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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
(State or other jurisdiction of
incorporation or organization)
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04-2746201
(I.R.S. Employer
Identification No.)
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Large accelerated filer
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ý
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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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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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PART I
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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
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Item 1.
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Item 1A.
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Item 2.
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Item 5.
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Other Information
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Item 6.
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February 28,
2019 |
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November 30,
2018 |
||||
(In thousands, except share data)
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|
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As Adjusted
(1)
|
||||
Assets
|
|
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|
||||
Current assets:
|
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|
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Cash and cash equivalents
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$
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106,516
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$
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105,126
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Short-term investments
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26,942
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34,387
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Total cash, cash equivalents and short-term investments
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133,458
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139,513
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Accounts receivable (less allowances of $725 and $840, respectively)
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54,572
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59,715
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Unbilled receivables
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2,121
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1,421
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Other current assets
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19,757
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25,080
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Assets held for sale
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5,776
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5,776
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Total current assets
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215,684
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231,505
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Long-term unbilled receivables
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2,581
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1,811
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Property and equipment, net
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29,351
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30,714
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Intangible assets, net
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50,297
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58,919
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Goodwill
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315,010
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314,992
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Deferred tax assets
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889
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966
|
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Other assets
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2,079
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5,243
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Total assets
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$
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615,891
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$
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644,150
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Liabilities and shareholders’ equity
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Current liabilities:
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Current portion of long-term debt, net
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$
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6,593
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$
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5,819
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Accounts payable
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9,823
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10,593
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Accrued compensation and related taxes
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14,984
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25,500
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Dividends payable to shareholders
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6,939
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6,998
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Income taxes payable
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1,233
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1,228
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Other accrued liabilities
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11,887
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12,686
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Short-term deferred revenue
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130,569
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123,210
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Total current liabilities
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182,028
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186,034
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Long-term debt, net
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108,042
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110,270
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Long-term deferred revenue
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11,614
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12,730
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Deferred tax liabilities
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2,665
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5,799
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Other noncurrent liabilities
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4,840
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5,315
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Commitments and contingencies
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Shareholders’ equity:
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Preferred stock, $0.01 par value; authorized, 10,000,000 shares; issued, none
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—
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—
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Common stock, $0.01 par value, and additional paid-in capital; authorized, 200,000,000 shares; issued and outstanding, 44,473,947 shares in 2019 and 45,114,935 shares in 2018
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272,854
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267,053
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Retained earnings
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60,462
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85,125
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Accumulated other comprehensive loss
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(26,614
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)
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(28,176
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)
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Total shareholders’ equity
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306,702
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324,002
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Total liabilities and shareholders’ equity
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$
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615,891
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$
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644,150
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(1)
The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1.
Nature of Business and Basis of Presentation
for further information.
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Three Months Ended
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||||||
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February 28,
2019 |
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February 28,
2018 |
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(In thousands, except per share data)
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As Adjusted
(1)
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Revenue:
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Software licenses
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$
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22,802
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$
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26,054
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Maintenance and services
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66,747
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69,356
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Total revenue
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89,549
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95,410
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Costs of revenue:
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Cost of software licenses
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1,167
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1,261
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Cost of maintenance and services
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9,439
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9,824
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Amortization of acquired intangibles
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5,433
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5,818
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Total costs of revenue
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16,039
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16,903
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Gross profit
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73,510
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78,507
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Operating expenses:
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Sales and marketing
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22,323
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21,428
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Product development
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19,890
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20,245
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General and administrative
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12,285
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11,262
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Amortization of acquired intangibles
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3,188
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3,319
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Fees related to shareholder activist
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—
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1,258
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Restructuring expenses
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415
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1,821
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Acquisition-related expenses
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—
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43
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Total operating expenses
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58,101
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59,376
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Income from operations
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15,409
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19,131
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Other (expense) income:
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Interest expense
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(1,389
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)
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(1,165
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)
|
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Interest income and other, net
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229
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|
408
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Foreign currency loss, net
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(843
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)
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(828
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)
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Total other expense, net
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(2,003
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)
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(1,585
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)
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Income before income taxes
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13,406
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17,546
|
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Provision for income taxes
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4,004
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3,814
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Net income
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$
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9,402
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$
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13,732
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Earnings per share:
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Basic
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$
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0.21
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$
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0.30
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Diluted
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$
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0.21
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$
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0.29
|
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Weighted average shares outstanding:
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|
||||
Basic
|
44,956
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46,529
|
|
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Diluted
|
45,286
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|
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47,476
|
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Cash dividends declared per common share
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$
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0.155
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$
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0.140
|
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(1)
The Company adopted ASC 606 effective December 1, 2018 using the full retrospective method. See Note 1.
Nature of Business and Basis of Presentation
for further information.
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Three Months Ended
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||||||
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February 28, 2019
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February 28, 2018
|
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(In thousands)
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As Adjusted
(1)
|
||||
Net income
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$
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9,402
|
|
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$
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13,732
|
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Other comprehensive income, net of tax:
|
|
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|
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Foreign currency translation adjustments
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1,479
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3,831
|
|
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Unrealized gain (loss) on investments, net of tax provision of $30 and $39 for 2019 and 2018, respectively
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83
|
|
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(27
|
)
|
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Total other comprehensive income, net of tax
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1,562
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|
|
3,804
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Comprehensive income
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$
|
10,964
|
|
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$
|
17,536
|
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(1)
The Company adopted ASC 606 effective December 1, 2018 using the full retrospective method. See Note 1.
