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 1.
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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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July 2,
2016 |
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September 30,
2015 |
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ASSETS
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Current assets:
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||||
Cash and cash equivalents
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$
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294,626
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$
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273,417
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Short term marketable securities
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11,380
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—
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Accounts receivable, net of allowance for doubtful accounts of $999 and $998 at July 2, 2016 and September 30, 2015, respectively
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151,718
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197,275
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Prepaid expenses
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56,986
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56,365
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Other current assets
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120,576
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140,819
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Deferred tax assets
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—
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36,803
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Total current assets
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635,286
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704,679
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Property and equipment, net
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62,909
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65,162
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Goodwill
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1,169,660
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1,069,041
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Acquired intangible assets, net
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323,382
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291,301
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Long term marketable securities
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33,226
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—
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Deferred tax assets
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71,467
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38,936
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Other assets
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43,216
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40,794
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Total assets
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$
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2,339,146
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$
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2,209,913
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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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16,250
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$
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13,361
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Accrued expenses and other current liabilities
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77,003
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97,613
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Accrued compensation and benefits
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91,861
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82,414
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Accrued income taxes
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7,784
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4,010
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Deferred tax liabilities
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—
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1,622
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Current portion of long term debt
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—
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50,000
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Deferred revenue
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410,996
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368,240
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Total current liabilities
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603,894
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617,260
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Long term debt, net of current portion
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778,125
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618,125
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Deferred tax liabilities
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20,342
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42,361
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Deferred revenue
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14,436
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18,610
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Other liabilities
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59,688
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53,386
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Total liabilities
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1,476,485
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1,349,742
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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, $0.01 par value; 500,000 shares authorized; 114,952 and 113,745 shares issued and outstanding at July 2, 2016 and September 30, 2015, respectively
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1,150
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1,137
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Additional paid-in capital
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1,584,675
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1,553,390
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Accumulated deficit
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(628,606
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)
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(602,614
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)
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Accumulated other comprehensive loss
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(94,558
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)
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(91,742
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)
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Total stockholders’ equity
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862,661
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860,171
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Total liabilities and stockholders’ equity
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$
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2,339,146
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$
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2,209,913
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Three months ended
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Nine months ended
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||||||||||||
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July 2,
2016 |
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July 4,
2015 |
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July 2,
2016 |
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July 4,
2015 |
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Revenue:
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Subscription
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$
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31,822
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$
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17,155
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$
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77,657
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$
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47,143
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Support
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161,881
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165,687
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494,262
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516,042
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Total recurring software revenue
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193,703
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182,842
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571,919
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563,185
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Perpetual license
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44,648
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66,771
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132,100
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201,707
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|
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Total software revenue
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238,351
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249,613
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704,019
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764,892
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Professional services
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50,301
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53,500
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148,277
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177,782
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|
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Total revenue
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288,652
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303,113
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852,296
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942,674
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Cost of revenue:
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Cost of software revenue
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38,864
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33,282
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114,291
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102,525
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Cost of professional services revenue
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43,606
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46,094
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128,518
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155,847
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Total cost of revenue
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82,470
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79,376
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242,809
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258,372
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Gross margin
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206,182
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223,737
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609,487
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684,302
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Operating expenses:
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Sales and marketing
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94,874
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88,353
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264,480
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261,702
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Research and development
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57,118
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54,078
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171,397
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175,333
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General and administrative
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35,485
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46,201
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107,968
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113,725
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|
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Amortization of acquired intangible assets
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8,294
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9,105
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25,040
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27,691
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Restructuring charges
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2,815
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4,393
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44,541
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42,625
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|
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Total operating expenses
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198,586
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202,130
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613,426
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|
621,076
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Operating income (loss)
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7,596
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|
21,607
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(3,939
|
)
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63,226
|
|
||||
Interest and other expense, net
|
(8,300
|
)
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(3,668
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)
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(19,880
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)
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(10,492
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)
|
||||
Income (loss) before income taxes
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(704
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)
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17,939
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(23,819
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)
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52,734
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|
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Provision (benefit) for income taxes
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(3,777
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)
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|
504
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2,173
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(377
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)
|
||||
Net income (loss)
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$
|
3,073
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$
|
17,435
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$
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(25,992
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)
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$
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53,111
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Earnings (loss) per share—Basic
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$
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0.03
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$
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0.15
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$
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(0.23
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)
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$
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0.46
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Earnings (loss) per share—Diluted
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$
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0.03
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$
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0.15
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$
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(0.23
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)
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$
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0.46
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Weighted average shares outstanding—Basic
|
114,795
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114,764
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|
|
114,499
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|
|
115,021
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|
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Weighted average shares outstanding—Diluted
|
115,698
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|
|
116,025
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|
|
114,499
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|
|
116,330
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Three months ended
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Nine months ended
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||||||||||||
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July 2,
2016 |
|
July 4,
2015 |
|
July 2,
2016 |
|
July 4,
2015 |
||||||||
Net income (loss)
|
$
|
3,073
|
|
|
$
|
17,435
|
|
|
$
|
(25,992
|
)
|
|
$
|
53,111
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Unrealized hedge gain (loss) arising during the period
|
361
|
|
|
—
|
|
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(3,633
|
)
|
|
—
|
|
||||
Net hedge loss reclassified into earnings
|
(1,560
|
)
|
|
—
|
|
|
(727
|
)
|
|
—
|
|
||||
Unrealized gain (loss) on hedging instruments
|
1,921
|
|
|
—
|
|
|
(2,906
|
)
|
|
—
|
|
||||
Foreign currency translation adjustment, net of tax of $0 for each period
|
(5,961
|
)
|
|
1,201
|
|
|
(1,219
|
)
|
|
(41,695
|
)
|
||||
Unrealized gain on marketable securities
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
||||
Amortization of net actuarial pension loss included in net income, net of tax of $0.2 million and $0.1 million in the third quarter of 2016 and 2015, respectively, and $0.5 million and $0.4 million in the first nine months of 2016 and 2015, respectively
|
417
|
|
|
1,003
|
|
|
1,220
|
|
|
3,081
|
|
||||
Change in unamortized pension loss during the period related to changes in foreign currency
|
413
|
|
|
(190
|
)
|
|
82
|
|
|
2,915
|
|
||||
Total other comprehensive income (loss)
|
(3,203
|
)
|
|
2,014
|
|
|
(2,816
|
)
|
|
(35,699
|
)
|
||||
Comprehensive income (loss)
|
$
|
(130
|
)
|
|
$
|
19,449
|
|
|
$
|
(28,808
|
)
|
|
$
|
17,412
|
|
|
Nine months ended
|
||||||
|
July 2,
2016 |
|
July 4,
2015 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(25,992
|
)
|
|
$
|
53,111
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
64,721
|
|
|
63,455
|
|
||
Stock-based compensation
|
51,821
|
|
|
38,135
|
|
||
Excess tax benefits from stock-based awards
|
(94
|
)
|
|
71
|
|
||
Other non-cash items, net
|
246
|
|
|
(53
|
)
|
||
Changes in operating assets and liabilities, excluding the effects of acquisitions:
|
|
|
|
||||
Accounts receivable
|
58,499
|
|
|
44,906
|
|
||
Accounts payable, accrued expenses and other current liabilities
|
(17,303
|
)
|
|
17,433
|
|
||
Accrued compensation and benefits
|
7,442
|
|
|
(27,462
|
)
|
||
Deferred revenue
|
44,592
|
|
|
51,393
|
|
||
Accrued and deferred income taxes
|
(17,470
|
)
|
|
(25,608
|
)
|
||
Other current assets and prepaid expenses
|
4,249
|
|
|
(5,109
|
)
|
||
Other noncurrent assets and liabilities
|
(1,115
|
)
|
|
(17,809
|
)
|
||
Net cash provided by operating activities
|
169,596
|
|
|
192,463
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Additions to property and equipment
|
(16,632
|
)
|
|
(20,637
|
)
|
||
Purchases of investments
|
(44,605
|
)
|
|
(11,000
|
)
|
||
Acquisitions of businesses, net of cash acquired
|
(164,191
|
)
|
|
(98,411
|
)
|
||
Net cash used by investing activities
|
(225,428
|
)
|
|
(130,048
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings
|
670,000
|
|
|
135,000
|
|
||
Repayments of borrowings under credit facility
|
(560,000
|
)
|
|
(122,500
|
)
|
||
Repurchases of common stock
|
—
|
|
|
(49,962
|
)
|
||
Proceeds from issuance of common stock
|
19
|
|
|
38
|
|
||
Excess tax benefits from stock-based awards
|
94
|
|
|
(71
|
)
|
||
Credit facility origination costs
|
(6,759
|
)
|
|
—
|
|
||
Contingent consideration
|
(10,621
|
)
|
|
—
|
|
||
Payments of withholding taxes in connection with vesting of stock-based awards
|
(20,636
|
)
|
|
(29,117
|
)
|
||
Net cash provided (used) by financing activities
|
72,097
|
|
|
(66,612
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
4,944
|
|
|
(14,397
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
21,209
|
|
|
(18,594
|
)
|
||
Cash and cash equivalents, beginning of period
|
273,417
|
|
|
293,654
|
|
||
Cash and cash equivalents, end of period
|
$
|
294,626
|
|
|
$
|
275,060
|
|
|
July 2,
2016 |
|
September 30,
2015 |
||||
|
(in thousands)
|
||||||
S&P bond rating BBB-1 and above-Tier 1
|
$
|
9,447
|
|
|
$
|
16,841
|
|
Internal Credit Assessment-Tier 2
|
2,623
|
|
|
10,593
|
|
||
Internal Credit Assessment-Tier 3
|
—
|
|
|
—
|
|
||
Total financing receivables
|
$
|
12,070
|
|
|
$
|
27,434
|
|
|
Employee severance and related benefits
|
|
Facility closures and related costs
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||
October 1, 2015
|
$
|
14,086
|
|
|
$
|
1,168
|
|
|
$
|
15,254
|
|
Charge to operations
|
44,010
|
|
|
531
|
|
|
44,541
|
|
|||
Cash disbursements
|
(49,059
|
)
|
|
(834
|
)
|
|
(49,893
|
)
|
|||
Foreign exchange impact
|
103
|
|
|
(11
|
)
|
|
92
|
|
|||
Accrual, July 2, 2016
|
$
|
9,140
|
|
|
$
|
854
|
|
|
$
|
9,994
|
|
Restricted stock unit activity for the nine months ended July 2, 2016
|
Shares
|
|
Weighted
Average
Grant Date
Fair Value
(Per Share)
|
|||
|
(in thousands)
|
|
|
|||
Balance of outstanding restricted stock units October 1, 2015
|
3,654
|
|
|
$
|
33.64
|
|
Granted
|
2,465
|
|
|
$
|
37.20
|
|
Vested
|
(1,794
|
)
|
|
$
|
30.06
|
|
Forfeited or not earned
|
(500
|
)
|
|
$
|
36.53
|
|
Balance of outstanding restricted stock units July 2, 2016
|
3,825
|
|
|
$
|
37.23
|
|
|
Restricted Stock Units
|
||||
Grant Period
|
TSR Units (1)
|
|
Performance-based RSUs (2)
|
|
Service-based RSUs (2)
|
|
(Number of Units in thousands)
|
||||
First nine months of 2016
|
326
|
|
343
|
|
1,795
|
(1)
|
The TSR units were granted to our executive officers pursuant to the terms described below.
