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Delaware
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94-3156479
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(State or Other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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|
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1 Wayside Road
Burlington, Massachusetts
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01803
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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ý
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|
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Accelerated filer
|
|
¨
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Non-accelerated filer
|
¨
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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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Page
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Item 1.
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Condensed Consolidated Financial Statements (unaudited):
|
|
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a) Consolidated Statements of Operations for the three and six months ended March 31, 2016 and 2015
|
|
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b) Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended March 31, 2016 and 2015
|
|
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c) Consolidated Balance Sheets at March 31, 2016 and September 30, 2015
|
|
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d) Consolidated Statements of Cash Flows for the six months ended March 31, 2016 and 2015
|
|
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Item 2.
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Item 3.
|
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Item 4.
|
|
||
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|||
Item 1.
|
|
||
Item 1A.
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|
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Item 2.
|
|
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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||
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|||
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|||
Certifications
|
|
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Three Months Ended March 31,
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|
Six Months Ended March 31,
|
||||||||||||
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2016
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|
2015
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2016
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|
2015
|
||||||||
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(Unaudited)
(In thousands, except per share amounts)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Product and licensing
|
$
|
158,622
|
|
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$
|
174,451
|
|
|
$
|
337,672
|
|
|
$
|
344,139
|
|
Professional services and hosting
|
240,196
|
|
|
224,504
|
|
|
467,331
|
|
|
450,674
|
|
||||
Maintenance and support
|
79,915
|
|
|
76,104
|
|
|
159,845
|
|
|
154,265
|
|
||||
Total revenues
|
478,733
|
|
|
475,059
|
|
|
964,848
|
|
|
949,078
|
|
||||
Cost of revenues:
|
|
|
|
|
|
|
|
||||||||
Product and licensing
|
20,823
|
|
|
23,252
|
|
|
44,235
|
|
|
47,222
|
|
||||
Professional services and hosting
|
154,712
|
|
|
150,701
|
|
|
307,971
|
|
|
307,574
|
|
||||
Maintenance and support
|
13,626
|
|
|
13,392
|
|
|
26,922
|
|
|
27,389
|
|
||||
Amortization of intangible assets
|
16,339
|
|
|
15,631
|
|
|
31,970
|
|
|
30,762
|
|
||||
Total cost of revenues
|
205,500
|
|
|
202,976
|
|
|
411,098
|
|
|
412,947
|
|
||||
Gross profit
|
273,233
|
|
|
272,083
|
|
|
553,750
|
|
|
536,131
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
67,226
|
|
|
73,723
|
|
|
137,751
|
|
|
155,149
|