Nature of Business and Basis of Presentation
for further information.
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Common Stock
|
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Additional Paid-In Capital
|
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Retained Earnings
|
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Accumulated Other Comprehensive Loss
|
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Total Shareholders' Equity
|
|||||||||||||
(in thousands)
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Number of Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance, December 1, 2018 As Adjusted
(1)
|
45,115
|
|
|
$
|
451
|
|
|
$
|
266,602
|
|
|
$
|
85,125
|
|
|
$
|
(28,176
|
)
|
|
$
|
324,002
|
|
Issuance of stock under employee stock purchase plan
|
38
|
|
|
—
|
|
|
997
|
|
|
—
|
|
|
—
|
|
|
997
|
|
|||||
Exercise of stock options
|
9
|
|
|
—
|
|
|
268
|
|
|
—
|
|
|
—
|
|
|
268
|
|
|||||
Withholding tax payments related to net issuance of restricted stock units
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
5,806
|
|
|
—
|
|
|
—
|
|
|
5,806
|
|
|||||
Adjustment due to adoption of ASU 2016-16 (Note 1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,397
|
)
|
|
—
|
|
|
(3,397
|
)
|
|||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,933
|
)
|
|
—
|
|
|
(6,933
|
)
|
|||||
Treasury stock repurchases and retirements
|
(688
|
)
|
|
(5
|
)
|
|
(1,260
|
)
|
|
(23,735
|
)
|
|
—
|
|
|
(25,000
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
9,402
|
|
|
—
|
|
|
9,402
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,562
|
|
|
1,562
|
|
|||||
Balance, February 28, 2019
|
44,474
|
|
|
$
|
446
|
|
|
$
|
272,408
|
|
|
$
|
60,462
|
|
|
$
|
(26,614
|
)
|
|
$
|
306,702
|
|
(1)
The Company adopted ASC 606 effective December 1, 2018 using the full retrospective method. See Note 1.
Nature of Business and Basis of Presentation
for further information.
|
|
Three Months Ended
|
||||||
|
February 28,
2019 |
|
February 28,
2018 |
||||
(In thousands)
|
|
|
As Adjusted
(1)
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
9,402
|
|
|
$
|
13,732
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization of property and equipment
|
1,620
|
|
|
1,682
|
|
||
Amortization of acquired intangibles and other
|
8,866
|
|
|
9,620
|
|
||
Stock-based compensation
|
5,806
|
|
|
4,570
|
|
||
Loss on disposal of property and equipment
|
153
|
|
|
135
|
|
||
Deferred income taxes
|
(3,069
|
)
|
|
137
|
|
||
Allowances for bad debt and sales credits
|
89
|
|
|
137
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
3,861
|
|
|
8,667
|
|
||
Other assets
|
5,147
|
|
|
2,382
|
|
||
Accounts payable and accrued liabilities
|
(13,128
|
)
|
|
(17,830
|
)
|
||
Income taxes payable
|
(246
|
)
|
|
(290
|
)
|
||
Deferred revenue
|
5,943
|
|
|
8,653
|
|
||
Net cash flows from operating activities
|
24,444
|
|
|
31,595
|
|
||
Cash flows from (used in) investing activities:
|
|
|
|
||||
Purchases of investments
|
(750
|
)
|
|
(7,374
|
)
|
||
Sales and maturities of investments
|
8,155
|
|
|
6,816
|
|
||
Purchases of property and equipment
|
(246
|
)
|
|
(1,386
|
)
|
||
Net cash flows from (used in) investing activities
|
7,159
|
|
|
(1,944
|
)
|
||
Cash flows used in financing activities:
|
|
|
|
||||
Proceeds from stock-based compensation plans
|
1,894
|
|
|
2,469
|
|
||
Repurchases of common stock
|
(25,000
|
)
|
|
(45,000
|
)
|
||
Dividend payments to shareholders
|
(6,992
|
)
|
|
(6,619
|
)
|
||
Payment of principal on long-term debt
|
(1,547
|
)
|
|
(1,547
|
)
|
||
Net cash flows used in financing activities
|
(31,645
|
)
|
|
(50,697
|
)
|
||
Effect of exchange rate changes on cash
|
1,432
|
|
|
4,693
|
|
||
Net increase (decrease) in cash and cash equivalents
|
1,390
|
|
|
(16,353
|
)
|
||
Cash and cash equivalents, beginning of period
|
105,126
|
|
|
133,464
|
|
||
Cash and cash equivalents, end of period
|
$
|
106,516
|
|
|
$
|
117,111
|
|
(1)
The Company adopted ASC 606 effective December 1, 2018 using the full retrospective method. See Note 1.