|
(2)
|
The service-based RSUs were issued to employees, our executive officers and our directors. Executive officers may earn up to
one
or, for our CEO,
two
times the number of time-based RSUs (up to a maximum of
343,000
shares) if certain performance conditions are met. Of the service-based RSUs, approximately
64,000
shares will vest in one installment on or about the anniversary of the date of grant. Approximately
121,000
shares will vest in
two
substantially equal annual installments on or about the anniversary of the date of grant. All other service-based RSUs will vest in
three
substantially equal annual installments on or about the anniversary of the date of grant. The performance-based RSUs will vest in
three
substantially equal installments on the later of November 15, 2016, November 15, 2017 and November 15, 2018, or the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved.
|
Average volatility of peer group
|
28.1
|
%
|
Risk free interest rate
|
1.05
|
%
|
Dividend yield
|
—
|
%
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
July 2,
2016 |
|
July 4,
2015 |
|
July 2,
2016 |
|
July 4,
2015 |
||||||||
|
(in thousands)
|
||||||||||||||
Cost of software revenue
|
$
|
1,158
|
|
|
$
|
1,133
|
|
|
$
|
4,163
|
|
|
$
|
3,158
|
|
Cost of professional services revenue
|
1,342
|
|
|
1,317
|
|
|
4,072
|
|
|
4,510
|
|
||||
Sales and marketing
|
3,195
|
|
|
4,075
|
|
|
11,254
|
|
|
10,821
|
|
||||
Research and development
|
2,531
|
|
|
2,928
|
|
|
7,578
|
|
|
9,015
|
|
||||
General and administrative
|
5,570
|
|
|
4,618
|
|
|
24,754
|
|
|
10,631
|
|
||||
Total stock-based compensation expense
|
$
|
13,796
|
|
|
$
|
14,071
|
|
|
$
|
51,821
|
|
|
$
|
38,135
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
Calculation of Basic and Diluted EPS
|
July 2,
2016 |
|
July 4,
2015 |
|
July 2,
2016 |
|
July 4,
2015 |
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
Net income (loss)
|
$
|
3,073
|
|
|
$
|
17,435
|
|
|
$
|
(25,992
|
)
|
|
$
|
53,111
|
|
Weighted average shares outstanding—Basic
|
114,795
|
|
|
114,764
|
|
|
114,499
|
|
|
115,021
|
|
||||
Dilutive effect of employee stock options, restricted shares and restricted stock units
|
903
|
|
|
1,261
|
|
|
—
|
|
|
1,309
|
|
||||
Weighted average shares outstanding—Diluted
|
115,698
|
|
|
116,025
|
|
|
114,499
|
|
|
116,330
|
|
||||
Earnings (loss) per share—Basic
|
$
|
0.03
|
|
|
$
|
0.15
|
|
|
$
|
(0.23
|
)
|
|
$
|
0.46
|
|
Earnings (loss) per share—Diluted
|
$
|
0.03
|
|
|
$
|
0.15
|
|
|
$
|
(0.23
|
)
|
|
$
|
0.46
|
|
|
July 2, 2016
|
|
September 30, 2015
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Goodwill (not amortized)
|
|
|
|
|
$
|
1,169,660
|
|
|
|
|
|
|
$
|
1,069,041
|
|
||||||||
Intangible assets with finite lives (amortized) (1):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Purchased software
|
$
|
352,782
|
|
|
$
|
192,509
|
|
|
$
|
160,273
|
|
|
$
|
284,257
|
|
|
$
|
174,887
|
|
|
$
|
109,370
|
|
Capitalized software
|
22,877
|
|
|
22,877
|
|
|
—
|
|
|
22,877
|
|
|
22,877
|
|
|
—
|
|
||||||
Customer lists and relationships
|
355,504
|
|
|
198,335
|
|
|
157,169
|
|
|
349,938
|
|
|
174,017
|
|
|
175,921
|
|
||||||
Trademarks and trade names
|
19,012
|
|
|
13,151
|
|
|
5,861
|
|
|
18,534
|
|
|
12,759
|
|
|
5,775
|
|
||||||
Other
|
3,941
|
|
|
3,862
|
|
|
79
|
|
|
3,946
|
|
|
3,711
|
|
|
235
|
|
||||||
|
$
|
754,116
|
|
|
$
|
430,734
|
|
|
$
|
323,382
|
|
|
$
|
679,552
|
|
|
$
|
388,251
|
|
|
$
|
291,301
|
|
Total goodwill and acquired intangible assets
|
|
|
|
|
$
|
1,493,042
|
|
|
|
|
|
|
$
|
1,360,342
|
|
|
Software
Products
Segment
|
|
Services
Segment
|
|
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Balance, October 1, 2015
|
$
|
1,016,413
|
|
|
$
|
52,628
|
|
|
|
|
$
|
1,069,041
|
|
||
Acquisition of Vuforia
|
23,316
|
|
|
—
|
|
|
|
|
23,316
|
|
|||||
Acquisition of Kepware
|
77,081
|
|
|
—
|
|
|
|
|
77,081
|
|
|||||
Foreign currency translation adjustments
|
228
|
|
|
(6
|
)
|
|
|
|
222
|
|
|||||
Balance, July 2, 2016 prior to reallocation
|
$
|
1,117,038
|
|
|
$
|
52,622
|
|
|
|
|
$
|
1,169,660
|
|
||
|
Solutions Group
|
|
Technology Platform Group
|
|
Professional Services
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Balance, July 2, 2016 after reallocation
|
$
|
1,050,013
|
|
|
$
|
90,053
|
|
|
$
|
29,594
|
|
|
$
|
1,169,660
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
July 2,
2016 |
|
July 4,
2015 |
|
July 2,
2016 |
|
July 4,
2015 |
||||||||
|
(in thousands)
|
||||||||||||||
Amortization of acquired intangible assets
|
$
|
8,294
|
|
|
$
|
9,105
|
|
|
$
|
25,040
|
|
|
$
|
27,691
|
|
Cost of software revenue
|
6,383
|
|
|
4,957
|
|
|
18,235
|
|
|
14,438
|
|
||||
Total amortization expense
|
$
|
14,677
|
|
|
$
|
14,062
|
|
|
$
|
43,275
|
|
|
$
|
42,129
|
|
•
|
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.
