Massachusetts
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04-2866152
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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Large accelerated filer
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þ
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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(Do not check if a smaller
reporting company)
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Page
Number
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Part I—FINANCIAL INFORMATION
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Part II—OTHER INFORMATION
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Item 1A.
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Item 6.
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ITEM 1.
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UNAUDITED CONDENSED FINANCIAL STATEMENTS
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April 4,
2015 |
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September 30,
2014 |
||||
ASSETS
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|
||||
Current assets:
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Cash and cash equivalents
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$
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267,815
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$
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293,654
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Accounts receivable, net of allowance for doubtful accounts of $1,236 and $1,622 at April 4, 2015 and September 30, 2014, respectively
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201,379
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235,688
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Prepaid expenses and other current assets
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203,726
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171,526
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Deferred tax assets
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33,332
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31,299
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Total current assets
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706,252
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732,167
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Property and equipment, net
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65,191
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67,783
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Goodwill
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984,953
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1,012,527
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Acquired intangible assets, net
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301,443
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336,873
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Deferred tax assets
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20,639
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8,958
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Other assets
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30,152
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41,646
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Total assets
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$
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2,108,630
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$
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2,199,954
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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||||
Current liabilities:
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|
||||
Accounts payable
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$
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13,879
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$
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19,802
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Accrued expenses and other current liabilities
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58,986
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|
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57,536
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Accrued compensation and benefits
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132,008
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144,875
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Accrued income taxes
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14,316
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9,329
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||
Deferred tax liabilities
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183
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854
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Current portion of long term debt
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37,500
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25,000
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Deferred revenue
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403,864
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369,271
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Total current liabilities
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660,736
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626,667
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Long term debt, net of current portion
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493,125
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586,875
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Deferred tax liabilities
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30,880
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36,601
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Deferred revenue
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16,963
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13,273
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Other liabilities
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52,706
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82,649
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Total liabilities
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1,254,410
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1,346,065
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Commitments and contingencies (Note 13)
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Stockholders’ equity:
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Preferred stock, $0.01 par value; 5,000 shares authorized; none issued
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—
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—
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Common stock, $0.01 par value; 500,000 shares authorized; 114,985 and 115,025 shares issued and outstanding at April 4, 2015 and September 30, 2014, respectively
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1,150
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1,150
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Additional paid-in capital
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1,599,646
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1,597,277
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Accumulated deficit
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(614,495
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)
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(650,171
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)
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Accumulated other comprehensive loss
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(132,081
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)
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(94,367
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)
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Total stockholders’ equity
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854,220
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853,889
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Total liabilities and stockholders’ equity
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$
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2,108,630
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$
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2,199,954
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Three months ended
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Six months ended
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April 4,
2015 |
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March 29,
2014 |
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April 4,
2015 |
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March 29,
2014 |
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Revenue:
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License and subscription solutions
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$
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85,952
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$
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88,545
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$
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164,923
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$
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171,411
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Support
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168,727
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166,249
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350,356
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336,391
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Total software revenue
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254,679
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254,794
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515,279
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507,802
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Professional services
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59,440
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73,906
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124,282
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145,823
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Total revenue
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314,119
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328,700
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639,561
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653,625
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Cost of revenue:
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Cost of license and subscription solutions revenue
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13,190
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10,889
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26,519
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21,208
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Cost of support revenue
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21,328
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21,564