Nature of Business and Basis of Presentation
for further information.
|
|
Three Months Ended
|
||||||
|
February 28,
2019 |
|
February 28,
2018 |
||||
Supplemental disclosure:
|
|
|
|
||||
Cash paid for income taxes, net of refunds of $166 in 2019 and $307 in 2018
|
$
|
1,496
|
|
|
$
|
1,614
|
|
Cash paid for interest
|
$
|
1,169
|
|
|
$
|
942
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Total fair value of restricted stock awards, restricted stock units and deferred stock units on date vested
|
$
|
76
|
|
|
$
|
43
|
|
Dividends declared
|
$
|
6,939
|
|
|
$
|
6,482
|
|
2020
|
$
|
1,048
|
|
2021
|
1,089
|
|
|
2022
|
444
|
|
|
Total
|
$
|
2,581
|
|
Balance, December 1, 2018 As Adjusted
(1)
|
$
|
135,940
|
|
Billings and other
|
95,792
|
|
|
Revenue recognized
|
(89,549
|
)
|
|
Balance, February 28, 2019
|
$
|
142,183
|
|
(1)
The Company adopted ASC 606 effective December 1, 2018 using the full retrospective method.
|
•
|
Revenue from term licenses with extended payment terms over the term of the agreement within our Data Connectivity and Integration segment
- Under the applicable revenue recognition guidance for fiscal years 2018 and prior, these transactions were recognized when the amounts were billed to the customer. In accordance with ASC 606, revenue from term license performance obligations is recognized upon delivery and revenue from maintenance performance obligations is expected to be recognized over the contract term. To the extent that we enter into these transactions, revenue from term licenses with extended payment terms will be recognized prior to the customer being billed and we will recognize an unbilled receivable on the balance sheet. Accordingly, the recognition of license revenue is accelerated under ASC 606 as we historically did not recognize revenue until the amounts had been billed to the customer.
|
•
|
Revenue from transactions with multiple elements within our Application Development and Deployment segment (i.e., sales of perpetual licenses with maintenance and/or support)
- Under the applicable revenue recognition guidance for fiscal years 2018 and prior, these transactions were recognized ratably over the associated maintenance period as the Company did not have vendor specific objective evidence ("VSOE") for maintenance or support. Under ASC 606, the requirement to have VSOE for undelivered elements that existed under prior guidance is eliminated. Accordingly, the Company will recognize a portion of the sales price as revenue upon delivery of the license instead of recognizing the entire sales price ratably over the maintenance period.
|
|
November 30, 2018
|
||||||||||
(in thousands)
|
As Reported
|
|
Adjustments
|
|
As Adjusted
|
||||||
Assets
|
|
|
|
|
|
||||||
Accounts receivable, net
|
$
|
58,450
|
|
|
$
|
1,265
|
|
|
$
|
59,715
|
|
Short-term unbilled receivables
|
—
|
|
|
1,421
|
|
|
1,421
|
|
|||
Long-term unbilled receivables
|
—
|
|
|
1,811
|
|
|
1,811
|
|
|||
Deferred tax assets
|
1,922
|
|
|
(956
|
)
|
|
966
|
|
|||
Other assets
(1)
|
580,237
|
|
|
—
|
|
|
580,237
|
|
|||
Total assets
|
$
|
640,609
|
|
|
$
|
3,541
|
|
|
$
|
644,150
|
|
Liabilities and shareholders’ equity
|
|
|
|
|
|
||||||
Short-term deferred revenue
|
133,194
|
|
|
(9,984
|
)
|
|
123,210
|
|
|||
Long-term deferred revenue
|
15,127
|
|
|
(2,397
|
)
|
|
12,730
|
|
|||
Deferred tax liabilities
|
3,797
|
|
|
2,002
|
|
|
5,799
|
|
|||
Other liabilities
(2)
|
178,409
|
|
|
—
|
|
|
178,409
|
|
|||
Retained earnings
|
71,242
|
|
|
13,883
|
|
|
85,125
|
|
|||
Accumulated other comprehensive loss
|
(28,213
|
)
|
|
37
|
|
|
(28,176
|
)
|
|||
Other equity
(3)
|
267,053
|
|
|
—
|
|
|
267,053
|
|
|||
Total liabilities and shareholders’ equity
|
$
|
640,609
|
|
|
$
|
3,541
|
|
|
$
|
644,150
|
|
(1)
Includes cash and cash equivalents, short-term investments, other current assets, assets held for sale, property and equipment, net, intangible assets, net, goodwill, and other assets.
|
|||||||||||
(2)
Includes current portion of long-term debt, net, accounts payable, accrued compensation and related taxes, dividends payable, income taxes payable, other accrued liabilities, long-term debt, net, and other noncurrent liabilities.
|
|||||||||||
(3)
Includes common stock and additional paid-in capital.