|
|
July 2, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
72,829
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
72,829
|
|
Marketable securities
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
—
|
|
|
680
|
|
|
—
|
|
|
680
|
|
||||
Commercial paper
|
—
|
|
|
9,930
|
|
|
—
|
|
|
9,930
|
|
||||
Corporate notes/bonds
|
31,590
|
|
|
—
|
|
|
—
|
|
|
31,590
|
|
||||
U.S. government agency securities
|
—
|
|
|
2,406
|
|
|
—
|
|
|
2,406
|
|
||||
Forward contracts
|
—
|
|
|
1,739
|
|
|
—
|
|
|
1,739
|
|
||||
|
$
|
104,419
|
|
|
$
|
14,755
|
|
|
$
|
—
|
|
|
$
|
119,174
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration related to acquisitions
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,497
|
|
|
$
|
19,497
|
|
Forward contracts
|
—
|
|
|
6,150
|
|
|
—
|
|
|
6,150
|
|
||||
|
$
|
—
|
|
|
$
|
6,150
|
|
|
$
|
19,497
|
|
|
$
|
25,647
|
|
|
September 30, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
91,216
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
91,216
|
|
Forward contracts
|
—
|
|
|
507
|
|
|
—
|
|
|
507
|
|
||||
|
$
|
91,216
|
|
|
$
|
507
|
|
|
$
|
—
|
|
|
$
|
91,723
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration related to acquisitions
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,000
|
|
|
$
|
13,000
|
|
Forward contracts
|
—
|
|
|
46
|
|
|
—
|
|
|
46
|
|
||||
|
$
|
—
|
|
|
$
|
46
|
|
|
$
|
13,000
|
|
|
$
|
13,046
|
|
|
Contingent Consideration
|
||||||||||||||
|
(in thousands)
|
||||||||||||||
|
ThingWorx
|
|
ColdLight
|
|
Kepware
|
|
Total
|
||||||||
Balance, October 1, 2015
|
$
|
9,000
|
|
|
$
|
4,000
|
|
|
$
|
—
|
|
|
$
|
13,000
|
|
Addition to contingent consideration
|
—
|
|
|
—
|
|
|
16,900
|
|
|
16,900
|
|
||||
Change in present value of contingent consideration
|
—
|
|
|
1,000
|
|
|
97
|
|
|
1,097
|
|
||||
Payment of contingent consideration
|
(9,000
|
)
|
|
(2,500
|
)
|
|
|
|
(11,500
|
)
|
|||||
Balance, July 2, 2016
|
$
|
—
|
|
|
$
|
2,500
|
|
|
$
|
16,997
|
|
|
$
|
19,497
|
|
|
July 2, 2016
|
||||||||||||||
|
Amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair value
|
||||||||
|
(in thousands)
|
||||||||||||||
Certificates of deposit
|
$
|
680
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
680
|
|
Commercial paper
|
9,934
|
|
|
—
|
|
|
(4
|
)
|
|
9,930
|
|
||||
Corporate notes/bonds
|
31,579
|
|
|
11
|
|
|
—
|
|
|
31,590
|
|
||||
US government agency securities
|
2,406
|
|
|
—
|
|
|
—
|
|
|
2,406
|
|
||||
|
$
|
44,599
|
|
|
$
|
11
|
|
|
$
|
(4
|
)
|
|
$
|
44,606
|
|
|
July 2, 2016
|
||||||
|
Amortized cost
|
|
Fair value
|
||||
|
(in thousands)
|
||||||
Due in one year or less
|
$
|
11,387
|
|
|
$
|
11,380
|
|
Due after one year through three years
|
33,212
|
|
|
33,226
|
|
||
|
$
|
44,599
|
|
|
$
|
44,606
|
|
Currency Hedged
|
July 2,
2016 |
|
September 30,
2015 |
||||
|
(in thousands)
|
||||||
Canadian / U.S. Dollar
|
$
|
16,148
|
|
|
$
|
17,448
|
|
Euro / U.S. Dollar
|
145,317
|
|
|
82,917
|
|
||
British Pound / Euro
|
—
|
|
|
9,409
|
|
||
Israeli New Sheqel / U.S. Dollar
|
6,147
|
|
|
4,607
|
|
||
Japanese Yen / Euro
|
30,900
|
|
|
25,133
|
|
||
Japanese Yen / U.S. Dollar
|
6,716
|
|
|
—
|
|
||
Swiss Franc / U.S. Dollar
|
229
|
|
|
5,149
|
|
||
Swedish Krona / U.S. Dollar
|
5,111
|
|
|
3,128
|
|
||
All other
|
7,933
|
|
|
9,464
|
|
||
Total
|
$
|
218,501
|
|
|
$
|
157,255
|
|
Derivatives Not Designated as Hedging Instruments
|
|
Location of Gain or (Loss) Recognized in Income
|
|
Net realized and unrealized gain or (loss) (excluding the underlying foreign currency exposure being hedged)
|
||||||
|
|
|
|
Three months ended
|
||||||
|
|
|
|
July 2,
2016 |
|
July 4,
2015 |
||||
|
|
|
|
(in thousands)
|
||||||
Forward Contracts
|
|
Other Income (Expense)
|
|
$
|
(1,059
|
)
|
|
$
|
(741
|
)
|
|
|
|
|
|
|
|
||||
|
|
|
|
Nine months ended
|
||||||
|
|
|
|
July 2,
2016 |
|
July 4,
2015 |
||||
|
|
|
|
(in thousands)
|
||||||
Forward Contracts
|
|
Other Income (Expense)
|
|
$
|
(1,645
|
)
|
|
$
|
(1,122
|
)
|
Currency Hedged
|
July 2,
2016 |
|
September 30,
2015 |
||||
|
(in thousands)
|
||||||
Euro / U.S. Dollar
|
$
|
60,742
|
|
|
$
|
—
|
|
Japanese Yen / U.S. Dollar
|
20,488
|
|
|
—
|
|
||
SEK / U.S. Dollar
|
9,267
|
|
|
—
|
|
||
Total
|
$
|
90,497
|
|
|
$
|
—
|
|
Derivatives Designated as Hedging Instruments
|
|
Gain or (Loss)Recognized in OCI-Effective Portion
|
|
Location of Gain or (Loss) Reclassified from OCI into Income-Effective Portion
|
|
Gain or (Loss) Reclassified from OCI into Income-Effective Portion
|
|
Location of Gain or (Loss) Recognized-Ineffective Portion
|
|
Gain or (Loss) Recognized-Ineffective Portion
|
||||||||||||||||||
|
|
Three Months Ended
|
|
|
|
Three Months Ended
|
|
|
|
Three Months Ended
|
||||||||||||||||||
|
|
July 2,
2016 |
|
July 4,
2015 |
|
|
|
July 2,
2016 |
|
July 4,
2015 |
|
|
|
July 2,
2016 |
|
July 4,
2015 |
||||||||||||
Forward Contracts
|
|
$
|
361
|
|
|
$
|
—
|
|
|
Software Revenue
|
|
$
|
(1,560
|
)
|
|
$
|
—
|
|
|
Other Income (Expense)
|
|
$
|
9
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Nine months ended
|
|
|
|
Nine months ended
|
|
|
|
Nine months ended
|
||||||||||||||||||
|
|
July 2,
2016 |
|
July 4,
2015 |
|
|
|
July 2,
2016 |
|
July 4,
2015 |
|
|
|
July 2,
2016 |
|
July 4,
2015 |
||||||||||||
Forward Contracts
|
|
$
|
(3,633
|
)
|
|
$
|
—
|
|
|
Software Revenue
|
|
$
|
(727
|
)
|
|
$
|
—
|
|
|
Other Income (Expense)
|
|
$
|
(28
|
)
|
|
$
|
—
|
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheets
|
|
|
||||||||||||||||
As of July 2, 2016
|
Gross Amount of Recognized Assets
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Amounts of Assets Presented in the Consolidated Balance Sheets
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Net Amount
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Forward Contracts
|
$
|
1,739
|
|
|
$
|
—
|
|
|
$
|
1,739
|
|
|
$
|
(1,739
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheets
|
|
|
||||||||||||||||
As of July 2, 2016
|
Gross Amount of Recognized Liabilities
|
|
Gross Amounts Offset in the Consolidated Balance Sheets
|
|
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets
|
|
Financial Instruments
|
|
Cash Collateral Pledged
|
|
Net Amount
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Forward Contracts
|
$
|
6,150
|
|
|
$
|
—
|
|
|
$
|
6,150
|
|
|
$
|
(1,739
|
)
|
|
$
|
—
|
|
|
$
|
4,411
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
July 2,
2016 |
|
July 4,
2015 |
|
July 2,
2016 |
|
July 4,
2015 |
||||||||
|
(in thousands)
|
||||||||||||||
Solutions Group
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
217,673
|
|
|
$
|
229,157
|
|
|
$
|
652,985
|
|
|
$
|
726,679
|
|
Direct costs
|
44,882
|
|
|
54,583
|
|
|
140,465
|
|
|
174,109
|
|
||||
Profit
|
172,791
|
|
|
174,574
|
|
|
512,520
|
|
|
552,570
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Technology Platform Group
|
|
|
|
|
|
|
|
||||||||
Revenue
|
20,678
|
|
|
20,456
|
|
|
51,034
|
|
|
38,213
|
|
||||
Direct costs
|
22,255
|
|
|
7,479
|
|
|
61,478
|
|
|
20,340
|
|
||||
Profit (loss)
|
(1,577
|
)
|
|
12,977
|
|
|
(10,444
|
)
|
|
17,873
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Professional Services
|
|
|
|
|
|
|
|
||||||||
Revenue
|
50,301
|
|
|
53,500
|
|
|
148,277
|
|
|
177,782
|
|
||||
Direct costs
|
42,393
|
|
|
44,703
|
|
|
124,832
|
|
|
151,521
|
|
||||
Profit
|
7,908
|
|
|
8,797
|
|
|
23,445
|
|
|
26,261
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total segment revenue
|
288,652
|
|
|
303,113
|
|
|
852,296
|
|
|
942,674
|
|
||||
Total segment costs
|
109,530
|
|
|
106,765
|
|
|
326,775
|
|
|
345,970
|
|
||||
Total segment profit
|
179,122
|
|
|
196,348
|
|
|
525,521
|
|
|
596,704
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other unallocated operating expenses
|
168,711
|
|
|
170,348
|
|
|
484,919
|
|
|
490,853
|
|
||||
Restructuring charges
|
2,815
|
|
|
4,393
|
|
|
44,541
|
|
|
42,625
|
|
||||
Total operating income (loss)
|
7,596
|
|
|
21,607
|
|
|
(3,939
|
)
|
|
63,226
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest and other expense, net
|
8,300
|
|
|
3,668
|
|
|
19,880
|
|
|
10,492
|
|
||||
Income (loss) before income taxes
|
$
|
(704
|
)
|
|
$
|
17,939
|
|
|
$
|
(23,819
|
)
|
|
$
|
52,734
|
|
(1)
|
We recorded restructuring charges of
$2.8 million
and
$44.5 million
, respectively, in the third quarter and first nine months of 2016. Solutions Group included
$1.4 million
and
$16.3 million
, respectively; Technology Platform Group included
$0.6 million
and
$1.3 million
, respectively; Professional Services included
$0.3 million
and
$4.8 million
, respectively; and unallocated departments included
$0.5 million
and
$22.1 million
, respectively, of these restructuring charges. We recorded restructuring charges of
$4.4 million
and
$42.6 million
, respectively, in the third quarter and first nine months of 2015. Solutions Group included
$1.0 million
and
$8.5 million
, respectively; Technology Platform Group included
$0.1 million
and
$0.3 million
, respectively; Professional Services included
$0.3 million
and
$10.9 million
, and unallocated departments included
$3.0 million
and
$22.9 million
, respectively, of these restructuring charges.