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42,724
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41,480
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Total cost of software revenue
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34,518
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32,453
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69,243
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62,688
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|
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Cost of professional services revenue
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51,536
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61,344
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109,753
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124,065
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Total cost of revenue
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86,054
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93,797
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178,996
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186,753
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Gross margin
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228,065
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234,903
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460,565
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466,872
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Operating expenses:
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Sales and marketing
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82,024
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85,934
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169,631
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170,172
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|
||||
Research and development
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60,158
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55,631
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121,255
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108,704
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|
||||
General and administrative
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34,235
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34,140
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71,242
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65,071
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Amortization of acquired intangible assets
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9,173
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7,985
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18,586
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15,774
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Restructuring charges
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38,487
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—
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38,232
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1,067
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Total operating expenses
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224,077
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183,690
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418,946
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360,788
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Operating income
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3,988
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51,213
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41,619
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106,084
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|
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Interest and other income (expense), net
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(3,601
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)
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(2,692
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)
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(6,825
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)
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(4,446
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)
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||||
Income before income taxes
|
387
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|
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48,521
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34,794
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101,638
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|
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(Benefit) Provision for income taxes
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(5,005
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)
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4,765
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(882
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)
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18,225
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|
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Net income
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$
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5,392
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$
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43,756
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$
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35,676
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$
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83,413
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Earnings per share—Basic
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$
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0.05
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$
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0.37
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$
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0.31
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$
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0.70
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Earnings per share—Diluted
|
$
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0.05
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$
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0.36
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$
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0.31
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$
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0.69
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Weighted average shares outstanding—Basic
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114,944
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118,978
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115,147
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118,973
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Weighted average shares outstanding—Diluted
|
115,922
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120,698
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116,479
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120,916
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Three months ended
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Six months ended
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April 4,
2015 |
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March 29,
2014 |
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April 4,
2015 |
|
March 29,
2014 |
||||||||
Net income
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$
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5,392
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$
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43,756
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$
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35,676
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$
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83,413
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Other comprehensive income (loss), net of tax:
|
|
|
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|
|
|
|
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Foreign currency translation adjustment, net of tax of $0 for each period
|
(22,464
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)
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(2,487
|
)
|
|
(42,896
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)
|
|
(850
|
)
|
||||
Amortization of net actuarial pension loss included in net income, net of tax of $0.1 million and $0.3 million in the second quarter of 2015 and 2014, respectively, and $0.3 million and $0.6 million in the first six months of 2015 and 2014, respectively
|
1,026
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|
|
525
|
|
|
2,078
|
|
|
1,048
|
|
||||
Change in unamortized pension loss during the period related to changes in foreign currency
|
2,183
|
|
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(3
|
)
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|
3,104
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|
|
(206
|
)
|
||||
Total other comprehensive loss
|
(19,255
|
)
|
|
(1,965
|
)
|
|
(37,714
|
)
|
|
(8
|
)
|
||||
Comprehensive income (loss)
|
$
|
(13,863
|
)
|
|
$
|
41,791
|
|
|
$
|
(2,038
|
)
|
|
$
|
83,405
|
|
|
Six months ended
|
||||||
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April 4,
2015 |
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March 29,
2014 |
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Cash flows from operating activities:
|
|
|
|
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Net income
|
$
|
35,676
|
|
|
$
|
83,413
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
42,205
|
|
|
38,273
|
|
||
Stock-based compensation
|
24,064
|
|
|
25,330
|
|
||
Excess tax benefits from stock-based awards
|
(163
|
)
|
|
(8,092
|
)
|
||
Other non-cash items, net
|
(1
|
)
|
|
626
|
|
||
Changes in operating assets and liabilities, excluding the effects of acquisitions:
|
|
|
|
||||
Accounts receivable
|
22,711
|
|
|
16,737
|
|
||
Accounts payable, accrued expenses and other current liabilities
|
(9,976
|
)
|
|
(3,346
|
)
|
||
Accrued compensation and benefits
|
(7,222
|
)
|
|
(34,285
|
)
|
||
Deferred revenue
|
32,200
|
|
|
29,683
|
|
||
Accrued and deferred income taxes
|
(16,565
|
)
|
|
5,879
|
|
||
Other current assets and prepaid expenses
|
(4,942
|
)
|
|
(2,193
|
)
|
||
Other noncurrent assets and liabilities
|
(12,363
|
)
|
|
(5,061
|
)
|
||
Net cash provided by operating activities
|
105,624
|
|
|
146,964
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Additions to property and equipment
|
(14,107
|
)
|
|
(10,342
|
)
|
||
Purchases of investments
|
(1,000
|
)
|
|
—
|
|
||
Acquisitions of businesses, net of cash acquired
|
180
|
|
|
(111,519
|
)
|
||
Net cash used by investing activities
|
(14,927
|
)
|
|
(121,861
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings under credit facility
|
35,000
|
|
|
474,375
|
|
||
Repayments of borrowings under credit facility
|
(116,250
|
)
|
|
(414,375
|
)
|
||
Repurchases of common stock
|
—
|
|
|
(39,965
|
)
|
||
Proceeds from issuance of common stock
|
6
|
|
|
716
|
|
||
