,074 | ||||||||
- 9 -
Nuance Communications, Inc.
Supplemental Financial Information GAAP to Non-GAAP Reconciliations
(in thousands, except per share amounts)
Unaudited
Supplemental Financial Information GAAP to Non-GAAP Reconciliations
(in thousands, except per share amounts)
Unaudited
Three months ended | Nine months ended | |||||||||||||||
June 30 , | June 30 , | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
GAAP revenue |
$ | 328,909 | $ | 273,203 | $ | 951,700 | $ | 809,185 | ||||||||
Acquisition-related revenue adjustments: product and licensing |
9,562 | 12,922 | 31,821 | 44,726 | ||||||||||||
Acquisition-related revenue adjustments: professional
services and hosting |
5,197 | 6,359 | 7,585 | 9,632 | ||||||||||||
Acquisition-related revenue adjustments: maintenance and
support |
1,463 | 900 | 3,297 | 7,269 | ||||||||||||
Non-GAAP revenue |
$ | 345,131 | $ | 293,384 | $ | 994,403 | $ | 870,812 | ||||||||
GAAP cost of revenue |
$ | 121,044 | $ | 101,778 | $ | 363,139 | $ | 298,973 | ||||||||
Cost of revenue from amortization of intangible assets |
(13,087 | ) | (11,893 | ) | (40,541 | ) | (35,095 | ) | ||||||||
Cost of revenue adjustments: product and licensing (1,2) |
2,038 | 2,794 | 6,807 | 8,920 | ||||||||||||
Cost of revenue adjustments: professional services and
hosting (1,2) |
(5,197 | ) | (2,181 | ) | (19,564 | ) | (7,085 | ) | ||||||||
Cost of revenue adjustments: maintenance and support (1,2) |
(518 | ) | (165 | ) | (1,545 | ) | (582 | ) | ||||||||
Non-GAAP cost of revenue |
$ | 104,280 | $ | 90,333 | $ | 308,296 | $ | 265,131 | ||||||||
GAAP gross profit |
$ | 207,865 | $ | 171,425 | $ | 588,561 | $ | 510,212 | ||||||||
Gross profit adjustments |
32,986 | 31,626 | 97,546 | 95,469 | ||||||||||||
Non-GAAP gross profit |
$ | 240,851 | $ | 203,051 | $ | 686,107 | $ | 605,681 | ||||||||
GAAP income from operations |
$ | 25,952 | $ | 4,562 | $ | 44,101 | $ | 2,170 | ||||||||
Gross profit adjustments |
32,986 | 31,626 | 97,546 | 95,469 | ||||||||||||
Research and development (1) |
5,280 | 2,282 | 18,188 | 6,731 | ||||||||||||
Sales and marketing (1) |
10,341 | 12,516 | 32,748 | 29,813 | ||||||||||||
General and administrative (1) |
11,883 | 10,512 | 36,481 | 27,544 | ||||||||||||
Amortization of intangible assets |
20,972 | 21,459 | 65,221 | 65,786 | ||||||||||||
Costs associated with IP collaboration agreements |
5,250 | 4,208 | 14,500 | 12,208 | ||||||||||||
Acquisition-related costs, net |
8,595 | 6,125 | 13,910 | 26,892 | ||||||||||||
Restructuring and other charges, net |
864 | 3,257 | 5,343 | 16,244 | ||||||||||||
Non-GAAP income from operations |
$ | 122,123 | $ | 96,547 | $ | 328,038 | $ | 282,857 | ||||||||
GAAP provision for income taxes |
$ | (23,390 | ) | $ | 1,831 | $ | (14,982 | ) | $ | 4,459 | ||||||
Non-cash taxes |
29,390 | 3,471 | 28,781 | 6,772 | ||||||||||||
Non-GAAP provision for income taxes |
$ | 6,000 | $ | 5,302 | $ | 13,799 | $ | 11,231 | ||||||||
GAAP net income (loss) |
$ | 41,621 | $ | (1,530 | ) | $ | 43,347 | $ | (21,204 | ) | ||||||
Acquisition-related adjustment revenue (2) |
16,222 | 20,181 | 42,703 | 61,627 | ||||||||||||
Acquisition-related adjustment cost of revenue (2) |
(2,607 | ) | (3,232 | ) | (7,786 | ) | (10,033 | ) | ||||||||
Acquisition-related costs, net |
8,595 | 6,125 | 13,910 | 26,892 | ||||||||||||
Cost of revenue from amortization of intangible assets |
13,087 | 11,893 | 40,541 | 35,095 | ||||||||||||
Amortization of intangible assets |
20,972 | 21,459 | 65,221 | 65,786 | ||||||||||||
Non-cash stock-based compensation (1) |
33,788 | 28,094 | 109,505 | 72,868 | ||||||||||||
Non-cash interest expense, net |
3,155 | 3,222 | 9,524 | 9,746 | ||||||||||||
Non-cash income taxes |
(29,390 | ) | (3,471 | ) | (28,781 | ) | (6,772 | ) | ||||||||
Costs associated with IP collaboration agreements |
5,250 | 4,208 | 14,500 | 12,208 | ||||||||||||
Change in fair value of share-based instruments |
(395 | ) | 1,044 | (10,844 | ) | (3,663 | ) | |||||||||
Restructuring and other charges, net |
864 | 3,257 | 5,343 | 16,244 | ||||||||||||
Non-GAAP net income |
$ | 111,162 | $ | 91,250 | $ | 297,183 | $ | 258,794 | ||||||||
Non-GAAP diluted net income per share |
$ | 0.35 | $ | 0.30 | $ | 0.94 | $ | 0.86 | ||||||||
Diluted weighted average common shares outstanding |
317,803 | 305,427 | 314,791 | 300,511 | ||||||||||||
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Nuance Communications, Inc.