|
|
July 2,
2016 |
|
September 30,
2015 |
||||
|
(in thousands)
|
||||||
6.000% Senior notes due 2024
|
$
|
500,000
|
|
|
$
|
—
|
|
Credit facility-revolver
|
278,125
|
|
|
193,125
|
|
||
Credit facility-term loan
|
—
|
|
|
475,000
|
|
||
Total debt
|
778,125
|
|
|
668,125
|
|
||
Unamortized debt issuance costs
|
(11,254
|
)
|
|
(7,587
|
)
|
||
Total debt, net of issuance costs
|
$
|
766,871
|
|
|
$
|
660,538
|
|
|
|
|
|
||||
Reported as
|
|
|
|
||||
Current portion of long-term debt
|
$
|
—
|
|
|
$
|
50,000
|
|
Long-term debt
|
778,125
|
|
|
618,125
|
|
||
Total debt
|
$
|
778,125
|
|
|
$
|
668,125
|
|
•
|
a total leverage ratio, defined as consolidated total indebtedness to the consolidated trailing four quarters EBITDA, not to exceed
4.00
to
1.00
as of the last day of any fiscal quarter;
|
•
|
a senior secured leverage ratio, defined as senior consolidated total indebtedness (which excludes unsecured indebtedness) to the consolidated trailing four quarters EBITDA, not to exceed
3.00
to
1.00
as of the last day of any fiscal quarter; 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 not less than
3.50
to
1.00
as of the last day of any fiscal quarter.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
a higher mix of subscription revenue in 2016 compared to 2015 as we transition from selling perpetual licenses to a subscription-based licensing model;
|
•
|
a decline in professional services revenue of 6%, consistent with our strategy to migrate more service engagements to our partners;
|
•
|
a challenging macroeconomic environment; and
|
•
|
the impact of foreign currency exchange rates on our reported revenue due to an increase in the strength of the U.S. Dollar relative to international currencies, most notably the Euro and the Yen.
|
|
|
Three Months Ended
|
|
|
|
Constant Currency Change
|
|
Nine Months Ended
|
|
|
|
Constant Currency Change
|
||||||||||||||||
|
|
July 2, 2016
|
|
July 4, 2015
|
|
|
|
|
July 2, 2016
|
|
July 4, 2015
|
|
|
|
||||||||||||||
Revenue
|
|
|
|
Change
|
|
|
|
|
Change
|
|
||||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||
Subscription
|
|
$
|
31.8
|
|
|
$
|
17.2
|
|
|
85
|
%
|
|
84
|
%
|
|
$
|
77.7
|
|
|
$
|
47.1
|
|
|
65
|
%
|
|
68
|
%
|
Support
|
|
161.9
|
|
|
165.7
|
|
|
(2
|
)%
|
|
(3
|
)%
|
|
494.3
|
|
|
516.0
|
|
|
(4
|
)%
|
|
(1
|
)%
|
||||
Total recurring software revenue
|
|
193.7
|
|
|
182.8
|
|
|
6
|
%
|
|
5
|
%
|
|
571.9
|
|
|
563.2
|
|
|
2
|
%
|
|
5
|
%
|
||||
Perpetual license
|
|
44.6
|
|
|
66.8
|
|
|
(33
|
)%
|
|
(32
|
)%
|
|
132.1
|
|
|
201.7
|
|
|
(35
|
)%
|
|
(32
|
)%
|
||||
Total software revenue
|
|
238.4
|
|
|
249.6
|
|
|
(5
|
)%
|
|
(5
|
)%
|
|
704.0
|
|
|
764.9
|
|
|
(8
|
)%
|
|
(5
|
)%
|
||||
Professional services
|
|
50.3
|
|
|
53.5
|
|
|
(6
|
)%
|
|
(6
|
)%
|
|
148.3
|
|
|
177.8
|
|
|
(17
|
)%
|
|
(13
|
)%
|
||||
Total revenue
|
|
$
|
288.7
|
|
|
$
|
303.1
|
|
|
(5
|
)%
|
|
(5
|
)%
|
|
$
|
852.3
|
|
|
$
|
942.7
|
|
|
(10
|
)%
|
|
(7
|
)%
|
|
|
Three Months Ended
|
|
|
|
Constant Currency Change
|
|
Nine Months Ended
|
|
|
|
Constant Currency Change
|
||||||||||||||||
|
|
July 2, 2016
|
|
July 4, 2015
|
|
|
|
|
July 2, 2016
|
|
July 4, 2015
|
|
|
|
||||||||||||||
Earnings Measures
|
|
|
|
Change
|
|
|
|
|
Change
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Operating Margin
|
|
2.6
|
%
|
|
7.1
|
%
|
|
|
|
|
|
(0.5
|
)%
|
|
6.7
|
%
|
|
|
|
|
||||||||
Earnings (Loss) Per Share
|
|
$
|
0.03
|
|
|
$
|
0.15
|
|
|
(82
|
)%
|
|
(86
|
)%
|
|
$
|
(0.23
|
)
|
|
$
|
0.46
|
|
|
(150
|
)%
|
|
(139
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Non-GAAP Operating Margin
(1)
|
|
14.1
|
%
|
|
24.1
|
%
|
|
|
|
|
|
16.5
|
%
|
|
22.9
|
%
|
|
|
|
|
||||||||
Non-GAAP EPS
(1)
|
|
$
|
0.26
|
|
|
$
|
0.53
|
|
|
(51
|
)%
|
|
(52
|
)%
|
|
$
|
1.00
|
|
|
$
|
1.57
|
|
|
(36
|
)%
|
|
(31
|
)%
|
(1) Non-GAAP measures are reconciled to GAAP results under
Results of Operations - Non-GAAP Measures
below.
|
Revenue by Line of Business
|
% of Total Revenue
|
||||||||||
|
Three months ended
|
|
Nine months ended
|
||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
July 2, 2016
|
|
July 4, 2015
|
||||
Subscription
|
11
|
%
|
|
6
|
%
|
|
9
|
%
|
|
5
|
%
|
Support
|
56
|
%
|
|
55
|
%
|
|
58
|
%
|
|
55
|
%
|
Perpetual license
|
15
|
%
|
|
22
|
%
|
|
15
|
%
|
|
21
|
%
|
Professional services
|
17
|
%
|
|
18
|
%
|
|
17
|
%
|
|
19
|
%
|
|
|||||||||||||||||||||||||||
Revenue by Group
|
Three months ended
|
|
Nine months ended
|
||||||||||||||||||||||||
|
|
|
|
|
Percent Change
|
|
|
|
|
|
Percent Change
|
||||||||||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
Actual
|
|
Constant
Currency
|
|
July 2, 2016
|
|
July 4, 2015
|
|
Actual
|
|
Constant
Currency
|
||||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||||||||
Solutions Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Subscription
|
$
|
20.8
|
|
|
$
|
8.9
|
|
|
134
|
%
|
|
132
|
%
|
|
$
|
45.8
|
|
|
$
|
26.2
|
|
|
75
|
%
|
|
80
|
%
|
Support
|
159.1
|
|
|
164.3
|
|
|
(3
|
)%
|
|
(4
|
)%
|
|
486.7
|
|
|
512.6
|
|
|
(5
|
)%
|
|
(2
|
)%
|
||||
Total recurring software revenue
|
179.9
|
|
|
173.2
|
|
|
4
|
%
|
|
3
|
%
|
|
532.5
|
|
|
538.8
|
|
|
(1
|
)%
|
|
2
|
%
|
||||
Perpetual license
|
37.7
|
|
|
55.9
|
|
|
(32
|
)%
|
|
(31
|
)%
|
|
120.5
|
|
|
187.9
|
|
|
(36
|
)%
|
|
(33
|
)%
|
||||
Total software revenue
|
217.7
|
|
|
229.2
|
|
|
(5
|
)%
|
|
(5
|
)%
|
|
653.0
|
|
|
726.7
|
|
|
(10
|
)%
|
|
(7
|
)%
|
||||
Professional services
|
48.7
|
|
|
52.6
|
|
|
(7
|
)%
|
|
(8
|
)%
|
|
142.7
|
|
|
175.6
|
|
|
(19
|
)%
|
|
(15
|
)%
|
||||
Total revenue
|
$
|
266.4
|
|
|
$
|
281.7
|
|
|
(5
|
)%
|
|
(6
|
)%
|
|
$