|
||||
Sales and marketing
|
92,837
|
|
|
93,249
|
|
|
193,427
|
|
|
204,499
|
|
||||
General and administrative
|
45,940
|
|
|
47,115
|
|
|
86,441
|
|
|
99,237
|
|
||||
Amortization of intangible assets
|
26,448
|
|
|
25,328
|
|
|
53,481
|
|
|
52,155
|
|
||||
Acquisition-related costs, net
|
1,225
|
|
|
6,523
|
|
|
3,705
|
|
|
11,279
|
|
||||
Restructuring and other charges, net
|
6,652
|
|
|
(333
|
)
|
|
14,540
|
|
|
1,895
|
|
||||
Total operating expenses
|
240,328
|
|
|
245,605
|
|
|
489,345
|
|
|
524,214
|
|
||||
Income from operations
|
32,905
|
|
|
26,478
|
|
|
64,405
|
|
|
11,917
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
1,616
|
|
|
627
|
|
|
2,499
|
|
|
1,189
|
|
||||
Interest expense
|
(32,328
|
)
|
|
(30,034
|
)
|
|
(62,208
|
)
|
|
(59,931
|
)
|
||||
Other income (expense), net
|
6
|
|
|
(110
|
)
|
|
(6,795
|
)
|
|
(895
|
)
|
||||
Income (loss) before income taxes
|
2,199
|
|
|
(3,039
|
)
|
|
(2,099
|
)
|
|
(47,720
|
)
|
||||
Provision for income taxes
|
9,245
|
|
|
11,059
|
|
|
17,012
|
|
|
16,873
|
|
||||
Net loss
|
$
|
(7,046
|
)
|
|
$
|
(14,098
|
)
|
|
$
|
(19,111
|
)
|
|
$
|
(64,593
|
)
|
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.02
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.20
|
)
|
Diluted
|
$
|
(0.02
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.20
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
298,021
|
|
|
322,879
|
|
|
303,050
|
|
|
322,331
|
|
||||
Diluted
|
298,021
|
|
|
322,879
|
|
|
303,050
|
|
|
322,331
|
|
|
Three Months Ended March 31,
|
|
Six Months Ended March 31,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(Unaudited)
|
||||||||||||||
|
(In thousands)
|
||||||||||||||
Net loss
|
$
|
(7,046
|
)
|
|
$
|
(14,098
|
)
|
|
$
|
(19,111
|
)
|
|
$
|
(64,593
|
)
|
Other comprehensive income (loss) income:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
17,567
|
|
|
(49,522
|
)
|
|
8,663
|
|
|
(77,740
|
)
|
||||
Pension adjustments
|
76
|
|
|
(759
|
)
|
|
150
|
|
|
(734
|
)
|
||||
Unrealized gain on marketable securities
|
100
|
|
|
58
|
|
|
33
|
|
|
29
|
|
||||
Total other comprehensive income (loss), net
|
17,743
|
|
|
(50,223
|
)
|
|
8,846
|
|
|
(78,445
|
)
|
||||
Comprehensive income (loss)
|
$
|
10,697
|
|
|
$
|
(64,321
|
)
|
|
$
|
(10,265
|
)
|
|
$
|
(143,038
|
)
|
|
March 31, 2016
|
|
September 30, 2015
|
||||
|
(Unaudited)
|
||||||
|
(In thousands, except per
share amounts)
|
||||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
250,690
|
|
|
$
|
479,449
|
|
Marketable securities
|
59,345
|
|
|
57,237
|
|
||
Accounts receivable, less allowances for doubtful accounts of $10,358 and $9,184
|
365,996
|
|
|
373,162
|
|
||
Prepaid expenses and other current assets
|
91,542
|
|
|
76,777
|
|
||
Total current assets
|
767,573
|
|
|
986,625
|
|
||
Marketable securities
|
30,782
|
|
|
32,099
|
|
||
Land, building and equipment, net
|
189,414
|
|
|
186,007
|
|
||
Goodwill
|
3,394,751
|
|
|
3,378,334
|
|
||
Intangible assets, net
|
719,744
|
|
|
796,285
|
|
||
Other assets
|
154,372
|
|
|
148,301
|
|
||
Total assets
|
$
|
5,256,636
|
|
|
$
|
5,527,651
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
||||||
Short-term related party note payable
|
$
|
125,000
|
|
|
$
|
—
|
|
Current portion of long-term debt
|
—
|
|
|
4,834
|
|
||
Contingent and deferred acquisition payments
|
19,428
|
|
|
15,651
|
|
||
Accounts payable
|
58,789
|
|
|
56,581
|
|
||
Accrued expenses and other current liabilities
|
190,161
|
|
|
224,609
|
|
||
Deferred revenue
|
378,731
|
|
|
324,709
|
|
||
Total current liabilities
|
772,109
|
|
|
626,384
|
|
||
Long-term portion of debt
|
2,131,572
|
|
|
2,118,821
|
|
||
Deferred revenue, net of current portion
|
369,768
|
|
|
343,452
|
|
||
Deferred tax liabilities
|
110,857
|
|
|
104,782
|
|
||
Other liabilities
|
77,752
|
|
|
68,960
|
|
||
Total liabilities
|
3,462,058
|
|
|
3,262,399
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 15)
|
|
|
|