|
|
February 28, 2018
|
||||||||||
(in thousands)
|
As Reported
|
|
Adjustments
|
|
As Adjusted
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Software licenses
|
$
|
25,343
|
|
|
$
|
711
|
|
|
$
|
26,054
|
|
Maintenance and services
|
68,704
|
|
|
652
|
|
|
69,356
|
|
|||
Total revenue
|
94,047
|
|
|
1,363
|
|
|
95,410
|
|
|||
Costs of revenue
|
16,903
|
|
|
—
|
|
|
16,903
|
|
|||
Gross Profit
|
77,144
|
|
|
1,363
|
|
|
78,507
|
|
|||
Operating expenses
|
59,376
|
|
|
—
|
|
|
59,376
|
|
|||
Income from operations
|
17,768
|
|
|
1,363
|
|
|
19,131
|
|
|||
Other expense, net
|
(1,585
|
)
|
|
—
|
|
|
(1,585
|
)
|
|||
Income before income taxes
|
16,183
|
|
|
1,363
|
|
|
17,546
|
|
|||
Provision for income taxes
|
3,271
|
|
|
543
|
|
|
3,814
|
|
|||
Net income
|
$
|
12,912
|
|
|
$
|
820
|
|
|
$
|
13,732
|
|
Earnings per share:
|
|
|
|
|
|
|
|||||
Basic
|
$
|
0.28
|
|
|
$
|
0.02
|
|
|
$
|
0.30
|
|
Diluted
|
$
|
0.27
|
|
|
$
|
0.02
|
|
|
$
|
0.29
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|||||
Basic
|
46,529
|
|
|
—
|
|
|
46,529
|
|
|||
Diluted
|
47,476
|
|
|
—
|
|
|
47,476
|
|
|
Amortized Cost Basis
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value
|
||||||||
Cash
|
$
|
94,904
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
94,904
|
|
Money market funds
|
11,612
|
|
|
—
|
|
|
—
|
|
|
11,612
|
|
||||
State and municipal bond obligations
|
14,406
|
|
|
—
|
|
|
(58
|
)
|
|
14,348
|
|
||||
U.S. treasury bonds
|
4,387
|
|
|
—
|
|
|
(8
|
)
|
|
4,379
|
|
||||
Corporate bonds
|
8,246
|
|
|
—
|
|
|
(31
|
)
|
|
8,215
|
|
||||
Total
|
$
|
133,555
|
|
|
$
|
—
|
|
|
$
|
(97
|
)
|
|
$
|
133,458
|
|
|
Amortized Cost Basis
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value
|
||||||||
Cash
|
$
|
101,316
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
101,316
|
|
Money market funds
|
3,810
|
|
|
—
|
|
|
—
|
|
|
3,810
|
|
||||
State and municipal bond obligations
|
19,542
|
|
|
—
|
|
|
(119
|
)
|
|
19,423
|
|
||||
U.S. treasury bonds
|
6,726
|
|
|
—
|
|
|
(21
|
)
|
|
6,705
|
|
||||
Corporate bonds
|
8,329
|
|
|
—
|
|
|
(70
|
)
|
|
8,259
|
|
||||
Total
|
$
|
139,723
|
|
|
$
|
—
|
|
|
$
|
(210
|
)
|
|
$
|
139,513
|
|
|
February 28, 2019
|
|
November 30, 2018
|
||||||||||||
|
Cash and
Equivalents
|
|
Short-Term
Investments
|
|
Cash and
Equivalents
|
|
Short-Term
Investments
|
||||||||
Cash
|
$
|
94,904
|
|
|
$
|
—
|
|
|
$
|
101,316
|
|
|
$
|
—
|
|
Money market funds
|
11,612
|
|
|
—
|
|
|
3,810
|
|
|
—
|
|
||||
State and municipal bond obligations
|
—
|
|
|
14,348
|
|
|
—
|
|
|
19,423
|
|
||||
U.S. treasury bonds
|
—
|
|
|
4,379
|
|
|
—
|
|
|
6,705
|
|
||||
Corporate bonds
|
—
|
|
|
8,215
|
|
|
—
|
|
|
8,259
|
|
||||
Total
|
$
|
106,516
|
|
|
$
|
26,942
|
|
|
$
|
105,126
|
|
|
$
|
34,387
|
|
|
February 28,
2019 |
|
November 30,
2018 |
||||
Due in one year or less
|
$
|
22,327
|
|
|
$
|
25,051
|
|
Due after one year
(1)
|
4,615
|
|
|
9,336
|
|
||
Total
|
$
|
26,942
|
|
|
$
|
34,387
|
|
(1)
|
Includes state and municipal bond obligations and corporate bonds, which are securities representing investments available for current operations and are classified as current on the condensed consolidated balance sheets.
|
|
February 28, 2019
|
|
November 30, 2018
|
||||||||||||
|
Notional Value
|
|
Fair Value
|
|
Notional Value
|
|
Fair Value
|
||||||||
Forward contracts to sell U.S. dollars
|
$
|
63,904
|
|
|
$
|
324
|
|
|
$
|
105,830
|
|
|
$
|
(170
|
)
|
Forward contracts to purchase U.S. dollars
|
495
|
|
|
(2
|
)
|
|
240
|
|
|
—
|
|
||||
Total
|
$
|
64,399
|
|
|
$
|
322
|
|
|
$
|
106,070
|
|
|
$
|
(170
|
)
|
|
|
|
Fair Value Measurements Using
|
||||||||||||
|
Total Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
11,612
|
|
|
$
|
11,612
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State and municipal bond obligations
|
14,348
|
|
|
—
|
|
|
14,348
|
|
|
—
|
|
||||
U.S. treasury bonds
|
4,379
|
|
|
—
|
|
|
4,379
|
|
|
—