|
795.6
|
|
|
$
|
902.3
|
|
|
(12
|
)%
|
|
(9
|
)%
|
Technology Platform Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Subscription
|
$
|
11.0
|
|
|
$
|
8.3
|
|
|
33
|
%
|
|
32
|
%
|
|
$
|
31.9
|
|
|
$
|
20.9
|
|
|
52
|
%
|
|
53
|
%
|
Support
|
2.8
|
|
|
1.3
|
|
|
109
|
%
|
|
109
|
%
|
|
7.6
|
|
|
3.5
|
|
|
119
|
%
|
|
121
|
%
|
||||
Total recurring software revenue
|
13.8
|
|
|
9.6
|
|
|
43
|
%
|
|
43
|
%
|
|
39.5
|
|
|
24.4
|
|
|
62
|
%
|
|
63
|
%
|
||||
Perpetual license
|
6.9
|
|
|
10.9
|
|
|
(36
|
)%
|
|
(36
|
)%
|
|
11.6
|
|
|
13.8
|
|
|
(16
|
)%
|
|
(16
|
)%
|
||||
Total software revenue
|
20.7
|
|
|
20.5
|
|
|
1
|
%
|
|
1
|
%
|
|
51.0
|
|
|
38.2
|
|
|
34
|
%
|
|
34
|
%
|
||||
Professional services
|
1.6
|
|
|
0.9
|
|
|
72
|
%
|
|
71
|
%
|
|
5.6
|
|
|
2.1
|
|
|
163
|
%
|
|
168
|
%
|
||||
Total revenue
|
$
|
22.3
|
|
|
$
|
21.4
|
|
|
4
|
%
|
|
4
|
%
|
|
$
|
56.7
|
|
|
$
|
40.3
|
|
|
40
|
%
|
|
41
|
%
|
|
Three months ended
|
|
Percent Change
|
|
Nine months ended
|
|
Percent Change
|
||||||||||||||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
Actual
|
|
Constant
Currency
|
|
July 2, 2016
|
|
July 4, 2015
|
|
Actual
|
|
Constant
Currency
|
||||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||||||||
Software revenue by region:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Americas
|
$
|
104.9
|
|
|
$
|
111.9
|
|
|
(6
|
)%
|
|
(6
|
)%
|
|
$
|
311.5
|
|
|
$
|
325.3
|
|
|
(4
|
)%
|
|
(4
|
)%
|
Europe
|
$
|
83.1
|
|
|
$
|
87.2
|
|
|
(5
|
)%
|
|
(5
|
)%
|
|
$
|
249.5
|
|
|
$
|
277.1
|
|
|
(10
|
)%
|
|
(4
|
)%
|
Pacific Rim
|
$
|
29.2
|
|
|
$
|
28.5
|
|
|
2
|
%
|
|
7
|
%
|
|
$
|
78.2
|
|
|
$
|
86.9
|
|
|
(10
|
)%
|
|
(5
|
)%
|
Japan
|
$
|
21.2
|
|
|
$
|
22.0
|
|
|
(4
|
)%
|
|
(10
|
)%
|
|
$
|
64.7
|
|
|
$
|
75.6
|
|
|
(14
|
)%
|
|
(13
|
)%
|
|
Three months ended
|
|
Nine months ended
|
||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
July 2, 2016
|
|
July 4, 2015
|
||||
Total revenue by region as a % of total revenue:
|
|
|
|
|
|
|
|
||||
Americas
|
42
|
%
|
|
44
|
%
|
|
43
|
%
|
|
43
|
%
|
Europe
|
38
|
%
|
|
36
|
%
|
|
37
|
%
|
|
37
|
%
|
Pacific Rim
|
12
|
%
|
|
11
|
%
|
|
11
|
%
|
|
11
|
%
|
Japan
|
9
|
%
|
|
9
|
%
|
|
9
|
%
|
|
10
|
%
|
Gross Margin
|
Three months ended
|
|
Nine months ended
|
||||||||||||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change |
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change |
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
Gross margin
|
$
|
206.2
|
|
|
$
|
223.7
|
|
|
(8
|
)%
|
|
$
|
609.5
|
|
|
$
|
684.3
|
|
|
(11
|
)%
|
Non-GAAP gross margin
|
216.0
|
|
|
231.8
|
|
|
(7
|
)%
|
|
638.2
|
|
|
709.3
|
|
|
(10
|
)%
|
||||
Gross margin as a % of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Software
|
83.7
|
%
|
|
86.7
|
%
|
|
|
|
83.8
|
%
|
|
86.6
|
%
|
|
|
||||||
Professional services
|
13.3
|
%
|
|
13.8
|
%
|
|
|
|
13.3
|
%
|
|
12.3
|
%
|
|
|
||||||
Gross margin as a % of total revenue
|
71.4
|
%
|
|
73.8
|
%
|
|
|
|
71.5
|
%
|
|
72.6
|
%
|
|
|
||||||
Non-GAAP gross margin as a % of total revenue
|
74.6
|
%
|
|
76.3
|
%
|
|
|
|
74.7
|
%
|
|
75.0
|
%
|
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change |
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change
|
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of software revenue
|
$
|
38.9
|
|
|
$
|
33.3
|
|
|
17
|
%
|
|
$
|
114.3
|
|
|
$
|
102.5
|
|
|
11
|
%
|
Cost of professional services revenue
|
43.6
|
|
|
46.1
|
|
|
(5
|
)%
|
|
128.5
|
|
|
155.8
|
|
|
(18
|
)%
|
||||
Sales and marketing
|
94.9
|
|
|
88.4
|
|
|
7
|
%
|
|
264.5
|
|
|
261.7
|
|
|
1
|
%
|
||||
Research and development
|
57.1
|
|
|
54.1
|
|
|
6
|
%
|
|
171.4
|
|
|
175.3
|
|
|
(2
|
)%
|
||||
General and administrative
|
35.5
|
|
|
46.2
|
|
|
(23
|
)%
|
|
108.0
|
|
|
113.7
|
|
|
(5
|
)%
|
||||
Amortization of acquired intangible assets
|
8.3
|
|
|
9.1
|
|
|
(9
|
)%
|
|
25.0
|
|
|
27.7
|
|
|
(10
|
)%
|
||||
Restructuring charges
|
2.8
|
|
|
4.4
|
|
|
(36
|
)%
|
|
44.5
|
|
|
42.6
|
|
|
4
|
%
|
||||
Total costs and expenses (1)
|
$
|
281.1
|
|
|
$
|
281.5
|
|
|
—
|
%
|
|
$
|
856.2
|
|
|
$
|
879.4
|
|
|
(3
|
)%
|
Total headcount at end of period
|
5,761
|
|
|
5,965
|
|
|
(3
|
)%
|
|
|
|
|
|
|
|
(1)
|
On a constant currency basis, compared to the year-ago period, total costs and expenses for both the
third
quarter and first nine months of 2016 remained flat.
|
•
|
cost savings from restructuring actions in 2016 and 2015;
|
•
|
acquisition and pension termination-related costs, which were $3.9 million and $10.9 million lower in the third quarter and first nine months of 2016, respectively, compared to the third quarter and first nine months of 2015;
|
•
|
a $13.6 million accrual recorded in the third quarter of 2015 related to the SEC and DOJ investigation in China; and
|
•
|
foreign currency rates which favorably impacted costs and expenses in the first nine months of 2016 by $23.6 million.
|
•
|
cash-based incentive compensation expense (as a result of over performance on subscription mix in 2016 and because 2015 incentive targets were not achieved in full), which was higher by $9.5 million and $20.3 million in the third quarter of 2016 and first nine months of 2016, respectively, compared to the third quarter and first nine months of 2015;
|
•
|
costs from acquired businesses (ColdLight, Vuforia, and Kepware added approximately 255 employees at the date of the acquisitions);
|
•
|
an increase in stock-based compensation expense of $13.7 million for the first nine months of 2016 compared to the first nine months of 2015;
|
•
|
company-wide merit pay increases that were effective July 1, 2015.