Excess tax benefits from stock-based awards
|
163
|
|
|
8,092
|
|
||
Credit facility origination costs
|
—
|
|
|
(4,120
|
)
|
||
Payments of withholding taxes in connection with vesting of stock-based awards
|
(21,864
|
)
|
|
(21,637
|
)
|
||
Net cash (used) provided by financing activities
|
(102,945
|
)
|
|
3,086
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(13,591
|
)
|
|
368
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(25,839
|
)
|
|
28,557
|
|
||
Cash and cash equivalents, beginning of period
|
293,654
|
|
|
241,913
|
|
||
Cash and cash equivalents, end of period
|
$
|
267,815
|
|
|
$
|
270,470
|
|
Supplemental disclosure of non-cash investing activities:
|
|
|
|
||||
Fair value of contingent consideration recorded for acquisition
|
$
|
—
|
|
|
$
|
13,048
|
|
|
Three months ended March 29, 2014
|
|
Six months ended March 29, 2014
|
||||
Reclassifications within revenue
|
(in millions)
|
||||||
From Services to L&SS
|
$
|
3.3
|
|
|
$
|
6.9
|
|
From Support to L&SS
|
0.1
|
|
|
0.1
|
|
||
|
$
|
3.4
|
|
|
$
|
7.0
|
|
Reclassifications within cost of revenue
|
|
|
|
||||
From Services to L&SS
|
$
|
2.8
|
|
|
$
|
5.6
|
|
•
|
determining whether collection is probable;
|
•
|
assessing whether the fee is fixed or determinable;
|
•
|
determining whether service arrangements, including modifications and customization of the underlying software, are not essential to the functionality of the licensed software and thus would result in the revenue for license and service elements of an agreement being recorded separately; and
|
•
|
determining the fair value of services and support elements included in multiple-element arrangements, which is the basis for allocating and deferring revenue for such services and support.
|
|
April 4,
2015 |
|
September 30,
2014 |
||||
|
(in thousands)
|
||||||
S&P bond rating BBB-1 and above-Tier 1
|
$
|
20,485
|
|
|
$
|
41,152
|
|
Internal Credit Assessment-Tier 2
|
11,994
|
|
|
16,989
|
|
||
Internal Credit Assessment-Tier 3
|
—
|
|
|
—
|
|
||
Total financing receivables
|
$
|
32,479
|
|
|
$
|
58,141
|
|
|
Employee Severance and Related Benefits
|
|
Facility Closures and Related Costs
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
October 1, 2014
|
$
|
25,835
|
|
|
$
|
535
|
|
|
$
|
26,370
|
|
Charge to operations
|
38,232
|
|
|
—
|
|
|
38,232
|
|
|||
Cash disbursements
|
(22,532
|
)
|
|
(135
|
)
|
|
(22,667
|
)
|
|||
Foreign exchange impact
|
(1,173
|
)
|
|
(5
|
)
|
|
(1,178
|
)
|
|||
Accrual, April 4, 2015
|
$
|
40,362
|
|
|
$
|
395
|
|
|
$
|
40,757
|
|
Restricted stock unit activity for the six months ended April 4, 2015
|
Shares
|
|
Weighted
Average
Grant Date
Fair Value
(Per Share)
|
|||
|
(in thousands)
|
|
|
|||
Balance of outstanding restricted stock units October 1, 2014
|
4,379
|
|
|
$
|
26.87
|
|
Granted
|
1,342
|
|
|
$
|
37.78
|
|
Vested
|
(1,606
|
)
|
|
$
|
24.13
|
|
Forfeited or not earned
|
(197
|
)
|
|
$
|
29.21
|
|
Balance of outstanding restricted stock units April 4, 2015
|
3,918
|
|
|
$
|
31.62
|
|
|
Restricted Stock Units
|
||
Grant Period
|
Performance-based (1)
|
|
Service-based (2)
|
|
|
||
|
(Number of Units in thousands)
|
||
First six months of 2015
|
313
|
|
1,029
|
(1)
|
The performance-based RSUs were granted to employees pursuant to the terms described below.
|
(2)
|
The service-based RSUs were issued to employees, including our executive officers and our directors. Of these RSUs, approximately
110,000
will vest one year from the date of grant. Substantially all other service-based RSUs will vest in
three
substantially equal annual installments on or about the anniversary of the date of grant.
|
Average volatility of peer group
|
29.8
|
%
|
Risk free interest rate
|
0.85
|
%
|
Dividend yield
|
—
|
%
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
April 4,
2015 |
|
March 29,
2014 |
|
April 4,
2015 |
|
March 29,
2014 |
||||||||
|
(in thousands)
|
||||||||||||||
Cost of license and subscription solutions revenue
|
$
|
118
|
|
|
$
|
82
|
|
|
$
|
260
|
|
|
$
|
147
|
|
Cost of support revenue
|
989
|
|
|
889
|
|
|
1,765
|
|
|
1,813
|
|
||||
Cost of professional services revenue
|
1,504
|
|
|
1,349
|
|
|
3,193
|
|
|
2,886
|
|
||||
Sales and marketing
|
3,081
|
|
|
3,019
|
|
|
5,953
|
|
|
5,518
|
|
||||
Research and development
|
3,001
|
|
|
2,147
|
|
|
6,087
|
|
|
4,836
|
|
||||
General and administrative
|
4,129
|
|
|
5,080
|
|
|
6,806
|
|
|
10,130
|
|
||||
Total stock-based compensation expense
|
$
|
12,822
|
|
|
$
|
12,566
|
|
|
$
|
24,064
|
|
|
$
|
25,330
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
Calculation of Basic and Diluted EPS
|
April 4,
2015 |
|
March 29,
2014 |
|
April 4,
2015 |
|
March 29,
2014 |
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
Net income
|
$
|
5,392
|
|
|
$
|
43,756
|
|
|
$
|
35,676
|
|
|
$
|
83,413
|
|
Weighted average shares outstanding—Basic
|
114,944
|
|
|
118,978
|
|
|
115,147
|
|
|
118,973
|
|
||||
Dilutive effect of employee stock options, restricted shares and restricted stock units
|
978
|
|
|
1,720
|
|
|
1,332
|
|
|
1,943
|
|
||||
Weighted average shares outstanding—Diluted
|
115,922
|
|
|
120,698
|
|
|
116,479
|
|
|
120,916
|
|
||||
Earnings per share—Basic
|
$
|
0.05
|
|
|
$
|
0.37
|
|
|
$
|
0.31
|
|
|
$
|
0.70
|
|
Earnings per share—Diluted
|
$
|
0.05
|
|
|
$
|
0.36
|
|
|
$
|
0.31
|
|
|
$
|
0.69
|
|
|
April 4, 2015
|
|
September 30, 2014
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Goodwill (not amortized)
|
|
|
|
|
$
|
984,953
|
|
|
|
|
|
|
$
|
1,012,527
|
|
||||||||
Intangible assets with finite lives (amortized) (1):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Purchased software
|
$
|
269,825
|
|
|
$
|
164,236
|
|
|
$
|
105,589
|
|
|
$
|
278,012
|
|
|
$
|
162,259
|
|
|
$
|
115,753
|
|
Capitalized software
|
22,877
|
|
|
22,877
|
|
|
—
|
|
|
22,877
|
|
|
22,877
|
|
|
—
|
|
||||||
Customer lists and relationships
|
346,506
|
|
|
157,454
|
|
|
189,052
|
|
|
360,530
|
|
|
147,469
|
|
|
213,061
|
|
||||||
Trademarks and trade names
|
18,010
|
|
|
11,597
|
|
|
6,413
|
|
|
18,479
|
|
|
10,964
|
|
|
7,515
|
|
||||||
Other
|
3,900
|
|
|
3,511
|
|
|
389
|
|
|
4,117
|
|
|
3,573
|
|
|
544
|
|
||||||
|
$
|
661,118
|
|
|
$
|
359,675
|
|
|
$
|
301,443
|
|
|
$
|
684,015
|
|
|
$
|
347,142
|
|
|
$
|
336,873
|
|
Total goodwill and acquired intangible assets
|
|
|
|
|
$
|
1,286,396
|
|
|
|
|
|
|
$
|
1,349,400
|
|
|
Software
Products
Segment
|
|
Services
Segment
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
Balance, October 1, 2014
|
$
|
959,768
|
|
|
$
|
52,759
|
|
|
$
|
1,012,527
|
|
Acquisition of Axeda
|
(180
|
)
|
|
—
|
|
|
(180
|
)
|
|||
Foreign currency translation adjustments
|
(27,163
|
)
|
|
(231
|
)
|
|
(27,394
|
)
|
|||
Balance, April 4, 2015
|
$
|
932,425
|
|
|
$
|
52,528
|
|
|
$
|
984,953
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
April 4,
2015 |
|
March 29,
2014 |
|
April 4, 2015
|
|
March 29, 2014
|
||||||||
|
(in thousands)
|
||||||||||||||
Amortization of acquired intangible assets
|
$
|
9,173
|
|
|
$
|
7,985
|
|
|
$
|
18,586
|
|
|
$
|
15,774
|
|
Cost of license and subscriptions solutions revenue
|
4,714
|
|
|
4,407
|
|
|
9,481
|
|
|
8,904
|
|
||||
Total amortization expense
|
$
|
13,887
|
|
|
$
|
12,392
|
|
|
$
|
28,067
|
|
|
$
|
24,678
|
|
•
|
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
|
•
|
Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or
|
•
|
Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
|
April 4, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents (1)
|
$
|
61,037
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
61,037
|
|
Forward contracts
|
—
|
|
|
39
|
|
|
—
|
|
|
39
|
|
||||
|
$
|
61,037
|
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
61,076
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration related to ThingWorx acquisition
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16,272
|
|
|
$
|
16,272
|
|
Forward contracts
|
—
|
|
|
255
|
|
|
—
|
|
|
255
|
|
||||
|
$
|
—
|
|
|
$
|
255
|
|
|
$
|
16,272
|
|
|
$
|
16,527
|
|
|
September 30, 2014
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents (1)
|
$
|
101,113
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
101,113
|
|
Forward contracts
|
—
|
|
|
339
|
|
|
—
|
|
|
339
|
|
||||
|
$
|
101,113
|
|
|
$
|
339
|
|
|
$
|
—
|
|
|
$
|
101,452
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration related to ThingWorx acquisition
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,191
|
|
|
$
|
15,191
|
|
Forward contracts
|
—
|
|
|
911
|
|
|
—
|
|
|
911
|
|
||||
|
$
|
—
|
|
|
$
|
911
|
|
|
$
|
15,191
|
|
|
$
|
16,102
|
|
|
Contingent Consideration
|
||
|
(in thousands)
|
||
Balance, October 1, 2014
|
$
|
15,191
|
|
Change in present value of contingent consideration
|
1,081
|
|
|
Balance, April 4, 2015
|
$
|
16,272
|
|
Currency Hedged
|
April 4,
2015 |
|
September 30,
2014 |
||||
|
(in thousands)
|
||||||
Canadian Dollar / U.S. Dollar
|
$
|
21,283
|
|
|
25,583
|
|
|
Euro / U.S. Dollar
|
35,007
|
|
|
61,751
|
|
||
British Pound / Euro
|
9,196
|
|
|
14,259
|
|
||
Israeli New Sheqel / U.S. Dollar
|
2,713
|
|
|
6,144
|
|
||
All other
|
12,424
|
|
|
9,251
|
|
||
Total
|
$
|
80,623
|
|
|
$
|
116,988
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
April 4,
2015 |
|
March 29,
2014 |
|
April 4, 2015
|
|
March 29, 2014
|
||||||||
|
(in thousands)
|
||||||||||||||
Net foreign currency losses
|
$
|
675
|
|
|
$
|
1,129
|
|
|
$
|
912
|
|
|
$
|
1,993
|
|
Net realized and unrealized loss (gain) on forward contracts (excluding the underlying foreign currency exposure being hedged)
|
$
|
678
|
|
|
$
|
(69
|
)
|
|
$
|
381
|
|
|
$
|
(1,697
|
)
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
April 4,
2015 |
|
March 29,
2014 |
|
April 4,
2015 |
|
March 29,
2014 |
||||||||
|
(in thousands)
|
||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Total Software Products segment revenue
|
$
|
240,951
|
|
|
$
|
245,423
|
|
|
$
|
487,942
|
|
|
$
|
489,677
|
|
Total Services segment revenue
|
73,168
|
|
|
83,277
|
|
|
151,619
|
|
|
163,948
|
|
||||
Total revenue
|
$
|
314,119
|
|
|
$
|
328,700
|
|
|
$
|
639,561
|
|
|
$
|
653,625
|
|
Operating income: (1)
|
|
|
|
|
|
|
|
||||||||
Software Products segment
|
$
|
134,580
|
|
|
$
|
154,859
|
|
|
$
|
283,625
|
|
|
$
|
313,099
|
|
Services segment
|
3,178
|
|
|
16,427
|
|
|
16,378
|
|
|
29,048
|
|
||||
Sales and marketing expenses
|
(94,942
|
)
|
|
(85,933
|
)
|
|
(182,549
|
)
|
|
(170,644
|
)
|
||||
General and administrative expenses
|
(38,828
|
)
|
|
(34,140
|
)
|
|
(75,835
|
)
|
|
(65,419
|
)
|
||||
Total operating income
|
3,988
|
|
|
51,213
|
|
|
41,619
|
|
|
106,084
|
|
||||
Other income (expense), net
|
(3,601
|
)
|
|
(2,692
|
)
|
|
(6,825
|
)
|
|
(4,446
|
)
|
||||
Income before income taxes
|
$
|
387
|
|
|
$
|
48,521
|
|
|
$
|
34,794
|
|
|
$
|
101,638
|
|
(1)
|
We recorded restructuring charges of
$38.5 million
in the second quarter of 2015. Software Products included
$10.0 million
; Services included
$11.0 million
; sales and marketing expenses included
$12.9 million
; and general and administrative expenses included
$4.6 million
of these restructuring charges. We recorded a credit to restructuring of
$0.3 million
in the first quarter of 2015 which is included in the Services segment. We recorded restructuring charges of
$1.1 million
in the first six months of 2014. Software Products included
$0.1 million
; Services included
$0.2 million
; sales and marketing expenses included
$0.5 million
; and general and administrative expenses included
$0.3 million
of these restructuring charges.