|
|
||||
Corporate bonds
|
8,215
|
|
|
—
|
|
|
8,215
|
|
|
—
|
|
||||
Foreign exchange derivatives
|
$
|
322
|
|
|
$
|
—
|
|
|
$
|
322
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements Using
|
||||||||||||
|
Total Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
3,810
|
|
|
$
|
3,810
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State and municipal bond obligations
|
19,423
|
|
|
—
|
|
|
19,423
|
|
|
—
|
|
||||
U.S. treasury bonds
|
6,705
|
|
|
—
|
|
|
6,705
|
|
|
—
|
|
||||
Corporate bonds
|
8,259
|
|
|
—
|
|
|
8,259
|
|
|
—
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Foreign exchange derivatives
|
$
|
(170
|
)
|
|
$
|
—
|
|
|
$
|
(170
|
)
|
|
$
|
—
|
|
|
Total Fair Value
|
|
Total Losses
|
||||
Assets held for sale
|
$
|
5,776
|
|
|
$
|
5,147
|
|
|
February 28, 2019
|
|
November 30, 2018
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
||||||||||||
Purchased technology
|
$
|
146,501
|
|
|
$
|
(108,599
|
)
|
|
$
|
37,902
|
|
|
$
|
154,301
|
|
|
$
|
(110,959
|
)
|
|
$
|
43,342
|
|
Customer-related
|
67,642
|
|
|
(58,901
|
)
|
|
8,741
|
|
|
67,802
|
|
|
(56,589
|
)
|
|
11,213
|
|
||||||
Trademarks and trade names
|
17,740
|
|
|
(14,086
|
)
|
|
3,654
|
|
|
17,740
|
|
|
(13,376
|
)
|
|
4,364
|
|
||||||
Total
|
$
|
231,883
|
|
|
$
|
(181,586
|
)
|
|
$
|
50,297
|
|
|
$
|
239,843
|
|
|
$
|
(180,924
|
)
|
|
$
|
58,919
|
|
Remainder of 2019
|
$
|
26,310
|
|
2020
|
10,152
|
|
|
2021
|
10,033
|
|
|
2022
|
3,802
|
|
|
Total
|
$
|
50,297
|
|
Balance, November 30, 2018
|
$
|
314,992
|
|
Translation adjustments
|
18
|
|
|
Balance, February 28, 2019
|
$
|
315,010
|
|
|
November 30, 2018
|
|
Translation adjustments
|
|
February 28, 2019
|
||||||
OpenEdge
|
$
|
248,987
|
|
|
$
|
18
|
|
|
$
|
249,005
|
|
Data Connectivity and Integration
|
19,040
|
|
|
—
|
|
|
19,040
|
|
|||
Application Development and Deployment
|
46,965
|
|
|
—
|
|
|
46,965
|
|
|||
Total goodwill
|
$
|
314,992
|
|
|
$
|
18
|
|
|
$
|
315,010
|
|
Remainder of 2019
|
$
|
4,641
|
|
2020
|
9,281
|
|
|
2021
|
12,375
|
|
|
2022
|
89,719
|
|
|
Total
|
$
|
116,016
|
|
|
Three Months Ended
|
||||||
|
February 28,
2019 |
|
February 28,
2018 |
||||
Cost of maintenance and services
|
$
|
244
|
|
|
$
|
246
|
|
Sales and marketing
|
1,048
|
|
|
370
|
|
||
Product development
|
1,928
|
|
|
2,046
|
|
||
General and administrative
|
2,586
|
|
|
1,908
|
|
||
Total stock-based compensation
|
$
|
5,806
|
|
|
$
|
4,570
|
|
|
Foreign Currency Translation Adjustment
|
|
Unrealized (Losses) Gains on Investments
|
|
Accumulated Other Comprehensive (Loss) Income
|
||||||
Balance, December 1, 2018, as adjusted
|
$
|
(27,973
|
)
|
|
$
|
(203
|
)
|
|
$
|
(28,176
|
)
|
Other comprehensive income before reclassifications, net of tax
|
1,479
|
|
|
83
|
|
|
1,562
|
|
|||
Balance, February 28, 2019
|
$
|
(26,494
|
)
|
|
$
|
(120
|
)
|
|
$
|
(26,614
|
)
|
|
Excess
Facilities and
Other Costs
|
|
Employee Severance and Related Benefits
|
|
Total
|
||||||
Balance, December 1, 2018
|
$
|
307
|
|
|
$
|
4
|
|
|
$
|
311
|
|
Costs incurred
|
411
|
|
|
4
|
|
|
415
|
|
|||
Cash disbursements
|
(151
|
)
|
|
(8
|
)
|
|
(159
|
)
|
|||
Translation adjustments and other
|
(84
|
)
|
|
—
|
|
|
(84
|
)
|
|||
Balance, February 28, 2019
|
$
|
483
|
|
|
$
|
—
|
|
|
$
|
483
|
|
|
Three Months Ended
|
||||||
|
February 28,
2019 |
|
February 28,
2018 |
||||
|
|
|
As Adjusted
(1)
|
||||
Net income
|
$
|
9,402
|
|
|
$
|
13,732
|
|
Weighted average shares outstanding
|
44,956
|
|
|
46,529
|
|
||
Dilutive impact from common stock equivalents
|
330
|
|
|
947
|
|
||
Diluted weighted average shares outstanding
|
45,286
|
|
|
47,476
|
|
||
Basic earnings per share
|
$
|
0.21
|
|
|
$
|
0.30
|
|
Diluted earnings per share
|
$
|
0.21
|
|
|
$
|
0.29
|
|
(1)
The Company adopted ASC 606 effective December 1, 2018 using the full retrospective method. See Note 1.
Nature of Business and Basis of Presentation
for further information.