||||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.001 par value per share; 560,000 shares authorized; 282,629 and 313,531 shares issued and 278,878 and 309,781 shares outstanding, respectively
|
283
|
|
|
314
|
|
||
Additional paid-in capital
|
3,027,542
|
|
|
3,149,060
|
|
||
Treasury stock, at cost (3,751 shares)
|
(16,788
|
)
|
|
(16,788
|
)
|
||
Accumulated other comprehensive loss
|
(108,099
|
)
|
|
(116,945
|
)
|
||
Accumulated deficit
|
(1,108,360
|
)
|
|
(750,389
|
)
|
||
Total stockholders’ equity
|
1,794,578
|
|
|
2,265,252
|
|
||
Total liabilities and stockholders’ equity
|
$
|
5,256,636
|
|
|
$
|
5,527,651
|
|
|
Six Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(Unaudited)
(In thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(19,111
|
)
|
|
$
|
(64,593
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
115,826
|
|
|
114,020
|
|
||
Stock-based compensation
|
80,511
|
|
|
78,271
|
|
||
Non-cash interest expense
|
21,215
|
|
|
14,918
|
|
||
Deferred tax provision
|
3,738
|
|
|
6,386
|
|
||
Loss on extinguishment of debt
|
4,851
|
|
|
—
|
|
||
Other
|
(135
|
)
|
|
1,427
|
|
||
Changes in operating assets and liabilities, net of effects from acquisitions:
|
|
|
|
||||
Accounts receivable
|
22,110
|
|
|
16,988
|
|
||
Prepaid expenses and other assets
|
(16,765
|
)
|
|
(13,213
|
)
|
||
Accounts payable
|
2,697
|
|
|
1,869
|
|
||
Accrued expenses and other liabilities
|
7,334
|
|
|
(50,017
|
)
|
||
Deferred revenue
|
78,792
|
|
|
109,575
|
|
||
Net cash provided by operating activities
|
301,063
|
|
|
215,631
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(32,235
|
)
|
|
(30,758
|
)
|
||
Payments for business and technology acquisitions, net of cash acquired
|
(27,399
|
)
|
|
(31,891
|
)
|
||
Purchases of marketable securities and other investments
|
(32,757
|
)
|
|
(91,348
|
)
|
||
Proceeds from sales and maturities of marketable securities and other investments
|
32,681
|
|
|
23,165
|
|
||
Net cash used in investing activities
|
(59,710
|
)
|
|
(130,832
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Payments of debt
|
(511,844
|
)
|
|
(2,418
|
)
|
||
Proceeds from issuance of convertible debt, net of issuance costs
|
663,757
|
|
|
—
|
|
||
Payments for repurchase of common stock
|
(574,338
|
)
|
|
(109,838
|
)
|
||
Payments for settlement of other share-based derivatives
|
—
|
|
|
(340
|
)
|
||
Net payments on other long-term liabilities
|
(1,084
|
)
|
|
(1,526
|
)
|
||
Proceeds from issuance of common stock from employee stock plans
|
8,440
|
|
|
9,149
|
|
||
Cash used to net share settle employee equity awards
|
(56,973
|
)
|
|
(46,953
|
)
|
||
Net cash used in financing activities
|
(472,042
|
)
|
|
(151,926
|
)
|
||
Effects of exchange rate changes on cash and cash equivalents
|
1,930
|
|
|
(5,453
|
)
|
||
Net decrease in cash and cash equivalents
|
(228,759
|
)
|
|
(72,580
|
)
|
||
Cash and cash equivalents at beginning of period
|
479,449
|
|
|
547,230
|
|
||
Cash and cash equivalents at end of period
|
$
|
250,690
|
|
|
$
|
474,650
|
|
1.
|
Organization and Presentation
|
2.
|
Summary of Significant Accounting Policies
|
3.
|
Business Acquisitions
|
|
Three Months Ended March 31,
|
|
Six Months Ended March 31,
|
||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Transition and integration costs
|
$
|
1,039
|
|
|
$
|
2,756
|
|
|
$
|
2,035
|
|
|
$
|
6,237
|
|
Professional service fees
|
1,197
|
|
|
3,485
|
|
|
2,600
|
|
|
5,686
|
|
||||
Acquisition-related adjustments
|
(1,011
|
)
|
|
282
|
|
|
(930
|
)
|
|
(644
|
)
|
||||
Total
|
$
|
1,225
|
|
|
$
|
6,523
|
|
|
$
|
3,705
|
|
|
$
|
11,279
|
|
4.
|
Goodwill and Intangible Assets
|
|
Goodwill
|
|
Intangible
Assets
|
||||
Balance at September 30, 2015
|
$
|
3,378,334
|
|
|
$
|
796,285
|
|
Acquisitions
|
14,422
|
|
|
5,590
|
|
||
Amortization
|
—
|
|
|
(85,451
|
)
|
||
Effect of foreign currency translation
|
1,995
|
|
|
3,320
|
|
||
Balance at March 31, 2016
|
$
|
3,394,751
|
|
|
$
|
719,744
|
|
5.