|
•
|
a leverage ratio, defined as consolidated funded indebtedness to consolidated trailing four quarters EBITDA, of no greater than
3.00
to
1.00
at any time; and
|
•
|
a fixed charge coverage ratio, defined as the ratio of consolidated trailing four quarters EBITDA less consolidated capital expenditures to consolidated fixed charges, of no less than
3.50
to
1.00
at any time.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Revenue by Line of Business
|
% of Total Revenue
|
||||||||||
|
Three months ended
|
|
Six months ended
|
||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
April 4, 2015
|
|
March 29, 2014
|
||||
L&SS
|
27
|
%
|
|
27
|
%
|
|
26
|
%
|
|
26
|
%
|
Support
|
54
|
%
|
|
51
|
%
|
|
55
|
%
|
|
51
|
%
|
Professional services
|
19
|
%
|
|
22
|
%
|
|
19
|
%
|
|
22
|
%
|
|
|||||||||||||||||||||||||||
Revenue by Solution
|
Three months ended
|
|
Six months ended
|
||||||||||||||||||||||||
|
|
|
|
|
Percent Change
|
|
|
|
|
|
Percent Change
|
||||||||||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
Actual
|
|
Constant
Currency
|
|
April 4, 2015
|
|
March 29, 2014
|
|
Actual
|
|
Constant
Currency
|
||||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||||||||
CAD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
L&SS
|
$
|
35.0
|
|
|
$
|
37.9
|
|
|
(7
|
)%
|
|
2
|
%
|
|
$
|
64.8
|
|
|
$
|
72.0
|
|
|
(10
|
)%
|
|
(3
|
)%
|
Support
|
91.1
|
|
|
93.9
|
|
|
(3
|
)%
|
|
6
|
%
|
|
189.7
|
|
|
189.9
|
|
|
—
|
%
|
|
6
|
%
|
||||
Total software revenue
|
126.2
|
|
|
131.7
|
|
|
(4
|
)%
|
|
5
|
%
|
|
254.4
|
|
|
261.9
|
|
|
(3
|
)%
|
|
4
|
%
|
||||
Professional services
|
4.9
|
|
|
6.4
|
|
|
(24
|
)%
|
|
(16
|
)%
|
|
10.2
|
|
|
12.4
|
|
|
(18
|
)%
|
|
(12
|
)%
|
||||
Total revenue
|
$
|
131.1
|
|
|
$
|
138.2
|
|
|
(5
|
)%
|
|
4
|
%
|
|
$
|
264.6
|
|
|
$
|
274.3
|
|
|
(4
|
)%
|
|
3
|
%
|
EPLM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
L&SS
|
$
|
32.7
|
|
|
$
|
40.3
|
|
|
(19
|
)%
|
|
(11
|
)%
|
|
$
|
63.8
|
|
|
$
|
76.0
|
|
|
(16
|
)%
|
|
(10
|
)%
|
Support
|
59.2
|
|
|
55.4
|
|
|
7
|
%
|
|
14
|
%
|
|
122.6
|
|
|
112.1
|
|
|
9
|
%
|
|
14
|
%
|
||||
Total software revenue
|
91.9
|
|
|
95.7
|
|
|
(4
|
)%
|
|
4
|
%
|
|
186.4
|
|
|
188.1
|
|
|
(1
|
)%
|
|
5
|
%
|
||||
Professional services
|
40.1
|
|
|
51.1
|
|
|
(21
|
)%
|
|
(13
|
)%
|
|
85.1
|
|
|
101.8
|
|
|
(16
|
)%
|
|
(10
|
)%
|
||||
Total revenue
|
$
|
132.0
|
|
|
$
|
146.8
|
|
|
(10
|
)%
|
|
(2
|
)%
|
|
$
|
271.5
|
|
|
$
|
289.9
|
|
|
(6
|
)%
|
|
(1
|
)%
|
SLM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
L&SS
|
$
|
10.7
|
|
|
$
|
10.0
|
|
|
8
|
%
|
|
11
|
%
|
|
$
|
20.7
|
|
|
$
|
23.0
|
|
|
(10
|
)%
|
|
(7
|
)%
|
Support
|
17.2
|
|
|
17.0
|
|
|
1
|
%
|
|
6
|
%
|
|
36.0
|
|
|
34.4
|
|
|
4
|
%
|
|
8
|
%
|
||||
Total software revenue
|
27.9
|
|
|
26.9
|
|
|
4
|
%
|
|
8
|
%
|
|
56.7
|
|
|
57.4
|
|
|
(1
|
)%
|
|
2
|
%
|
||||
Professional services
|
13.7
|
|
|
16.3
|
|
|
(16
|
)%
|
|
(12
|
)%
|
|
27.8
|
|
|
31.5
|
|
|
(12
|
)%
|
|
(8
|
)%
|
||||
Total revenue
|
$
|
41.6
|
|
|
$
|
43.2
|
|
|
(4
|
)%
|
|
—
|
%
|
|
$
|
84.5
|
|
|
$
|
88.9
|
|
|
(5
|
)%
|
|
(2
|
)%
|
IoT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
L&SS
|
$
|
7.5
|
|
|
$
|
0.4
|
|
|
|
|
|
|
$
|
15.6
|
|
|
$
|
0.4
|
|
|
|
|
|
||||
Support
|
1.2
|
|
|
—
|
|
|
|
|
|
|
2.1
|
|
|
—
|
|
|
|
|
|
||||||||
Total software revenue
|
8.7
|
|
|
0.4
|
|
|
|
|
|
|
|
17.8
|
|
|
0.4
|
|
|
|
|
|
|
||||||
Professional services
|
0.7
|
|
|
0.1
|
|
|
|
|
|
|
1.2
|
|
|
0.1
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
9.4
|
|
|
$
|
0.5
|
|
|
|
|
|
|
$
|
19.0
|
|
|
$
|
0.5
|
|
|
|
|
|
|
Three months ended
|
|
Percent Change
|
|
Six months ended
|
|
|
Percent Change
|
|||||||||||||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
Actual
|
|
Constant
Currency
|
|
April 4, 2015
|
|
March 29, 2014
|
|
Actual
|
|
Constant
Currency
|
||||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||||||||
Revenue by region:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Americas
|
$
|
131.8
|
|
|
$
|
134.4
|
|
|
(2
|
)%
|
|
(1
|
)%
|
|
$
|
267.9
|
|
|
$
|
273.3
|
|
|
(2
|
)%
|
|
(1
|
)%
|
Europe
|
$
|
110.3
|
|
|
$
|
128.0
|
|
|
(14
|
)%
|
|
—
|
%
|
|
$
|
238.6
|
|
|
$
|
255.1
|
|
|
(6
|
)%
|
|
4
|
%
|
Pacific Rim
|
$
|
32.9
|
|
|
$
|
36.7
|
|
|
(10
|
)%
|
|
(8
|
)%
|
|
$
|
68.8
|
|
|
$
|
70.6
|
|
|
(3
|
)%
|
|
(1
|
)%
|
Japan
|
$
|
39.1
|
|
|
$
|
29.6
|
|
|
32
|
%
|
|
52
|
%
|
|
$
|
64.3
|
|
|
$
|
54.8
|
|
|
17
|
%
|
|
34
|
%
|
|
Three months ended
|
|
Six months ended
|
||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
April 4, 2015
|
|
March 29, 2014
|
||||
Revenue by region as a % of total revenue:
|
|
|
|
|
|
|
|
||||
Americas
|
42
|
%
|
|
41
|
%
|
|
42
|
%
|
|
42
|
%
|
Europe
|
35
|
%
|
|
39
|
%
|
|
37
|
%
|
|
39
|
%
|
Pacific Rim
|
10
|
%
|
|
11
|
%
|
|
11
|
%
|
|
11
|
%
|
Japan
|
12
|
%
|
|
9
|
%
|
|
10
|
%
|
|
8
|
%
|
Gross Margin
|
Three months ended
|
|
Six months ended
|
||||||||||||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change |
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change |
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
Gross margin
|
$
|
228.1
|
|
|
$
|
234.9
|
|
|
(3
|
)%
|
|
$
|
460.6
|
|
|
$
|
466.9
|
|
|
(1
|
)%
|
Non-GAAP gross margin
|
236.4
|
|
|
241.6
|
|
|
(2
|
)%
|
|
477.5
|
|
|
480.6
|
|
|
(1
|
)%
|
||||
Gross margin as a % of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
License and subscription solutions
|
84.7
|
%
|
|
87.7
|
%
|
|
|
|
83.9
|
%
|
|
87.6
|
%
|
|
|
||||||
Support
|
87.4
|