Supplemental Financial Information GAAP to Non-GAAP Reconciliations, continued
(in thousands)
Unaudited
Supplemental Financial Information GAAP to Non-GAAP Reconciliations, continued
(in thousands)
Unaudited
Three months ended | Nine months ended | |||||||||||||||
June 30 , | June 30 , | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(1) Non-Cash Stock-Based Compensation |
||||||||||||||||
Cost of product and licensing |
$ | 2 | $ | 7 | $ | 29 | $ | 25 | ||||||||
Cost of professional services and hosting |
5,764 | 2,612 | 20,514 | 8,173 | ||||||||||||
Cost of maintenance and support |
518 | 165 | 1,545 | 582 | ||||||||||||
Research and development |
5,280 | 2,282 | 18,188 | 6,731 | ||||||||||||
Sales and marketing |
10,341 | 12,516 | 32,748 | 29,813 | ||||||||||||
General and administrative |
11,883 | 10,512 | 36,481 | 27,544 | ||||||||||||
Total |
$ | 33,788 | $ | 28,094 | $ | 109,505 | $ | 72,868 | ||||||||
(2) Acquisition-Related Revenue and Cost of Revenue |
||||||||||||||||
Revenue |
$ | 16,222 | $ | 20,181 | $ | 42,703 | $ | 61,627 | ||||||||
Cost of product and licensing |
(2,040 | ) | $ | (2,801 | ) | (6,836 | ) | (8,945 | ) | |||||||
Cost of professional services and hosting |
(567 | ) | (431 | ) | (950 | ) | (1,088 | ) | ||||||||
Cost of maintenance and support |
| | | | ||||||||||||
Total |
$ | 13,615 | $ | 16,949 | $ | 34,917 | $ | 51,594 | ||||||||
Nuance Communications, Inc.
Supplemental Financial Information GAAP to Non-GAAP Reconciliations, continued
(in millions)
Unaudited
Supplemental Financial Information GAAP to Non-GAAP Reconciliations, continued
(in millions)
Unaudited
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | |||||||||||||||||||||||||
Healthcare | 2010 | 2010 | 2010 | 2010 | 2010 | 2011 | 2011 | 2011 | ||||||||||||||||||||||||
GAAP Revenue |
$ | 105.5 | $ | 105.8 | $ | 113.5 | $ | 119.8 | $ | 444.6 | $ | 117.4 | $ | 120.7 | $ | 135.4 | ||||||||||||||||
Adjustment |
$ | 1.3 | $ | 1.1 | $ | 0.8 | $ | 1.5 | $ | 4.7 | $ | 0.4 | $ | 0.3 | $ | 3.9 | ||||||||||||||||
Non-GAAP Revenue |
$ | 106.8 | $ | 106.9 | $ | 114.3 | $ | 121.3 | $ | 449.3 | $ | 117.8 | $ | 121.0 | $ | 139.3 | ||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | |||||||||||||||||||||||||
Mobile & Consumer | 2010 | 2010 | 2010 | 2010 | 2010 | 2011 | 2011 | 2011 | ||||||||||||||||||||||||
GAAP Revenue |
$ | 64.1 | $ | 77.8 | $ | 66.3 | $ | 89.2 | $ | 297.3 | $ | 86.1 | $ | 93.1 | $ | 91.6 | ||||||||||||||||
Adjustment |
$ | 2.3 | $ | 2.9 | $ | 5.9 | $ | 1.0 | $ | 12.1 | $ | 1.6 | $ | 0.6 | $ | 1.5 | ||||||||||||||||
Non-GAAP Revenue |
$ | 66.4 | $ | 80.7 | $ | 72.2 | $ | 90.2 | $ | 309.4 | $ | 87.7 | $ | 93.7 | $ | 93.1 | ||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | |||||||||||||||||||||||||
Enterprise | 2010 | 2010 | 2010 | 2010 | 2010 | 2011 | 2011 | 2011 | ||||||||||||||||||||||||
GAAP Revenue |
$ | 75.4 | $ | 70.9 | $ | 71.0 | $ | 76.6 | $ | 293.9 | $ | 71.1 | $ | 72.3 | $ | 68.5 | ||||||||||||||||
Adjustment |
$ | 0.3 | $ | 0.4 | $ | 0.1 | $ | 1.4 | $ | 2.2 | $ | 1.4 | $ | 1.7 | $ | 1.4 | ||||||||||||||||
Non-GAAP Revenue |
$ | 75.7 | $ | 71.3 | $ | 71.1 | $ | 78.0 | $ | 296.1 | $ | 72.5 | $ | 74.0 | $ | 69.9 | ||||||||||||||||
Q1 | Q2 | Q3 | Q4 | FY | Q1 | Q2 | Q3 | |||||||||||||||||||||||||
Imaging Revenue | 2010 | 2010 | 2010 | 2010 | 2010 | 2011 | 2011 | 2011 | ||||||||||||||||||||||||
GAAP Revenue |
$ | 18.0 | $ | 18.5 | $ | 22.4 | $ | 24.2 | $ | 83.1 | $ | 29.2 | $ | 32.8 | $ | 33.4 | ||||||||||||||||
Adjustment |
$ | 17.7 | $ | 15.4 | $ | 13.4 | $ | 11.2 | $ | 57.7 | $ | 10.0 | $ | 10.4 | $ | 9.4 | ||||||||||||||||
Non-GAAP Revenue |
$ | 35.7 | $ | 33.9 | $ | 35.8 | $ | 35.4 | $ | 140.8 | $ | 39.3 | $ | 43.2 | $ | 42.8 | ||||||||||||||||
Schedules may not add due to rounding.
- 11 -