|
Financial Instruments and Hedging Activities
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Six Months Ended March 31,
|
||||||||||||
Derivatives Not Designated as Hedges
|
|
Location of Gain (Loss) Recognized in Income
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Foreign currency contracts
|
|
Other income (expense), net
|
|
$
|
5,607
|
|
|
$
|
(12,813
|
)
|
|
$
|
2,234
|
|
|
$
|
(19,096
|
)
|
Security price guarantees
|
|
Other income (expense), net
|
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
(539
|
)
|
•
|
Level 1.
Quoted prices for identical assets or liabilities in active markets which we can access.
|
•
|
Level 2.
Observable inputs other than those described as Level 1.
|
•
|
Level 3.
Unobservable inputs based on the best information available, including management’s estimates and assumptions.
|
|
March 31, 2016
|
||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
(a)
|
$
|
150,842
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
150,842
|
|
US government agency securities
(a)
|
1,001
|
|
|
—
|
|
|
—
|
|
|
1,001
|
|
||||
Time deposits
(b)
|
—
|
|
|
51,288
|
|
|
—
|
|
|
51,288
|
|
||||
Commercial paper, $1,769 at cost
(b)
|
—
|
|
|
1,769
|
|
|
—
|
|
|
1,769
|
|
||||
Corporate notes and bonds, $47,588 at cost
(b)
|
—
|
|
|
47,577
|
|
|
—
|
|
|
47,577
|
|
||||
Foreign currency exchange contracts
(b)
|
—
|
|
|
1,798
|
|
|
—
|
|
|
1,798
|
|
||||
Total assets at fair value
|
$
|
151,843
|
|
|
$
|
102,432
|
|
|
$
|
—
|
|
|
$
|
254,275
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent acquisition payments
(c)
|
—
|
|
|
—
|
|
|
(20,825
|
)
|
|
(20,825
|
)
|
||||
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(20,825
|
)
|
|
$
|
(20,825
|
)
|
|
September 30, 2015
|
||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
(a)
|
$
|
334,404
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
334,404
|
|
US government agency securities
(a)
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
||||
Time deposits
(b)
|
—
|
|
|
71,453
|
|
|
—
|
|
|
71,453
|
|
||||
Commercial paper, $3,491 at cost
(b)
|
—
|
|
|
3,493
|
|
|
—
|
|
|
3,493
|
|
||||
Corporate notes and bonds, $44,581 at cost
(b)
|
—
|
|
|
44,533
|
|
|
—
|
|
|
44,533
|
|
||||
Foreign currency exchange contracts
(b)
|
—
|
|
|
260
|
|
|
—
|
|
|
260
|
|
||||
Total assets at fair value
|
$
|
335,404
|
|
|
$
|
119,739
|
|
|
$
|
—
|
|
|
$
|
455,143
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent acquisition payments
(c)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(15,961
|
)
|
|
$
|
(15,961
|
)
|
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(15,961
|
)
|
|
$
|
(15,961
|
)
|
(a)
|
Money market funds and U.S. government agency securities, included in cash and cash equivalents in the accompanying balance sheets, are valued at quoted market prices in active markets.
|
(b)
|
The fair values of our time deposits, commercial paper, corporate notes and bonds, and foreign currency exchange contracts are based on the most recent observable inputs for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable. Time deposits are generally for terms of one year or less. The commercial paper and corporate notes and bonds mature within three years and have a weighted average maturity of
1.25 years
as of
March 31, 2016
.
|
(c)
|
The fair value of our contingent consideration arrangements are determined based on our evaluation as to the probability and amount of any earn-out that will be achieved based on expected future performance by the acquired entity.