%
|
|
87.0
|
%
|
|
|
|
87.8
|
%
|
|
87.7
|
%
|
|
|
||||||
Professional services
|
13.3
|
%
|
|
17.0
|
%
|
|
|
|
11.7
|
%
|
|
14.9
|
%
|
|
|
||||||
Gross margin as a % of total revenue
|
72.6
|
%
|
|
71.5
|
%
|
|
|
|
72.0
|
%
|
|
71.4
|
%
|
|
|
||||||
Non-GAAP gross margin as a % of total revenue
|
75.0
|
%
|
|
73.5
|
%
|
|
|
|
74.4
|
%
|
|
73.5
|
%
|
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change
|
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change
|
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of L&SS revenue
|
$
|
13.2
|
|
|
$
|
10.9
|
|
|
21
|
%
|
|
$
|
26.5
|
|
|
$
|
21.2
|
|
|
25
|
%
|
Cost of support revenue
|
21.3
|
|
|
21.6
|
|
|
(1
|
)%
|
|
42.7
|
|
|
41.5
|
|
|
3
|
%
|
||||
Cost of professional services revenue
|
51.5
|
|
|
61.3
|
|
|
(16
|
)%
|
|
109.8
|
|
|
124.1
|
|
|
(12
|
)%
|
||||
Sales and marketing
|
82.0
|
|
|
85.9
|
|
|
(5
|
)%
|
|
169.6
|
|
|
170.2
|
|
|
—
|
%
|
||||
Research and development
|
60.2
|
|
|
55.6
|
|
|
8
|
%
|
|
121.3
|
|
|
108.7
|
|
|
12
|
%
|
||||
General and administrative
|
34.2
|
|
|
34.1
|
|
|
—
|
%
|
|
71.2
|
|
|
65.1
|
|
|
9
|
%
|
||||
Amortization of acquired intangible assets
|
9.2
|
|
|
8.0
|
|
|
15
|
%
|
|
18.6
|
|
|
15.8
|
|
|
18
|
%
|
||||
Restructuring (credit) charge
|
38.5
|
|
|
—
|
|
|
|
|
|
38.2
|
|
|
1.1
|
|
|
|
|
||||
Total costs and expenses (1)
|
$
|
310.1
|
|
|
$
|
277.5
|
|
|
12
|
%
|
|
$
|
597.9
|
|
|
$
|
547.5
|
|
|
9
|
%
|
Total headcount at end of period
|
6,294
|
|
|
6,043
|
|
|
4
|
%
|
|
|
|
|
|
|
(1)
|
On a constant currency basis, compared to the year-ago period, total costs and expenses for the
second
quarter and
first six months
of 2015 increased 18% and 13%, respectively.
|
Cost of License and Subscription Solutions Revenue
|
Three months ended
|
|
Six months ended
|
||||||||||||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change
|
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change
|
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
Cost of L&SS revenue
|
$
|
13.2
|
|
|
$
|
10.9
|
|
|
21
|
%
|
|
$
|
26.5
|
|
|
$
|
21.2
|
|
|
25
|
%
|
% of total revenue
|
4
|
%
|
|
3
|
%
|
|
|
|
4
|
%
|
|
3
|
%
|
|
|
||||||
% of total L&SS revenue
|
15
|
%
|
|
12
|
%
|
|
|
|
16
|
%
|
|
12
|
%
|
|
|
||||||
L&SS headcount at end of period
|
102
|
|
|
56
|
|
|
82
|
%
|
|
|
|
|
|
|
Cost of Support Revenue
|
Three months ended
|
|
Six months ended
|
||||||||||||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change |
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change |
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
Cost of support revenue
|
$
|
21.3
|
|
|
$
|
21.6
|
|
|
(1
|
)%
|
|
$
|
42.7
|
|
|
$
|
41.5
|
|
|
3
|
%
|
% of total revenue
|
7
|
%
|
|
7
|
%
|
|
|
|
7
|
%
|
|
6
|
%
|
|
|
||||||
% of total support revenue
|
13
|
%
|
|
13
|
%
|
|
|
|
12
|
%
|
|
12
|
%
|
|
|
||||||
Support headcount at end of period
|
668
|
|
|
625
|
|
|
7
|
%
|
|
|
|
|
|
|
Cost of Professional Services Revenue
|
Three months ended
|
|
Six months ended
|
||||||||||||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change
|
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change
|
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
Cost of professional services revenue
|
$
|
51.5
|
|
|
$
|
61.3
|
|
|
(16
|
)%
|
|
$
|
109.8
|
|
|
$
|
124.1
|
|
|
(12
|
)%
|
% of total revenue
|
16
|
%
|
|
19
|
%
|
|
|
|
17
|
%
|
|
19
|
%
|
|
|
||||||
% of total professional services revenue
|
87
|
%
|
|
83
|
%
|
|
|
|
88
|
%
|
|
85
|
%
|
|
|
||||||
Professional services headcount at end of period
|
1,241
|
|
|
1,342
|
|
|
(8
|
)%
|
|
|
|
|
|
|
|
Sales and Marketing
|
Three months ended
|
|
Six months ended
|
||||||||||||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change |
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change |
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
Sales and marketing
|
$
|
82.0
|
|
|
$
|
85.9
|
|
|
(5
|
)%
|
|
$
|
169.6
|
|
|
$
|
170.2
|
|
|
—
|
%
|
% of total revenue
|
26
|
%
|
|
26
|
%
|
|
|
|
27
|
%
|
|
26
|
%
|
|
|
||||||
Sales and marketing headcount at end of period
|
1,458
|
|
|
1,366
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
Research and Development
|
Three months ended
|
|
Six months ended
|
||||||||||||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change |
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change |
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
Research and development
|
$
|
60.2
|
|
|
$
|
55.6
|
|
|
8
|
%
|
|
$
|
121.3
|
|
|
$
|
108.7
|
|
|
12
|
%
|
% of total revenue
|
19
|
%
|
|
17
|
%
|
|
|
|
19
|
%
|
|
17
|
%
|
|
|
||||||
Research and development headcount at end of period
|
2,131
|
|
|
2,032
|
|
|
5
|
%
|
|
|
|
|
|
|
|
General and Administrative
|
Three months ended
|
|
Six months ended
|
||||||||||||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change |
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change |
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
General and administrative
|
$
|
34.2
|
|
|
$
|
34.1
|
|
|
—
|
%
|
|
$
|
71.2
|
|
|
$
|
65.1
|
|
|
9
|
%
|
% of total revenue
|
11
|
%
|
|
10
|
%
|
|
|
|
11
|
%
|
|
10
|
%
|
|
|
||||||
General and administrative headcount at end of period
|
694
|
|
|
622
|
|
|
12
|
%
|
|
|
|
|
|
|
|
Amortization of Acquired Intangible Assets
|
Three months ended
|
|
Six months ended
|
||||||||||||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change |
|
April 4, 2015
|
|
March 29, 2014
|
|
Percent
Change |
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