|
•
|
our leading UI development tools, which enable organizations to easily build engaging user interfaces for any device or front end;
|
•
|
our NativeScript offering, which allows developers to use JavaScript to build native applications across multiple mobile platforms;
|
•
|
our modern high productivity application development platform, Progress Kinvey, that is cloud-native, is secure, high-performing, and highly-scalable while supporting all modern user interfaces;
|
•
|
automated and intuitive machine learning capabilities for accelerating the creation and delivery of cognitive applications;
|
•
|
our data connectivity and integration capabilities;
|
•
|
our business logic and rules capabilities; and
|
•
|
web content management for delivering personalized and engaging digital experiences
|
|
Three Months Ended
|
|
Percentage Change
|
||||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
As Reported
|
|
Constant
Currency
|
||||||
Revenue
|
$
|
89,549
|
|
|
$
|
95,410
|
|
|
(6
|
)%
|
|
(4
|
)%
|
|
Three Months Ended
|
|
Percentage Change
|
||||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
As Reported
|
|
Constant
Currency
|
||||||
License
|
$
|
22,802
|
|
|
$
|
26,054
|
|
|
(12
|
)%
|
|
(10
|
)%
|
As a percentage of total revenue
|
25
|
%
|
|
27
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Percentage Change
|
||||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
As Reported
|
|
Constant
Currency
|
||||||
Maintenance
|
$
|
59,999
|
|
|
$
|
62,184
|
|
|
(4
|
)%
|
|
(1
|
)%
|
As a percentage of total revenue
|
67
|
%
|
|
65
|
%
|
|
|
|
|
||||
Services
|
6,748
|
|
|
7,172
|
|
|
(6
|
)%
|
|
(4
|
)%
|
||
As a percentage of total revenue
|
8
|
%
|
|
8
|
%
|
|
|
|
|
||||
Total maintenance and services revenue
|
$
|
66,747
|
|
|
$
|
69,356
|
|
|
(4
|
)%
|
|
(1
|
)%
|
As a percentage of total revenue
|
75
|
%
|
|
73
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Percentage Change
|
||||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
As Reported
|
|
Constant
Currency
|
||||||
North America
|
$
|
46,498
|
|
|
$
|
52,198
|
|
|
(11
|
)%
|
|
(11
|
)%
|
As a percentage of total revenue
|
52
|
%
|
|
55
|
%
|
|
|
|
|
||||
EMEA
|
$
|
33,372
|
|
|
$
|
33,296
|
|
|
—
|
%
|
|
5
|
%
|
As a percentage of total revenue
|
37
|
%
|
|
35
|
%
|
|
|
|
|
||||
Latin America
|
$
|
4,461
|
|
|
$
|
4,942
|
|
|
(10
|
)%
|
|
(1
|
)%
|
As a percentage of total revenue
|
5
|
%
|
|
5
|
%
|
|
|
|
|
||||
Asia Pacific
|
$
|
5,218
|
|
|
$
|
4,974
|
|
|
5
|
%
|
|
11
|
%
|
As a percentage of total revenue
|
6
|
%
|
|
5
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Percentage Change
|
||||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
As Reported
|
|
Constant Currency
|
||||||
OpenEdge segment
|
$
|
65,252
|
|
|
$
|
66,663
|
|
|
(2
|
)%
|
|
1
|
%
|
Data Connectivity and Integration segment
|
6,000
|
|
|
9,492
|
|
|
(37
|
)%
|
|
(37
|
)%
|
||
Application Development and Deployment segment
|
18,297
|
|
|
19,255
|
|
|
(5
|
)%
|
|
(5
|
)%
|
||
Total revenue
|
$
|
89,549
|
|
|
$
|
95,410
|
|
|
(6
|
)%
|
|
(4
|
)%
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change
|
|||||
Cost of software licenses
|
$
|
1,167
|
|
|
$
|
1,261
|
|
|
(7
|
)%
|
As a percentage of software license revenue
|
5
|
%
|
|
5
|
%
|
|
|
|||
As a percentage of total revenue
|
1
|
%
|
|
1
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change
|
|||||
Cost of maintenance and services
|
$
|
9,439
|
|
|
$
|
9,824
|
|
|
(4
|
)%
|
As a percentage of maintenance and services revenue
|
14
|
%
|
|
14
|
%
|
|
|
|||
As a percentage of total revenue
|
11
|
%
|
|
10
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change
|
|||||
Amortization of acquired intangibles
|
$
|
5,433
|
|
|
$
|
5,818
|
|
|
(7
|
)%
|
As a percentage of total revenue
|
6
|
%
|
|
6
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change
|
|||||
Gross profit
|
$
|
73,510
|
|
|
$
|
78,507
|
|
|
(6
|
)%
|
As a percentage of total revenue
|
82
|
%
|
|
82
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change
|
|||||
Sales and marketing
|
$
|
22,323
|
|
|
$
|
21,428
|
|
|
4
|
%
|
As a percentage of total revenue
|
25
|
%
|
|
22
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change
|
|||||
Product development
|
$
|
19,890
|
|
|
$
|
20,245
|
|
|
(2
|
)%
|
As a percentage of total revenue
|
22
|
%
|
|
21
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change
|
|||||
General and administrative
|
$
|
12,285
|
|
|
$
|
11,262
|
|
|
9
|
%
|
As a percentage of total revenue
|
14
|
%
|
|
12
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change
|
|||||
Amortization of acquired intangibles
|
$
|
3,188
|
|
|
$
|
3,319
|
|
|
(4
|
)%
|
As a percentage of total revenue
|
4
|
%
|
|
3
|
%
|
|
|
|
Three Months Ended
|
||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change |
||||
Fees related to shareholder activist
|
$
|
—
|
|
|
$
|
1,258
|
|
|
*
|
As a percentage of total revenue
|
—
|
%
|
|
1
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change
|
|||||
Restructuring expenses
|
$
|
415
|
|
|
$
|
1,821
|
|
|
(77
|
)%
|
As a percentage of total revenue
|
—
|
%
|
|
2
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change
|
|||||
Acquisition-related expenses
|
$
|
—
|
|
|
$
|
43
|
|
|
(100
|
)%
|