|
Cost of Software Revenue
|
Three months ended
|
|
Nine months ended
|
||||||||||||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change
|
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change
|
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
Cost of software revenue
|
$
|
38.9
|
|
|
$
|
33.3
|
|
|
17
|
%
|
|
$
|
114.3
|
|
|
$
|
102.5
|
|
|
11
|
%
|
% of total revenue
|
13
|
%
|
|
11
|
%
|
|
|
|
13
|
%
|
|
11
|
%
|
|
|
||||||
% of total software revenue
|
16
|
%
|
|
13
|
%
|
|
|
|
16
|
%
|
|
13
|
%
|
|
|
||||||
Software headcount at end of period
|
818
|
|
|
760
|
|
|
8
|
%
|
|
|
|
|
|
|
|
Cost of Professional Services Revenue
|
Three months ended
|
|
Nine months ended
|
||||||||||||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change
|
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change
|
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
Cost of professional services revenue
|
$
|
43.6
|
|
|
$
|
46.1
|
|
|
(5
|
)%
|
|
$
|
128.5
|
|
|
$
|
155.8
|
|
|
(18
|
)%
|
% of total revenue
|
15
|
%
|
|
15
|
%
|
|
|
|
15
|
%
|
|
17
|
%
|
|
|
||||||
% of total professional services revenue
|
87
|
%
|
|
86
|
%
|
|
|
|
87
|
%
|
|
88
|
%
|
|
|
||||||
Professional services headcount at end of period
|
987
|
|
|
1,115
|
|
|
(11
|
)%
|
|
|
|
|
|
|
Sales and Marketing
|
Three months ended
|
|
Nine months ended
|
||||||||||||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change |
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change |
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
Sales and marketing
|
$
|
94.9
|
|
|
$
|
88.4
|
|
|
7
|
%
|
|
$
|
264.5
|
|
|
$
|
261.7
|
|
|
1
|
%
|
% of total revenue
|
33
|
%
|
|
29
|
%
|
|
|
|
31
|
%
|
|
28
|
%
|
|
|
||||||
Sales and marketing headcount at end of period
|
1,417
|
|
|
1,391
|
|
|
2
|
%
|
|
|
|
|
|
|
Research and Development
|
Three months ended
|
|
Nine months ended
|
||||||||||||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change |
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change |
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
Research and development
|
$
|
57.1
|
|
|
$
|
54.1
|
|
|
6
|
%
|
|
$
|
171.4
|
|
|
$
|
175.3
|
|
|
(2
|
)%
|
% of total revenue
|
20
|
%
|
|
18
|
%
|
|
|
|
20
|
%
|
|
19
|
%
|
|
|
||||||
Research and development headcount at end of period
|
1,862
|
|
|
2,010
|
|
|
(7
|
)%
|
|
|
|
|
|
|
|
General and Administrative
|
Three months ended
|
|
Nine months ended
|
||||||||||||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change |
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change |
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
General and administrative
|
$
|
35.5
|
|
|
$
|
46.2
|
|
|
(23
|
)%
|
|
$
|
108.0
|
|
|
$
|
113.7
|
|
|
(5
|
)%
|
% of total revenue
|
12
|
%
|
|
15
|
%
|
|
|
|
13
|
%
|
|
12
|
%
|
|
|
||||||
General and administrative headcount at end of period
|
677
|
|
|
689
|
|
|
(2
|
)%
|
|
|
|
|
|
|
Amortization of Acquired Intangible Assets
|
Three months ended
|
|
Nine months ended
|
||||||||||||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change |
|
July 2, 2016
|
|
July 4, 2015
|
|
Percent
Change |
||||||||||
|
(Dollar amounts in millions)
|
||||||||||||||||||||
Amortization of acquired intangible assets
|
$
|
8.3
|
|
|
$
|
9.1
|
|
|
(9
|
)%
|
|
$
|
25.0
|
|
|
$
|
27.7
|
|
|
(10
|
)%
|
% of total revenue
|
3
|
%
|
|
3
|
%
|
|
|
|
3
|
%
|
|
3
|
%
|
|
|
Restructuring Charges
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
July 2, 2016
|
|
July 4, 2015
|
||||||||
|
(in millions)
|
||||||||||||||
Restructuring charges
|
$
|
2.8
|
|
|
$
|
4.4
|
|
|
$
|
44.5
|
|
|
$
|
42.6
|
|
Interest and Other Expense, net
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
July 2, 2016
|
|
July 4, 2015
|
||||||||
|
(in millions)
|
||||||||||||||
Interest income
|
$
|
0.8
|
|
|
$
|
0.8
|
|
|
$
|
2.4
|
|
|
$
|
2.8
|
|
Interest expense
|
(8.2
|
)
|
|
(3.6
|
)
|
|
(19.5
|
)
|
|
(10.9
|
)
|
||||
Other expense, net
|
(0.9
|
)
|
|
(0.9
|
)
|
|
(2.8
|
)
|
|
(2.5
|
)
|
||||
Total interest and other expense, net
|
$
|
(8.3
|
)
|
|
$
|
(3.7
|
)
|
|
$
|
(19.9
|
)
|
|
$
|
(10.5
|
)
|
Income Taxes
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
July 2, 2016
|
|
July 4, 2015
|
||||||||
|
(Dollar amounts in millions)
|
||||||||||||||
Pre-tax income (loss)
|
$
|
(0.7
|
)
|
|
$
|
17.9
|
|
|
$
|
(23.8
|
)
|
|
$
|
52.7
|
|
Tax provision (benefit)
|
(3.8
|
)
|
|
0.5
|
|
|
2.2
|
|
|
(0.4
|
)
|
||||
Effective income tax rate
|
537
|
%
|
|
3
|
%
|
|
(9
|
)%
|
|
(1
|
)%
|
•
|
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
|
|
Nine months ended
|
||||||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
July 2, 2016
|
|
July 4, 2015
|
||||||||
|
(in millions, except per share amounts)
|
||||||||||||||
GAAP revenue
|
$
|
288.7
|
|
|
$
|
303.1
|
|
|
$
|
852.3
|
|
|
$
|
942.7
|
|
Fair value of acquired deferred revenue
|
1.0
|
|
|
0.8
|
|
|
2.6
|
|
|
3.3
|
|
||||
Non-GAAP revenue
|
$
|
289.7
|
|
|
$
|
303.9
|
|
|
$
|
854.9
|
|
|
$
|
946.0
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP gross margin
|
$
|
206.2
|
|
|
$
|
223.7
|
|
|
$
|
609.5
|
|
|
$
|
684.3
|
|
Fair value of acquired deferred revenue
|
1.0
|
|
|
0.8
|
|
|
2.6
|
|
|
3.3
|
|
||||
Fair value of acquired deferred costs
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.4
|
)
|
|
(0.4
|
)
|
||||
Stock-based compensation
|
2.5
|
|
|
2.5
|
|
|
8.2
|
|
|
7.7
|
|
||||
Amortization of acquired intangible assets included in cost of revenue
|
6.4
|
|
|
5.0
|
|
|
18.2
|
|
|
14.4
|
|
||||
Non-GAAP gross margin
|
$
|
216.0
|
|
|
$
|
231.8
|
|
|
$
|
638.2
|
|
|
$
|
709.3
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP operating income (loss)
|
$
|
7.6
|
|
|
$
|
21.6
|
|
|
$
|
(3.9
|
)
|
|
$
|
63.2
|
|
Fair value of acquired deferred revenue
|
1.0
|
|
|
0.8
|
|
|
2.6
|
|
|
3.3
|
|
||||
Fair value of acquired deferred costs
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.4
|
)
|
|
(0.4
|
)
|
||||
Stock-based compensation
|
13.8
|
|
|
14.1
|
|
|
51.8
|
|
|
38.1
|
|
||||
Amortization of acquired intangible assets included in cost of revenue
|
6.4
|
|
|
5.0
|
|
|
18.2
|
|
|
14.4
|
|
||||
Amortization of acquired intangible assets
|
8.3
|
|
|
9.1
|
|
|
25.0
|
|
|
27.7
|
|
||||
Acquisition-related charges included in general and administrative expenses
|
0.9
|
|
|
2.8
|
|
|
3.2
|
|
|
8.7
|
|
||||
US pension plan termination-related costs
|
—
|
|
|
2.0
|
|
|
—
|
|
|
5.4
|
|
||||
Legal settlement accrual
|
—
|
|
|
13.6
|
|
|
—
|
|
|
13.6
|
|
||||
Restructuring charge
|
2.8
|
|
|
4.4
|
|
|
44.5
|
|
|
42.6
|
|
||||
Non-GAAP operating income
|
$
|
40.7
|
|
|
$
|
73.2
|
|
|
$
|
141.1
|
|
|
$
|
216.8
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP net income (loss)
|
$
|
3.1
|
|
|
$
|
17.4
|
|
|
$
|
(26.0
|
)
|
|
$
|
53.1
|
|
Fair value of acquired deferred revenue
|
1.0
|
|
|
0.8
|
|
|
2.6
|
|
|
3.3
|
|
||||
Fair value of acquired deferred costs
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.4
|
)
|
|
(0.4
|
)
|
||||
Stock-based compensation
|
13.8
|
|
|
14.1
|
|
|
51.8
|
|
|
38.1
|
|
||||
Amortization of acquired intangible assets included in cost of revenue
|
6.4
|
|
|
5.0
|
|
|
18.2
|
|
|
14.4
|
|
||||
Amortization of acquired intangible assets
|
8.3
|
|
|
9.1
|
|
|
25.0
|
|
|
27.7
|
|
||||
Acquisition-related charges included in general and administrative expenses
|
0.9
|
|
|
2.8
|
|
|
3.2
|
|
|
8.7
|
|
||||
U.S. pension plan termination-related costs
|
—
|
|
|
2.0
|
|
|
—
|
|
|
5.4
|
|
||||
Legal settlement accrual
|
—
|
|
|
13.6
|
|
|
—
|
|
|
13.6
|
|
||||
Restructuring charges
|
2.8
|
|
|
4.4
|
|
|
44.5
|
|
|
42.6
|
|
||||
Non-operating credit facility refinancing costs
|
—
|
|
|
—
|
|
|
2.4
|
|
|
—
|
|
||||
Income tax adjustments
(1)
|
(6.2
|
)
|
|
(7.3
|
)
|
|
(6.5
|
)
|
|
(24.6
|
)
|
||||
Non-GAAP net income
|
$
|
30.0
|
|
|
$
|
61.7
|
|
|
$
|
114.9
|
|
|
$
|
182.1
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP diluted earnings (loss) per share
|
$
|
0.03
|
|
|
$
|
0.15
|
|
|
$
|
(0.23
|
)
|
|
$
|
0.46
|
|
Fair value of acquired deferred revenue
|
0.01
|
|
|
0.01
|
|
|
0.02
|
|
|
0.03
|
|
||||
Fair value of acquired deferred costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Stock-based compensation
|
0.12
|
|
|
0.12
|
|
|
0.45
|
|
|
0.33
|
|
||||
Amortization of acquired intangible assets
|
0.13
|
|
|
0.12
|
|
|
0.38
|
|
|
0.36
|
|
||||
Acquisition-related charges included in general and administrative expenses
|
0.01
|
|
|
0.02
|
|
|
0.03
|
|
|
0.07
|
|
||||
U.S. pension plan termination-related costs
|
—
|
|
|
0.02
|
|
|
—
|
|
|
0.05
|
|
||||
Legal settlement accrual
|
—
|
|
|
0.12
|
|
|
—
|
|
|
0.12
|
|
||||
Restructuring charges
|
0.02
|
|
|
0.04
|
|
|
0.39
|
|
|
0.37
|
|
Non-operating credit facility refinancing costs
|
—
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
||||
Income tax adjustments
(1)
|
(0.05
|
)
|
|
(0.06
|
)
|
|
(0.06
|
)
|
|
(0.21
|
)
|
||||
Non-GAAP diluted earnings per share
|
$
|
0.26
|
|
|
$
|
0.53
|
|
|
$
|
1.00
|
|
|
$
|
1.57
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||
|
July 2, 2016
|
|
July 4, 2015
|
|
July 2, 2016
|
|
July 4, 2015
|
||||
GAAP operating margin
|
2.6
|
%
|
|
7.1
|
%
|
|
(0.5
|
)%
|
|
6.7
|
%
|
Fair value of acquired deferred revenue
|
0.4
|
%
|
|
0.3
|
%
|
|
0.3
|
%
|
|
0.4
|
%
|
Fair value of acquired deferred costs
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Stock-based compensation
|
4.8
|
%
|
|
4.6
|
%
|
|
6.1
|
%
|
|
4.0
|
%
|
Amortization of acquired intangible assets
|
5.1
|
%
|
|
4.6
|
%
|
|
5.1
|
%
|
|
4.5
|
%
|
Acquisition-related charges included in general and administrative expenses
|
0.3
|
%
|
|
0.9
|
%
|
|
0.4
|
%
|
|
0.9
|
%
|
U.S. pension plan termination-related costs
|
—
|
%
|
|
0.7
|
%
|
|
—
|
%
|
|
0.6
|
%
|
Legal settlement accrual
|
—
|
%
|
|
4.5
|
%
|
|
—
|
%
|
|
1.4
|
%
|
Restructuring charges
|
1.0
|
%
|
|
1.4
|
%
|
|
5.2
|
%
|
|
4.5
|
%
|
Non-GAAP operating margin
|
14.1
|
%
|
|
24.1
|
%
|
|
16.5
|
%
|
|
22.9
|
%
|
(1)
|
We have recorded a full valuation allowance against our U.S. net deferred tax assets and a valuation allowance against net deferred tax assets in certain foreign jurisdictions. As we are profitable on a non-GAAP basis, the 2016 and 2015 non-GAAP tax provisions are calculated assuming there is no valuation allowance. Income tax adjustments for the three and nine months ended July 4, 2015 reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above. However, for the nine months ended July 2, 2016, because of low expected full year GAAP earnings combined with the relatively large year-to-date GAAP loss, the non-GAAP provision for the third quarter and first nine months of 2016 calculated based on our historical methodology is not reflective of our full year expected non-GAAP tax rate. As a result, in the second quarter we changed our methodology for calculating our non-GAAP tax provision. For the nine months ended July 2, 2016, our non-GAAP tax provision is based on our annual expected non-GAAP tax rate applied to our year-to-date non-GAAP earnings.