Amortization of acquired intangible assets
|
$
|
9.2
|
|
|
$
|
8.0
|
|
|
15
|
%
|
|
$
|
18.6
|
|
|
$
|
15.8
|
|
|
18
|
%
|
% of total revenue
|
3
|
%
|
|
2
|
%
|
|
|
|
3
|
%
|
|
2
|
%
|
|
|
Restructuring Charges
|
Three months ended
|
Six months ended
|
|||||||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
April 4, 2015
|
|
March 29, 2014
|
||||||||
|
(in millions)
|
||||||||||||||
Restructuring charges
|
$
|
38.5
|
|
|
$
|
—
|
|
|
$
|
38.2
|
|
|
$
|
1.1
|
|
Interest and Other Income (Expense), net
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
April 4, 2015
|
|
March 29, 2014
|
||||||||
|
(in millions)
|
||||||||||||||
Interest income
|
$
|
0.9
|
|
|
$
|
0.8
|
|
|
$
|
2.1
|
|
|
$
|
1.5
|
|
Interest expense
|
(3.5
|
)
|
|
(2.1
|
)
|
|
(7.3
|
)
|
|
(3.4
|
)
|
||||
Other income (expense), net
|
(1.0
|
)
|
|
(1.4
|
)
|
|
(1.6
|
)
|
|
(2.6
|
)
|
||||
Total interest and other income (expense), net
|
$
|
(3.6
|
)
|
|
$
|
(2.7
|
)
|
|
$
|
(6.8
|
)
|
|
$
|
(4.4
|
)
|
Income Taxes
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
April 4, 2015
|
|
March 29, 2014
|
||||||||
|
(Dollar amounts in millions)
|
||||||||||||||
Pre-tax income
|
$
|
0.4
|
|
|
$
|
48.5
|
|
|
$
|
34.8
|
|
|
$
|
101.6
|
|
Tax (benefit) provision
|
(5.0
|
)
|
|
4.8
|
|
|
(0.9
|
)
|
|
18.2
|
|
||||
Effective income tax rate
|
(1,293
|
)%
|
|
10
|
%
|
|
(3
|
)%
|
|
18
|
%
|
•
|
non-GAAP revenue—GAAP revenue
|
•
|
non-GAAP gross margin—GAAP gross margin
|
•
|
non-GAAP operating income—GAAP operating income
|
•
|
non-GAAP operating margin—GAAP operating margin
|
•
|
non-GAAP net income—GAAP net income
|
•
|
non-GAAP diluted earnings per share—GAAP diluted earnings per share
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
April 4, 2015
|
|
March 29, 2014
|
||||||||
|
(in millions, except per share amounts)
|
||||||||||||||
GAAP revenue
|
$
|
314.1
|
|
|
$
|
328.7
|
|
|
$
|
639.6
|
|
|
$
|
653.6
|
|
Fair value of acquired deferred revenue
|
1.1
|
|
|
—
|
|
|
2.5
|
|
|
—
|
|
||||
Non-GAAP revenue
|
$
|
315.3
|
|
|
$
|
328.7
|
|
|
$
|
642.1
|
|
|
$
|
653.6
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP gross margin
|
$
|
228.1
|
|
|
$
|
234.9
|
|
|
$
|
460.6
|
|
|
$
|
466.9
|
|
Fair value of acquired deferred revenue
|
1.1
|
|
|
—
|
|
|
2.5
|
|
|
—
|
|
||||
Fair value of acquired deferred costs
|
(0.2
|
)
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
||||
Stock-based compensation
|
2.6
|
|
|
2.3
|
|
|
5.2
|
|
|
4.8
|
|
||||
Amortization of acquired intangible assets included in cost of revenue
|
4.7
|
|
|
4.4
|
|
|
9.5
|
|
|
8.9
|
|
||||
Non-GAAP gross margin
|
$
|
236.4
|
|
|
$
|
241.6
|
|
|
$
|
477.5
|
|
|
$
|
480.6
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP operating income
|
$
|
4.0
|
|
|
$
|
51.2
|
|
|
$
|
41.6
|
|
|
$
|
106.1
|
|
Fair value of acquired deferred revenue
|
1.1
|
|
|
—
|
|
|
2.5
|
|
|
—
|
|
||||
Fair value of acquired deferred costs
|
(0.2
|
)
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
||||
Stock-based compensation
|
12.8
|
|
|
12.6
|
|
|
24.1
|
|
|
25.3
|
|
||||
Amortization of acquired intangible assets included in cost of revenue
|
4.7
|
|
|
4.4
|
|
|
9.5
|
|
|
8.9
|
|
||||
Amortization of acquired intangible assets
|
9.2
|
|
|
8.0
|
|
|
18.6
|
|
|
15.8
|
|
||||
Charges included in general and administrative expenses
(1)
|
3.6
|
|
|
3.9
|
|
|
9.3
|
|
|
5.2
|
|
||||
Restructuring charge
|
38.5
|
|
|
—
|
|
|
38.2
|
|
|
1.1
|
|
||||
Non-GAAP operating income
|
$
|
73.8
|
|
|
$
|
80.1
|
|
|
$
|
143.6
|
|
|
$
|
162.4
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP net income
|
$
|
5.4
|
|
|
$
|
43.8
|
|
|
$
|
35.7
|
|
|
$
|
83.4
|
|
Fair value of acquired deferred revenue
|
1.1
|
|
|
—
|
|
|
2.5
|
|
|
—
|
|
||||
Fair value of acquired deferred costs
|
(0.2
|
)
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
||||
Stock-based compensation
|
12.8
|
|
|
12.6
|
|
|
24.1
|
|
|
25.3
|
|
||||
Amortization of acquired intangible assets included in cost of revenue
|
4.7
|
|
|
4.4
|
|
|
9.5
|
|
|
8.9
|
|
||||
Amortization of acquired intangible assets
|
9.2
|
|
|
8.0
|
|
|
18.6
|
|
|
15.8
|
|
||||
Charges included in general and administrative expenses
(1)
|
3.6
|
|
|
3.9
|
|
|
9.3
|
|
|
5.2
|
|
||||
Restructuring charges
|
38.5
|
|
|
—
|
|
|
38.2
|
|
|
1.1
|
|
||||
Income tax adjustments
(2)
|
(13.8
|
)
|
|
(15.0
|
)
|
|
(17.2
|
)
|
|
(21.8
|
)
|
||||
Non-GAAP net income
|
$
|
61.4
|
|
|
$
|
57.7
|
|
|
$
|
120.4
|
|
|
$
|
117.9
|
|
GAAP diluted earnings per share
|
$
|
0.05
|
|
|
$
|
0.36
|
|
|
$
|
0.31
|
|
|
$
|
0.69
|
|
Fair value of acquired deferred revenue
|
0.01
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
||||
Fair value of acquired deferred costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Stock-based compensation
|
0.11
|
|
|
0.10
|
|
|
0.21
|
|
|
0.21
|
|
||||
Amortization of acquired intangible assets
|
0.12
|
|
|
0.10
|
|
|
0.24
|
|
|
0.20
|
|
||||
Charges included in general and administrative expenses
(1)
|
0.03
|
|
|
0.03
|
|
|
0.08
|
|
|
0.04
|
|
||||
Restructuring charges
|
0.33
|
|
|
—
|
|
|
0.33
|
|
|
0.01
|
|
||||
Income tax adjustments
(2)
|
(0.12
|
)
|
|
(0.12
|
)
|
|
(0.15
|
)
|
|
(0.18
|
)
|
||||
Non-GAAP diluted earnings per share
|
$
|
0.53
|
|
|
$
|
0.48
|
|
|
$
|
1.03
|
|
|
$
|
0.98
|
|
|
Three months ended
|
|
Six months ended
|
||||||||
|
April 4, 2015
|
|
March 29, 2014
|
|
April 4, 2015
|
|
March 29, 2014
|
||||
GAAP operating margin
|
1.3
|
%
|
|
15.6
|
%
|
|
6.5
|
%
|
|
16.2
|
%
|
Fair value of acquired deferred revenue