|
|
Three Months Ended March 31,
|
|
Six Months Ended March 31,
|
||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Balance at beginning of period
|
$
|
16,901
|
|
|
$
|
5,440
|
|
|
$
|
15,961
|
|
|
$
|
6,864
|
|
Earn-out liabilities established at time of acquisition
|
2,500
|
|
|
(554
|
)
|
|
2,500
|
|
|
85
|
|
||||
Payments upon settlement
|
(112
|
)
|
|
(1,476
|
)
|
|
(286
|
)
|
|
(2,938
|
)
|
||||
Adjustments to fair value included in acquisition-related costs, net
|
1,536
|
|
|
521
|
|
|
2,650
|
|
|
(80
|
)
|
||||
Balance at end of period
|
$
|
20,825
|
|
|
$
|
3,931
|
|
|
$
|
20,825
|
|
|
$
|
3,931
|
|
7.
|
Accrued Expenses and Other Current Liabilities
|
|
March 31, 2016
|
|
September 30, 2015
|
||||
Compensation
|
$
|
109,541
|
|
|
$
|
142,150
|
|
Cost of revenue related liabilities
|
24,851
|
|
|
25,584
|
|
||
Accrued interest payable
|
15,606
|
|
|
11,793
|
|
||
Consulting and professional fees
|
15,000
|
|
|
11,939
|
|
||
Sales and marketing incentives
|
7,255
|
|
|
6,845
|
|
||
Facilities related liabilities
|
6,176
|
|
|
6,312
|
|
||
Sales and other taxes payable
|
3,477
|
|
|
6,026
|
|
||
Other
|
8,255
|
|
|
13,960
|
|
||
Total
|
$
|
190,161
|
|
|
$
|
224,609
|
|
8.
|
Deferred Revenue
|
|
March 31, 2016
|
|
September 30, 2015
|
||||
Current liabilities:
|
|
|
|
||||
Deferred maintenance revenue
|
$
|
169,640
|
|
|
$
|
155,967
|
|
Unearned revenue
|
209,091
|
|
|
168,742
|
|
||
Total current deferred revenue
|
$
|
378,731
|
|
|
$
|
324,709
|
|
Long-term liabilities:
|
|
|
|
||||
Deferred maintenance revenue
|
$
|
62,416
|
|
|
$
|
62,201
|
|
Unearned revenue
|
307,352
|
|
|
281,251
|
|
||
Total long-term deferred revenue
|
$
|
369,768
|
|
|
$
|
343,452
|
|
9.
|
Restructuring and Other Charges, net
|
|
Personnel
|
|
Facilities
|
|
Total
|
||||||
Balance at September 30, 2015
|
$
|
635
|
|
|
$
|
6,222
|
|
|
$
|
6,857
|
|
Restructuring charges, net
|
9,549
|
|
|
4,884
|
|
|
14,433
|
|
|||
Non-cash adjustment
|
(57
|
)
|
|
545
|
|
|
488
|
|
|||
Cash payments
|
(5,041
|
)
|
|
(2,684
|
)
|
|
(7,725
|
)
|
|||
Balance at March 31, 2016
|
$
|
5,086
|
|
|
$
|
8,967
|
|
|
$
|
14,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Three Months Ended March 31,
|
||||||||||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||||||||||||||||||||||
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
||||||||||||||||||||
Healthcare
|
$
|
613
|
|
|
$
|
8
|
|
|
$
|
621
|
|
|
$
|
—
|
|
|
$
|
621
|
|
|
$
|
(81
|
)
|
|
$
|
—
|
|
|
$
|
(81
|
)
|
|
$
|
—
|
|
|
$
|
(81
|
)
|
Mobile
|
2,729
|
|
|
(652
|
)
|
|
2,077
|
|
|
46
|
|
|
2,123
|
|
|
(125
|
)
|
|
(172
|
)
|
|
(297
|
)
|
|
—
|
|
|
(297
|
)
|
||||||||||
Enterprise
|
(41
|
)
|
|
2,014
|
|
|
1,973
|
|
|
—
|
|
|
1,973
|
|
|
71
|
|
|
—
|
|
|
71
|
|
|
—
|
|
|
71
|
|
||||||||||
Imaging
|
(1
|
)
|
|
184
|
|
|
183
|
|
|
—
|
|
|
183
|
|
|
(1
|
)
|
|