As a percentage of total revenue
|
—
|
%
|
|
—
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change
|
|||||
Income from operations
|
$
|
15,409
|
|
|
$
|
19,131
|
|
|
(19
|
)%
|
As a percentage of total revenue
|
17
|
%
|
|
20
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change |
|||||
OpenEdge segment
|
$
|
46,937
|
|
|
$
|
50,901
|
|
|
(8
|
)%
|
Data Connectivity and Integration segment
|
4,500
|
|
|
7,863
|
|
|
(43
|
)%
|
||
Application Development and Deployment segment
|
12,870
|
|
|
12,457
|
|
|
3
|
%
|
||
Other unallocated expenses
|
(48,898
|
)
|
|
(52,090
|
)
|
|
(6
|
)%
|
||
Income from operations
|
$
|
15,409
|
|
|
$
|
19,131
|
|
|
(19
|
)%
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change
|
|||||
Interest expense
|
$
|
(1,389
|
)
|
|
$
|
(1,165
|
)
|
|
(19
|
)%
|
Interest income and other, net
|
229
|
|
|
408
|
|
|
(44
|
)%
|
||
Foreign currency (loss) gain, net
|
(843
|
)
|
|
(828
|
)
|
|
(2
|
)%
|
||
Total other (expense) income, net
|
$
|
(2,003
|
)
|
|
$
|
(1,585
|
)
|
|
(26
|
)%
|
As a percentage of total revenue
|
(2
|
)%
|
|
(2
|
)%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change
|
|||||
Provision for income taxes
|
$
|
4,004
|
|
|
$
|
3,814
|
|
|
5
|
%
|
As a percentage of total revenue
|
4
|
%
|
|
4
|
%
|
|
|
|
Three Months Ended
|
|||||||||
(In thousands)
|
February 28, 2019
|
|
February 28, 2018
|
|
Percentage
Change
|
|||||
Net income
|
$
|
9,402
|
|
|
$
|
13,732
|
|
|
(32
|
)%
|
As a percentage of total revenue
|
10
|
%
|
|
14
|
%
|
|
|
(In thousands)
|
February 28,
2019 |
|
November 30,
2018 |
||||
Cash and cash equivalents
|
$
|
106,516
|
|
|
$
|
105,126
|
|
Short-term investments
|
26,942
|
|
|
34,387
|
|
||
Total cash, cash equivalents and short-term investments
|
$
|
133,458
|
|
|
$
|
139,513
|
|
|
Three Months Ended
|
||||||
(In thousands)
|
February 28,
2019 |
|
February 28,
2018 |
||||
Net income
|
$
|
9,402
|
|
|
$
|
13,732
|
|
Non-cash reconciling items included in net income
|
13,465
|
|
|
16,281
|
|
||
Changes in operating assets and liabilities
|
1,577
|
|
|
1,582
|
|
||
Net cash flows from operating activities
|
$
|
24,444
|
|
|
$
|
31,595
|
|
|
Three Months Ended
|
||||||
(In thousands)
|
February 28,
2019 |
|
February 28,
2018 |
||||
Net investment activity
|
$
|
7,405
|
|
|
$
|
(558
|
)
|
Purchases of property and equipment
|
(246
|
)
|
|
(1,386
|
)
|
||
Net cash flows from (used in) investing activities
|
$
|
7,159
|
|
|
$
|
(1,944
|
)
|
|
Three Months Ended
|
||||||
(In thousands)
|
February 28,
2019 |
|
February 28,
2018 |
||||
Proceeds from stock-based compensation plans
|
$
|
1,894
|
|
|
$
|
2,469
|
|
Repurchases of common stock
|
(25,000
|
)
|
|
(45,000
|
)
|
||
Payment of principal on long-term debt
|
(1,547
|
)
|
|
(1,547
|
)
|
||
Dividend payments to shareholders
|
(6,992
|
)
|
|
(6,619
|
)
|
||
Net cash flows used in financing activities
|
$
|
(31,645
|
)
|
|
$
|
(50,697
|
)
|
•
|
changes in demand for our products;
|
•
|
introduction, enhancement or announcement of products by us or our competitors;
|
•
|
market acceptance of our new products;
|
•
|
the growth rates of certain market segments in which we compete;
|
•
|
size and timing of significant orders;
|
•
|
a high percentage of our revenue is generated in the third month of each fiscal quarter and any failure to receive, complete or process orders at the end of any quarter could cause us to fall short of our revenue targets;
|
•
|
budgeting cycles of customers;
|
•
|
mix of distribution channels;
|
•
|
mix of products and services sold;
|
•
|
mix of international and North American revenues;
|
•
|
fluctuations in currency exchange rates;
|
•
|
changes in the level of operating expenses;
|
•
|
changes in management;
|
•
|
restructuring programs;
|
•
|
changes in our sales force;
|
•
|
completion or announcement of acquisitions by us or our competitors;
|
•
|
customer order deferrals in anticipation of new products announced by us or our competitors; and
|
•
|
general economic conditions in regions in which we conduct business.
|
•
|
longer payment cycles;
|
•
|
credit risk and higher levels of payment fraud;
|
•
|
greater difficulties in accounts receivable collection;
|
•
|
varying regulatory and legal requirements;
|
•
|
compliance with international and local trade, labor and export control laws;
|
•
|
compliance with U.S. laws such as the Foreign Corrupt Practices Act, and local laws prohibiting bribery and corrupt payments to government officials;
|
•
|
restrictions on the transfer of funds;
|
•
|
difficulties in developing, staffing, and simultaneously managing a large number of varying foreign operations as a result of distance, legal impediments and language and cultural differences;
|
•
|
reduced or minimal protection of intellectual property rights in some countries;
|
•
|
laws and business practices that favor local competitors or prohibit foreign ownership of certain businesses;
|
•
|
changes in U.S. or foreign trade policies or practices that increase costs or restrict the distribution of products;
|
•
|
seasonal reductions in business activity during the summer months in Europe and certain other parts of the world;
|
•
|
economic instability in emerging markets; and
|
•
|
potentially adverse tax consequences.