|
|
July 2, 2016
|
|
July 4, 2015
|
||||
|
(in thousands)
|
||||||
Cash and cash equivalents
|
$
|
294,626
|
|
|
$
|
275,060
|
|
Marketable securities
|
44,606
|
|
|
—
|
|
||
Total
|
$
|
339,232
|
|
|
$
|
275,060
|
|
|
|
|
|
||||
Amounts below are for the nine months ended:
|
|
|
|
||||
Cash provided by operating activities
|
$
|
169,596
|
|
|
$
|
192,463
|
|
Cash used by investing activities
|
(225,428
|
)
|
|
(130,048
|
)
|
||
Cash provided (used) by financing activities
|
72,097
|
|
|
(66,612
|
)
|
|
Nine months ended
|
||||||
|
July 2, 2016
|
|
July 4, 2015
|
||||
|
(in thousands)
|
||||||
Cash used by investing activities included the following:
|
|
|
|
||||
Additions to property and equipment
|
$
|
(16,632
|
)
|
|
$
|
(20,637
|
)
|
Purchases of investments
|
(44,605
|
)
|
|
(11,000
|
)
|
||
Acquisitions of businesses, net of cash acquired
|
(164,191
|
)
|
|
(98,411
|
)
|
||
|
$
|
(225,428
|
)
|
|
$
|
(130,048
|
)
|
|
Nine months ended
|
||||||
|
July 2, 2016
|
|
July 4, 2015
|
||||
|
(in thousands)
|
||||||
Cash used by financing activities included the following:
|
|
|
|
||||
Net borrowings (repayments) of debt
|
$
|
110,000
|
|
|
$
|
12,500
|
|
Payments of withholding taxes in connection with vesting of stock-based awards
|
(20,636
|
)
|
|
(29,117
|
)
|
||
Repurchases of common stock
|
—
|
|
|
(49,962
|
)
|
||
Proceeds from issuance of common stock
|
19
|
|
|
38
|
|
||
Excess tax benefits from stock-based awards
|
94
|
|
|
(71
|
)
|
||
Contingent consideration
|
(10,621
|
)
|
|
—
|
|
||
Credit facility origination costs
|
(6,759
|
)
|
|
—
|
|
||
|
$
|
72,097
|
|
|
$
|
(66,612
|
)
|
|
Ratio as of July 2, 2016
|
Total Leverage Ratio
Ratio of consolidated total indebtedness to the consolidated trailing four quarters EBITDA, not to exceed 4.00 to 1.00 as of the last day of any fiscal quarter.
|
3.15 to 1.00
|
Fixed Charge Coverage Ratio
Ratio of consolidated trailing four quarters EBITDA less consolidated capital expenditures to consolidated fixed charges as of the last day of any fiscal quarter, to be not less than 3.50 to 1.00.
|
8.45 to 1.00
|
Senior Secured Leverage Ratio
Ratio of senior consolidated total indebtedness (which excludes unsecured indebtedness) to consolidated trailing four quarters EBITDA as of the last day of any fiscal quarter, not to exceed 3.00 to 1.00.
|
1.09 to 1.00
|
|
Payments due by period
|
||||||||||||||||||
Contractual Obligations
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Credit facility (1)
|
$
|
719.0
|
|
|
$
|
64.2
|
|
|
$
|
150.7
|
|
|
$
|
504.0
|
|
|
$
|
—
|
|
Operating leases (2)
|
144.1
|
|
|
35.8
|
|
|
48.3
|
|
|
33.3
|
|
|
26.7
|
|
|||||
Purchase obligations (3)
|
28.0
|
|
|
21.6
|
|
|
5.8
|
|
|
0.7
|
|
|
—
|
|
|||||
Pension liabilities (4)
|
20.2
|
|
|
0.8
|
|
|
1.5
|
|
|
1.5
|
|
|
16.4
|
|
|||||
Unrecognized tax benefits (5)
|
14.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
925.4
|
|
|
$
|
122.4
|
|
|
$
|
206.3
|
|
|
$
|
539.5
|
|
|
$
|
43.1
|
|
(1)
|
Credit facility amounts above include required principal repayments and interest and commitment fees based on the balance outstanding as of September 30, 2015 and the interest rate in effect as of September 30, 2015, 1.875%. Pursuant to our amended and restated credit facility signed November 4, 2015, the term loan was converted into a revolving loan. The credit facility matures on September 15, 2019, when all remaining amounts outstanding will be due and payable in full.
|
(2)
|
The future minimum lease payments above include minimum future lease payments for excess facilities under noncancelable operating leases. These leases qualify for operating lease accounting treatment and, as such, are not included on our balance sheet. See Note I
Commitments and Contingencies
of “Notes to Consolidated Financial Statements” in our 2015 Annual Report on Form 10-K for additional information regarding our operating leases.
|
(3)
|
Purchase obligations represent minimum commitments due to third parties, including royalty contracts, research and development contracts, telecommunication contracts, information technology maintenance contracts in support of internal-use software and hardware and other marketing and consulting contracts. Contracts for which our commitment is variable, based on volumes, with no fixed minimum quantities, and contracts that can be canceled without payment penalties have been excluded. The purchase obligations included above are in addition to amounts included in current liabilities and prepaid expenses recorded on our September 30, 2015 consolidated balance sheet.
|
(4)
|
These obligations relate to our international pension plans. These liabilities are not subject to fixed payment terms. Payments have been estimated based on the plans’ current funded status, planned employer contributions and actuarial assumptions. In addition, we may, at our discretion, make additional voluntary contributions to the plans. See Note M
Pension Plans
of “Notes to Consolidated Financial Statements” in our 2015 Annual Report on Form 10-K for further discussion.
|
(5)
|
As of September 30, 2015, we had recorded total unrecognized tax benefits of
$14.1 million
. This liability is not subject to fixed payment terms and the amount and timing of payments, if any, which we will make related to this liability, are not known. See Note G
Income Taxes
of “Notes to Consolidated Financial Statements” in our 2015 Annual Report on Form 10-K for additional information.
|
|
Payments due by period
|
||||||||
Contractual Obligations
|
Total
|
|
Remainder of 2016
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
|
(in millions)
|
||||||||
Debt
|
$1,044.7
|
|
$2.1
|
|
$76.6
|
|
$346.0
|
|
$620.0
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
•
|
making it more difficult for us to satisfy our debt obligations and other ongoing business obligations, which may result in defaults;
|
•
|
events of default if we fail to comply with the financial and other covenants contained in the agreements governing our debt instruments, which could result in all of our debt becoming immediately due and payable or require us to negotiate an amendment to financial or other covenants that could cause us to incur additional fees and expenses;
|
•
|
limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;
|
•
|
reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes and limiting our ability to obtain additional financing for these purposes;
|
•
|
increasing our vulnerability to the impact of adverse economic and industry conditions;
|
•
|
exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under the senior credit facility, are at variable rates of interest;
|
•
|
limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industries in which we operate, and the overall economy;
|
•
|
placing us at a competitive disadvantage compared to other, less leveraged competitors; and
|
•
|
increasing our cost of borrowing.
|
|
|
|
1.1
|
|
Underwriting Agreement, dated May 4, 2016, by and between PTC Inc. and J.P. Morgan Securities LLC, as the representative of the several underwriters named therein (filed as Exhibit 1.1 to our Current Report on Form 8-K filed on May 5, 2016 (File No. 0-18059) and incorporated herein by reference).