|
0.4
|
%
|
|
—
|
%
|
|
0.4
|
%
|
|
—
|
%
|
Fair value of acquired deferred costs
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Stock-based compensation
|
4.1
|
%
|
|
3.8
|
%
|
|
3.8
|
%
|
|
3.9
|
%
|
Amortization of acquired intangible assets
|
4.4
|
%
|
|
3.8
|
%
|
|
4.4
|
%
|
|
3.8
|
%
|
Charges included in general and administrative expenses
|
1.1
|
%
|
|
1.2
|
%
|
|
1.5
|
%
|
|
0.8
|
%
|
Restructuring charges
|
12.3
|
%
|
|
—
|
%
|
|
6.0
|
%
|
|
0.2
|
%
|
Non-GAAP operating margin
|
23.4
|
%
|
|
24.4
|
%
|
|
22.4
|
%
|
|
24.8
|
%
|
(1)
|
Represents acquisition-related charges and costs related to terminating a U.S. pension plan.
|
(2)
|
Income taxes for non-GAAP diluted earnings per share reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments described in
Non-GAAP Measures.
In the fourth quarter of 2012, a valuation allowance was established against our U.S. net deferred tax assets. Similarly, in the fourth quarter of 2014, valuation allowances were established against our foreign net deferred tax assets in two foreign jurisdictions. As the U.S. and the two foreign jurisdictions are profitable on a non-GAAP basis, the 2015 and 2014 non-GAAP tax provision is being calculated assuming there is no valuation allowance in these jurisdictions. Our non-GAAP tax provision in the first quarter of 2015 reflects a $2.1 million tax benefit related to a retroactive extension of the research and development tax credit enacted in the first quarter of 2015. The second quarter of 2014 included a non-cash tax benefit of $8.9 million related to the release of a portion of the valuation allowance as a result of deferred tax liabilities established for the acquisition of ThingWorx. This benefit has been excluded from our non-GAAP tax results.
|
•
|
determining whether collection is probable;
|
•
|
assessing whether the fee is fixed or determinable;
|
•
|
determining whether service arrangements, including modifications and customization of the underlying software, are not essential to the functionality of the licensed software and thus would result in the revenue for license and service elements of an agreement being recorded separately; and
|
•
|
determining the fair value of services and support elements included in multiple-element arrangements, which is the basis for allocating and deferring revenue for such services and support.
|
|
April 4, 2015
|
|
March 29, 2014
|
||||
|
(in thousands)
|
||||||
Cash and cash equivalents
|
$
|
267,815
|
|
|
$
|
270,470
|
|
Amounts below are for the six months ended:
|
|
|
|
||||
Cash provided by operating activities
|
$
|
105,624
|
|
|
$
|
146,964
|
|
Cash used by investing activities
|
(14,927
|
)
|
|
(121,861
|
)
|
||
Cash (used) provided by financing activities
|
(102,945
|
)
|
|
3,086
|
|
|
Six months ended
|
||||||
|
April 4, 2015
|
|
March 29, 2014
|
||||
|
(in thousands)
|
||||||
Cash used by investing activities included the following:
|
|
|
|
||||
Additions to property and equipment
|
$
|
(14,107
|
)
|
|
$
|
(10,342
|
)
|
Purchases of investments
|
(1,000
|
)
|
|
—
|
|
||
Acquisitions of businesses
|
180
|
|
|
(111,519
|
)
|
||
|
$
|
(14,927
|
)
|
|
$
|
(121,861
|
)
|
|
Six months ended
|
||||||
|
April 4, 2015
|
|
March 29, 2014
|
||||
|
(in thousands)
|
||||||
Cash (used) provided by financing activities included the following:
|
|
|
|
||||
Net borrowings (repayments) under our credit facility
|
$
|
(81,250
|
)
|
|
$
|
60,000
|
|
Repurchases of common stock
|
—
|
|
|
(39,965
|
)
|
||
Payments of withholding taxes in connection with vesting of stock-based awards
|
(21,864
|
)
|
|
(21,637
|
)
|
||
Proceeds from issuance of common stock
|
6
|
|
|
716
|
|
||
Excess tax benefits from stock-based awards
|
163
|
|
|
8,092
|
|
||
Credit facility origination costs
|
—
|
|
|
(4,120
|
)
|
||
|
$
|
(102,945
|
)
|
|
$
|
3,086
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1A.
|
RISK FACTORS
|
|
|
|
2.1
|
|
Agreement and Plan of Merger dated as of May 4, 2015 by and among PTC Inc., Cedar Acquisition LLC, ColdLight Solutions, LLC, and Cedar Holder Representative, LLC., as the Security Holder Representative (filed as Exhibit 2.1 to our Current Report on Form 8-K dated May 5, 2015 (File No. 0-18059) and incorporated herein by reference).
|
|
|
|
3.1(a)
|
|
Restated Articles of Organization of PTC Inc. adopted February 4, 1993 (filed as Exhibit 3.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 1996 (File No. 0-18059) and incorporated herein by reference).
|
|
|
|
3.1(b)
|
|
Articles of Amendment to Restated Articles of Organization adopted February 9, 1996 (filed as Exhibit 4.1(b) to our Registration Statement on Form S-8 (Registration No. 333-01297) and incorporated herein by reference).
|
|
|
|
3.1(c)
|
|
Articles of Amendment to Restated Articles of Organization adopted February 13, 1997 (filed as Exhibit 4.1(b) to our Registration Statement on Form S-8 (Registration No. 333-22169) and incorporated herein by reference).
|
|
|
|
3.1(d)
|
|
Articles of Amendment to Restated Articles of Organization adopted February 10, 2000 (filed as Exhibit 3.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended April 1, 2000 (File No. 0-18059) and incorporated herein by reference).
|
|
|
|
3.1(e)
|
|
Certificate of Vote of Directors establishing Series A Junior Participating Preferred Stock (filed as Exhibit 3.1(e) to our Annual Report on Form 10-K for the fiscal year ended September 30, 2000 (File No. 0-18059) and incorporated herein by reference).