(60
|
)
|
|
(61
|
)
|
|
—
|
|
|
(61
|
)
|
||||||||||
Corporate
|
1,691
|
|
|
—
|
|
|
1,691
|
|
|
61
|
|
|
1,752
|
|
|
35
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
||||||||||
Total
|
$
|
4,991
|
|
|
$
|
1,554
|
|
|
$
|
6,545
|
|
|
$
|
107
|
|
|
$
|
6,652
|
|
|
$
|
(101
|
)
|
|
$
|
(232
|
)
|
|
$
|
(333
|
)
|
|
$
|
—
|
|
|
$
|
(333
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Six Months Ended March 31,
|
||||||||||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||||||||||||||||||||||
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
||||||||||||||||||||
Healthcare
|
$
|
1,314
|
|
|
$
|
8
|
|
|
$
|
1,322
|
|
|
$
|
—
|
|
|
$
|
1,322
|
|
|
$
|
(209
|
)
|
|
$
|
—
|
|
|
$
|
(209
|
)
|
|
$
|
—
|
|
|
$
|
(209
|
)
|
Mobile
|
4,911
|
|
|
(50
|
)
|
|
4,861
|
|
|
46
|
|
|
4,907
|
|
|
(113
|
)
|
|
(172
|
)
|
|
(285
|
)
|
|
—
|
|
|
(285
|
)
|
||||||||||
Enterprise
|
1,043
|
|
|
2,034
|
|
|
3,077
|
|
|
—
|
|
|
3,077
|
|
|
289
|
|
|
95
|
|
|
384
|
|
|
—
|
|
|
384
|
|
||||||||||
Imaging
|
212
|
|
|
184
|
|
|
396
|
|
|
—
|
|
|
396
|
|
|
1,479
|
|
|
333
|
|
|
1,812
|
|
|
—
|
|
|
1,812
|
|
||||||||||
Corporate
|
2,069
|
|
|
2,708
|
|
|
4,777
|
|
|
61
|
|
|
4,838
|
|
|
193
|
|
|
—
|
|
|
193
|
|
|
—
|
|
|
193
|
|
||||||||||
Total
|
$
|
9,549
|
|
|
$
|
4,884
|
|
|
$
|
14,433
|
|
|
$
|
107
|
|
|
$
|
14,540
|
|
|
$
|
1,639
|
|
|
$
|
256
|
|
|
$
|
1,895
|
|
|
$
|
—
|
|
|
$
|
1,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.
|
Debt and Credit Facilities
|
|
March 31, 2016
|
|
September 30, 2015
|
||||
5.375% Senior Notes due 2020, net of unamortized premium of $3.4 million and $3.8 million, respectively. Effective interest rate 5.28%.
|
$
|
1,053,800
|
|
|
$
|
1,053,818
|
|
1.00% Convertible Debentures due 2035, net of unamortized discount of $174.4 million. Effective interest rate 5.62%.
|
502,098
|
|
|
—
|
|
||
2.75% Convertible Debentures due 2031, net of unamortized discount of $27.6 million and $39.1 million, respectively. Effective interest rate 7.43%.
|
367,953
|
|
|
394,698
|
|
||
1.50% Convertible Debentures due 2035, net of unamortized discount of $56.2 million and $60.5 million, respectively. Effective interest rate 5.39%.
|
207,721
|
|
|
203,373
|
|
||
Credit Facility, net of unamortized original issue discount of $0.8 million.
|
—
|
|
|
471,766
|
|
||
Total long-term debt
|
$
|
2,131,572
|
|
|
$
|
2,123,655
|
|
Less: current portion
|
—
|
|
|
4,834
|
|
||
Non-current portion of long-term debt
|
$
|
2,131,572
|
|
|
$
|
2,118,821
|
|
Description
|
|
Base Rate Margin
|
|
|
LIBOR Margin
|
|
Revolving facility due August 2018
|
|
0.50% - 0.75%
|
(a)
|
|
1.50% - 1.75%
|
(a)
|
(a)
|
The margin is determined based on our net leverage ratio at the date the interest rates are reset on the revolving credit agreement.
|
11.
|
Stockholders' Equity
|
12.
|
Net Loss Per Share
|
|
|
|
|
13.