|
|
|
|
3.1
|
|
Restated Articles of Organization of PTC Inc. adopted August 4, 2015 (filed as Exhibit 3.1 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2015 (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).
|
|
|
|
4.1
|
|
Indenture, dated as of May 12, 2016, by and between the Company and The Bank of New York Mellon, as Trustee (filed as Exhibit 4.1 to our Current Report on Form 8-K filed on May 18, 2016 (File No. 0-18059) and incorporated herein by reference).
|
|
|
|
4.2
|
|
First Supplemental Indenture, dated as of May 12, 2016, by and between the Company and The Bank of New York Mellon, as Trustee (filed as Exhibit 4.2 to our Current Report on Form 8-K filed on May 18, 2016 (File No. 0-18059) and incorporated herein by reference).
|
|
|
|
4.3
|
|
6.000% Senior Notes due 2024 (filed as Exhibit 4.3 to our Current Report on Form 8-K filed on May 18, 2016 (File No. 0-18059) and incorporated herein by reference).
|
|
|
|
10.1
|
|
Amendment No. 1 dated April 18, 2016 to Credit Agreement dated as of November 4, 2015 by and among PTC Inc., JP Morgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto (filed as Exhibit 99.3 to our Current Report on Form 8-K filed on April 20, 2016 (File No. 0-18059) and incorporated herein by reference).
|
|
|
|
10.2
|
|
Amendment No. 2 dated June 1, 2016 to Credit Agreement dated as of November 4, 2015 by and among PTC Inc., JP Morgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto.
|
|
|
|
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 2, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of April 2, 2016 and September 30, 2015; (ii) Condensed Consolidated Statements of Operations for the three and six months ended April 2, 2016 and April 4, 2015; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended April 2, 2016 and April 4, 2015; (iv) Condensed Consolidated Statements of Cash Flows for the three and six months ended April 2, 2016 and April 4, 2015; and (v) Notes to Condensed Consolidated Financial Statements.
|
*
|
Indicates that the exhibit is being furnished, not filed, with this report.
|
PTC Inc.
|
||
|
|
|
By:
|
|
/S/ ANDREW MILLER
|
|
|
Andrew Miller
Executive Vice President and Chief Financial
Officer (Principal Financial Officer)
|
PTC INC.,
as the Parent
|
|
|
|
|
|
By: /s/Stephen Bouchard
|
|
|
Name: Stephen Bouchard
|
|
Title: Treasurer
|
|
|
PTC (IFSC) LIMITED,
as the Irish Borrower
|
|
|
|
|
|
By: /s/Eamonn Clarke
|
|
|
Name: Eamonn Clarke
|
|
Title: Director
|
JPMORGAN CHASE BANK, N.A.,
individually as a Lender, as the Swingline Lender, as an Issuing Bank and as Administrative Agent
|
|
|
|
|
|
By: /s/Daglas P. Panchal
|
|
|
Name: Daglas P. Panchal
|
|
Title: Vice President
|
|
KEYBANK NATIONAL ASSOCIATION
|
|
|
|
|
|
By: /s/David A. Wild
|
|
|
Name: David A. Wild
|
|
Title: Senior Vice President
|
|
Name of Lender:
|
|
|
|
FIFTH THIRD BANK
|
|
|
|
|
|
By: /s/Colin Murphy
|
|
|
Name: Colin Murphy
|
|
Title: Director
|
|
Name of Lender:
|
||
|
||
HSBC Bank USA, National Association
|
||
|
||
|
||
By: /s/Elise M. Russo
|
||
|
Name: Elise M. Russo
|
|
|
Title: Senior Vice President
|
|
|
||
|
||
|
||
For any Lender requiring a second signature line:
|
||
|
||
|
||
By:
|
||
|
Name:
|
|
|
Title:
|
Name of Lender:
|
||
|
||
CITIZENS BANK, N.A.
|
||
|
||
|
||
By: /s/William M. Clossey
|
||
|
Name: William M. Clossey
|
|
|
Title: Sr. Vice President
|
|
|
||
|
||
|
||
For any Lender requiring a second signature line:
|
||
|
||
|
||
By:
|
||
|
Name:
|
|
|
Title:
|
Name of Lender:
|
|
|
|
ROYAL BANK OF CANADA
|
|
|
|
|
|
By: /s/Nicholas Heslip
|
|
|
Name: Nicholas Heslip
|
|
Title: Authorized Signatory
|
|
Name of Lender:
|
|
|
|
SANTANDER BANK, N.A.
|
|
|
|
|
|
By: /s/William Maag
|
|
|
Name: William Maag
|
|
Title: Managing Director
|
|
Name of Lender:
|
||
|
||
TD BANK, N.A.
|
||
|
||
|
||
By: /s/Christopher Matheson
|
||
|
Name: Christopher Matheson
|
|
|
Title: Director
|
|
|
||
|
||
|
||
For any Lender requiring a second signature line:
|
||
|
||
|
||
By:
|
||
|
Name:
|
|
|
Title:
|
Name of Lender:
|
|
|
|
Barclays Bank PLC
|
|
|
|
|
|
By: /s/Sean Duggan
|
|
|
Name: Sean Duggan
|
|
Title: Assistant Vice President
|
|
Name of Lender:
|
||
|
||
SunTrust Bank
|
||
|
||
|
||
By: /s/Jason Crowley
|
||
|
Name: Jason Crowley
|
|
|
Title: Vice President
|
|
|
||
|
||
|
||
For any Lender requiring a second signature line:
|
||
|
||
|
||
By:
|
||
|
Name:
|
|
|
Title:
|
Name of Lender:
|
|
|
|
U.S. BANK NATIONAL ASSOCIATION
|
|
|
|
|
|
By: /s/Brian Seipke
|
|
|
Name: Brian Seipke
|
|
Title: Vice President
|
|
Name of Lender:
|
||
|
||
WELLS FARGO BANK, NATIONAL ASSOCIATION
|
||
|
||
|
||
By: /s/David Mallett
|
||
|
Name: David Mallett
|
|
|
Title: Managing Director
|
|
|
||
|
||
|
||
For any Lender requiring a second signature line:
|
||
|
||
|
||
By:
|
||
|
Name:
|
|
|
Title:
|
Name of Lender:
|
||
|
||
SILICON VALLEY BANK
|
||
|
||
|
||
By: /s/Kristy Vlahos
|
||
|
Name: Kristy Vlahos
|
|
|
Title: Director
|
|
|
||
|
||
|
||
For any Lender requiring a second signature line:
|
||
|
||
|
||
By:
|
||
|
Name:
|
|
|
Title:
|
Name of Lender:
|
|
|
|
The Huntington National Bank
|
|
|
|
|
|
By: /s/Jared Shaner
|
|
|
Name: Jared Shaner
|
|
Title: Vice President
|
|
|
|
|
|
Name of Lender: BANK OF AMERICA, N.A.
|
|
|
|
|
|
By: /s/My-Linh Yoshiike
|
|
|
Name: My-Linh Yoshiike
|
|
Title: Vice President
|
|
Name of Lender: PEOPLE’S UNITED BANK, NATIONAL ASSOCIATION
|
|
|
|
|
|
By: /s/Kathryn M. Williams
|
|
|
Name: Kathryn M. Williams
|
|
Title: Vice President
|
|
LENDER
|
COMMITMENT
|
||
|
|
||
JPMORGAN CHASE BANK, N.A.
|
|
$78,000,000.00
|
|
|
|
||
KEYBANK NATIONAL ASSOCIATION
|
|
$78,000,000.00
|
|
|
|
||
FIFTH THIRD BANK
|
|
$66,000,000.00
|
|
|
|
||
HSBC BANK USA, NATIONAL ASSOCIATION
|
|
$66,000,000.00
|
|
|
|
||
CITIZENS BANK, N.A.
|
|
$66,000,000.00
|
|
|
|
||
ROYAL BANK OF CANADA
|
|
$66,000,000.00
|
|
|
|
||
SANTANDER BANK, N.A.
|
|
$66,000,000.00
|
|
|
|
||
TD BANK, N.A.
|
|
$66,000,000.00
|
|
|
|
||
BARCLAYS BANK PLC
|
|
$54,000,000.00
|
|
|
|
||
SUNTRUST BANK
|
|
$54,000,000.00
|
|
|
|
||
U.S. BANK NATIONAL ASSOCIATION
|
|
$54,000,000.00
|
|
|
|
||
WELLS FARGO BANK, NATIONAL ASSOCIATION
|
|
$45,000,000.00
|
|
|
|
||
SILICON VALLEY BANK
|
|
$45,000,000.00
|
|
|
|
||
THE HUNTINGTON NATIONAL BANK
|
|
$36,000,000.00
|
|
|
|
||
BANK OF AMERICA, N.A.
|
|
$36,000,000.00
|
|
|
|
||
PEOPLE’S UNITED BANK
|
|
$24,000,000.00
|
|
|
|
||
AGGREGATE COMMITMENTS
|
|
$900,000,000.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
August 11, 2016
|
|
|
|
/S/ JAMES HEPPELMANN
|
|
|
|
|
|
James Heppelmann
|
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
August 11, 2016
|
|
|
|
/S/ ANDREW MILLER
|
|
|
|
|
|
Andrew Miller
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
August 11, 2016
|
|
|
|
/S/ JAMES HEPPELMANN
|
|
|
|
|
|
James Heppelmann
President and Chief Executive Officer
|
|
|
|
|
|
|
Date:
|
August 11, 2016
|
|
|
|
/S/ ANDREW MILLER
|
|
|
|
|
|
Andrew Miller
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|