|
|
|
|
3.1(f)
|
|
Articles of Amendment to Restated Articles of Organization adopted February 28, 2006 (filed as Exhibit 3.1(f) to our Quarterly Report on Form 10-Q for the fiscal quarter ended April 1, 2006 (File No. 0-18059) and incorporated herein by reference).
|
|
|
|
3.1(g)
|
|
Articles of Amendment to Restated Articles of Organization adopted January 28, 2013 (filed as Exhibit 3.1(g) to our Quarterly Report in Form 10-Q for the fiscal quarter ended December 29, 2012 (File No. 0-18059) and incorporated herein by reference).
|
|
|
|
3.2
|
|
By-Laws, as amended and restated, of PTC Inc. (filed as Exhibit 3.2 to our Quarterly Report in Form 10-Q for the fiscal quarter ended March 29, 2014 (File No. 0-18059) and incorporated herein by reference).
|
|
|
|
10.1
|
|
Consulting Agreement dated February 10, 2015 by and between PTC Inc. and Jeffrey Glidden (filed as Exhibit 10 to our Current Report on 8-K dated February 13, 2015 (File No. 0-18059) and incorporated herein by reference).
|
|
|
|
10.2
|
|
Executive Agreement dated February 11, 2015 between PTC Inc. and Andrew Miller.
|
|
|
|
10.3
|
|
Relocation Letter dated February 19, 2015 between PTC Inc. and Andrew Miller.
|
|
|
|
31.1
|
|
Certification of the Chief Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a).
|
|
|
|
31.2
|
|
Certification of the Chief Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a).
|
|
|
|
32*
|
|
Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350.
|
|
|
|
101
|
|
The following materials from PTC Inc.'s Quarterly Report on Form 10-Q for the quarter ended April 4, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of April 4, 2015 and September 30, 2014; (ii) Condensed Consolidated Statements of Operations for the three and six months ended April 4, 2015 and March 29, 2014; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended April 4, 2015 and March 29, 2014; (iv) Condensed Consolidated Statements of Cash Flows for the six months ended April 4, 2015 and March 29, 2014; and (v) Notes to Condensed Consolidated Financial Statements.
|
*
|
Indicates that the exhibit is being furnished, not filed, with this report.
|
PTC Inc.
|
||
|
|
|
By:
|
|
/s/ A
NDREW
M
ILLER
|
|
|
Andrew Miller
Executive Vice President and Chief Financial
Officer (Principal Financial Officer)
|
PTC INC.
By:
/s/ James E. Heppelmann/
Title:
President and Chief Executive Officer
|
ANDREW D. MILLER
/s/ Andrew D. Miller
|
|
|
1.
|
This offer is contingent upon you commencing work in the PTC Needham office on February 9, 2015 and relocating to Massachusetts.
|
2.
|
This offer includes a relocation reimbursement of up
to $500,000 to
cover your actual relocation expenses outlined below. You may exceed one or more of the following expense items, but in no event will PTC be responsible for more than $500,000 in the aggregate. PTC will issue the tax gross-up only after all other relocation expenses have been paid to ensure that the relocation budget is not exceeded.
|
Relocation Budget Details:
|
Budget Amount
|
Payment Method
|
House Hunting Trip
|
$3,000
|
Relocation Expense Report
|
Travel One Way to New Location
|
$6,000
|
Relocation Expense Report
|
Shipping and Storage of Household Goods
|
$55,000
|
Direct Bill to PTC
|
Shipping of Autos
|
$10,000
|
Direct Bill to PTC
|
Relocation Services
|
$5,000
|
Direct Bill to PTC
|
Temporary Living
|
$40,000
|
Relocation Expense Report
|
Brokerage Fees
|
$6,000
|
Direct Bill to PTC
|
BVO Cost (*)
|
$335,000
|
Direct Bill to PTC
|
Tax Gross-up (**)
|
$40,000
|
Paid by PTC via Payroll
|
|
|
|
Relocation Budget Cap:
|
$500,000
|
|
|
|
|
3.
|
Your Relocation Expenses must be submitted to Weichert Workforce Mobility for reimbursement. Your Relocation Counselor will provide instructions on completion. You will be required to e-mail or attach all receipts to your expense report. All expenses are reconciled by Weichert, and Weichert will make reimbursement directly to you.
|
4.
|
Any actual taxable relocation benefits that are reimbursed to you or paid on your behalf under this letter agreement will be included as income in your U.S. W-2. Any taxable items will be “grossed-up” and PTC will pay tax to the government based on the gross-up. This gross-up is an estimate of the tax due on these items and may not exactly reflect your effective tax rate on your U.S. income tax returns. PTC will make the appropriate U. S. and State tax payments, directly through payroll.
|
5.
|
As an active employee, you will be eligible to participate in Weichert’s Buyer Value Option (BVO) program for the sale of your principle residence located at 280111 Andrey Smith Lane, Saratoga, CA. The terms of this program are as set forth in the agreement between PTC and Weichert, a copy of which has been provided to you. The BVO program will provide you a cost savings by the company covering the cost of commissions and closing costs on the sale of your home. By signing below, you agree to (i) follow the enclosed Weichert BVO program procedures, (ii) add a Listing Exclusion Clause to your agreement with your Broker, and (iii) not sign any
agreements with real estate brokers or prospective buyers without consulting your Weichert Counselor.
You are financially responsible for your home until you vacate the property, the Weichert acceptance date, or the closing date, whichever occurs last.
By signing below, you also acknowledge and agree that, under the terms of PTC’s agreement with Weichert, PTC may be responsible to Weichert for costs and expenses that are supposed to be borne by you, and in such event you hereby agree to indemnify PTC for such costs and expenses, and to promptly reimburse PTC for such costs and expenses. You furthermore agree to provide to PTC all reasonable cooperation requested by PTC in connection with this program.
|
6.
|
The BVO Program eligibility is based on finding a qualified buyer within twelve (12) months from the relocation date in your written agreement with PTC. Program eligibility ends upon voluntary termination of employment or termination due to cause. The program can be extended upon management approval.
|
7.
|
If you voluntarily terminate employment with PTC within one year from the date of hire, you
agree to reimburse PTC all of the twelve-month pro-rated cost of your relocation. For example, if the relocation costs are $500,000 and you terminate employment after only three months, you will be required to reimburse PTC for 75% of the total cost of the relocation (or $375,000)
.
This will be based on actual reimbursements to you and relocation vendors. Also, because this is a permanent relocation, PTC will not provide any further relocation assistance following any termination of your employment. You hereby agree that, in the event that PTC owes you any money at the time of your termination, PTC may withhold such amounts (up to the amount you owe PTC) until such time as you reimburse PTC for the relocation costs and, if you do not do so within a reasonable time, to offset such amounts by what you owe PTC at that time.
|
8.
|
Please update your personal address information in “My Employee Profile” under the “Company Wide Tools” section of PTConnector upon your move into your permanent residence.
|
9.
|
The employment relationship established by this letter is at-will and nothing contained in this letter shall be construed to constitute a contract of employment. As an employee of the Company, you will enter into the enclosed Proprietary Information Agreement.
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Date:
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May 11, 2015
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/S/ JAMES HEPPELMANN
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James Heppelmann
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President and Chief Executive Officer
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Date:
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May 11, 2015
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/S/
ANDREW MILLER
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Andrew Miller
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Executive Vice President and Chief Financial Officer
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Date:
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May 11, 2015
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/S/ JAMES HEPPELMANN
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James Heppelmann
President and Chief Executive Officer
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Date:
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May 11, 2015
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/S/ ANDREW MILLER
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Andrew Miller
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Executive Vice President and Chief Financial Officer
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