|
•
|
if new or current customers desire only perpetual licenses, we may not be successful in selling subscriptions;
|
•
|
although we intend to continue to support our perpetual license business, the increased emphasis on a cloud strategy may raise concerns among our installed customer base;
|
•
|
we may be unsuccessful in achieving our target pricing;
|
•
|
our revenues might decline over the short or long term as a result of this strategy;
|
•
|
our relationships with existing partners that resell perpetual licenses may be damaged;
|
•
|
increased risk of security breaches; and
|
•
|
we may incur costs at a higher than forecasted rate as we enhance and expand our cloud operations.
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
(1)
|
||||||
December 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
100,000
|
|
January 2019
|
|
247,186
|
|
|
35.38
|
|
|
247,186
|
|
|
91,249
|
|
||
February 2019
|
|
440,732
|
|
|
36.85
|
|
|
440,732
|
|
|
75,000
|
|
||
Total
|
|
687,918
|
|
|
$
|
36.32
|
|
|
687,918
|
|
|
$
|
75,000
|
|
(1)
|
In September 2017, our Board of Directors increased our total share repurchase authorization to $250.0 million. As of
February 28, 2019
, there was
$75.0 million
remaining under this authorization. In connection with the announced acquisition of Ipswitch, we intend to suspend our stock repurchase program for the remainder of fiscal 2019. We expect to resume share repurchases in fiscal 2020, at a level consistent with our publicly stated capital allocation policy.
|
•
|
Audit Committee - $25,000 for the Chairman and $20,000 for the other members;
|
•
|
Compensation Committee - $25,000 for the Chairman and $15,000 for the other members;
|
•
|
Nominating and Corporate Governance Committee - $12,500 for the Chairman and $10,000 for the other members; and
|
•
|
Mergers and Acquisitions Committee - $12,500 for the Chairman and $10,000 for the other members.
|
Exhibit No.
|
|
Description
|
|
|
|
10.1*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
101
|
|
The following materials from Progress Software Corporation’s Quarterly Report on Form 10-Q for the three months ended February 28, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of February 28, 2019 and November 30, 2018; (ii) Condensed Consolidated Statements of Income for the three months ended February 28, 2019 and February 28, 2018; (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended February 28, 2019 and February 28, 2018; (iv) Condensed Consolidated Statements of Shareholders' Equity for the three months ended February 28, 2019 and February 28, 2018; (v) Condensed Consolidated Statements of Cash Flows for the three months ended February 28, 2019 and February 28, 2018; and (vi) Notes to Condensed Consolidated Financial Statements.
|
*
|
Filed herewith
|
**
|
Furnished herewith
|
Dated:
|
April 5, 2019
|
|
/s/ YOGESH K. GUPTA
|
|
|
|
Yogesh K. Gupta
|
|
|
|
President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Dated:
|
April 5, 2019
|
|
/s/ PAUL A. JALBERT
|
|
|
|
Paul A. Jalbert
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
A.
|
Amounts of 2019 Fiscal Year Compensation
|
•
|
Annual Board Retainer (cash): $50,000
|
•
|
Additional Annual Non-Executive
Chairman Retainer (cash): $50,000 |
•
|
Committee fees (cash):
|
•
|
$200,000 to be delivered in one installment (as set forth below under “Timing”), consisting of Deferred Stock Units (“DSUs”).
|
•
|
The number of DSUs to be issued will be determined by dividing $200,000 by the fair market value of Company common stock on the date of issuance. The DSUs will vest in a single installment on the date of the 2020 Annual Meeting, subject to continued service on the Board thru such date, with full acceleration upon a change in control.
|
•
|
DSUs will accrue dividends on the same basis as Company common stock and will be reinvested in additional DSUs.
|
•
|
DSUs, together with dividends credited on those DSUs, will be settled upon a Director’s separation from service from the Board of Directors or change in control, if earlier, and not upon vesting. At such time, DSUs will be paid out in the form of Company common stock.
|
•
|
Annual fiscal year cash compensation will be paid in one installment at the Compensation Committee meeting in June or, promptly following the date of the 2019 Annual Meeting, whichever is earlier, or such other date as determined by the Compensation Committee.
|
•
|
Amounts paid will be pro-rated for partial year service, with a fractional month of service rounded to a whole month. A Director who joins the Board other than on the first day of the fiscal year will be paid a pro-rated amount of the annual fiscal year compensation. The same proration rule will also apply to any partial year service on any committee.
|
/s/ YOGESH K. GUPTA
|
Yogesh K. Gupta
|
President and Chief Executive Officer
|
(Principal Executive Officer)
|
/s/ PAUL A. JALBERT
|
Paul A. Jalbert
|
Chief Financial Officer
|
(Principal Financial Officer)
|
/s/ YOGESH K. GUPTA
|
|
/s/ PAUL A. JALBERT
|
||
President and Chief Executive Officer
|
|
Chief Financial Officer
|
||
|
|
|
|
|
Date:
|
April 5, 2019
|
|
Date:
|
April 5, 2019
|