|
Stock-Based Compensation
|
|
Three Months Ended March 31,
|
|
Six Months Ended March 31,
|
||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Cost of product and licensing
|
$
|
122
|
|
|
$
|
96
|
|
|
$
|
244
|
|
|
$
|
183
|
|
Cost of professional services and hosting
|
7,757
|
|
|
4,729
|
|
|
15,514
|
|
|
12,352
|
|
||||
Cost of maintenance and support
|
923
|
|
|
631
|
|
|
1,991
|
|
|
1,574
|
|
||||
Research and development
|
7,967
|
|
|
6,668
|
|
|
17,900
|
|
|
17,177
|
|
||||
Selling and marketing
|
10,460
|
|
|
7,882
|
|
|
23,297
|
|
|
20,416
|
|
||||
General and administrative
|
10,934
|
|
|
10,911
|
|
|
21,565
|
|
|
26,569
|
|
||||
Total
|
$
|
38,163
|
|
|
$
|
30,917
|
|
|
$
|
80,511
|
|
|
$
|
78,271
|
|
|
Number of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(a)
|
|||||
Outstanding at September 30, 2015
|
2,923,989
|
|
|
$
|
14.01
|
|
|
|
|
|
||
Exercised/Repurchased
(b)
|
(944,421
|
)
|
|
$
|
12.03
|
|
|
|
|
|
||
Expired
|
(3,103
|
)
|
|
$
|
10.97
|
|
|
|
|
|
||
Outstanding at March 31, 2016
|
1,976,465
|
|
|
$
|
14.97
|
|
|
1.2 years
|
|
$
|
7.4
|
million
|
Exercisable at March 31, 2016
|
1,976,456
|
|
|
$
|
14.97
|
|
|
1.2 years
|
|
$
|
7.4
|
million
|
Exercisable at March 31, 2015
|
3,592,132
|
|
|
$
|
13.71
|
|
|
1.8 years
|
|
$
|
4.7
|
million
|
(a)
|
The aggregate intrinsic value in this table was calculated based on the positive difference, if any, between the closing market price of our common stock on
March 31, 2016
(
$18.69
) and the exercise price of the underlying options.
|
(b)
|
We repurchased
1.0 million
shares owned directly or indirectly by our Chief Executive Officer, composed of
649,649
outstanding shares and
800,000
vested stock options with a net share equivalent of
350,351
shares, for an aggregate purchase price of
$21.4 million
.
|
|
Number of Shares Underlying Restricted Units — Contingent Awards
|
|
Number of Shares Underlying Restricted Units — Time-Based Awards
|
||
Outstanding at September 30, 2015
|
4,700,210
|
|
|
7,007,839
|
|
Granted
|
1,935,656
|
|
|
4,736,678
|
|
Earned/released
|
(2,210,095
|
)
|
|
(4,273,840
|
)
|
Forfeited
|
(317,357
|
)
|
|
(441,739
|
)
|
Outstanding at March 31, 2016
|
4,108,414
|
|
|
7,028,938
|
|
Weighted average remaining recognition period of outstanding restricted units
|
1.7 years
|
|
|
1.6 years
|
|
Unearned stock-based compensation expense of outstanding restricted units
|
$70.4 million
|
|
$75.2 million
|
||
Aggregate intrinsic value of outstanding restricted units
(a)
|
$76.8 million
|
|
$131.5 million
|
(a)
|
The aggregate intrinsic value in this table was calculated based on the positive difference between the closing market price of our common stock on
March 31, 2016
(
$18.69
) and the purchase price of the underlying Restricted Units.
|
|
Six Months Ended March 31,
|
||||||
2016
|
|
2015
|
|||||
Weighted-average grant-date fair value per share
|
$
|
20.14
|
|
|
$
|
14.87
|
|
Total intrinsic value of shares vested (in millions)
|
$
|
132.1
|
|
|
$
|
110.9
|
|
|
Number of Shares Underlying Restricted Stock
|
|
Weighted Average Grant Date Fair Value
|
|||
Outstanding at September 30, 2015
|
250,000
|
|
|
$
|
15.71
|
|
Vested
|
(250,000
|
)
|
|
$
|
15.71
|
|
Outstanding at March 31, 2016
|
—
|
|
|
$
|
—
|
|
14.
|
Income Taxes
|
|
Three Months Ended March 31,
|
|
Six Months Ended March 31,
|
||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Domestic
|
$
|
(33,691
|
)
|
|
$
|
(37,225
|
)
|
|
$
|
(62,693
|
)
|
|
$
|
(100,935
|
)
|
Foreign
|
35,890
|
|
|
34,186
|
|
|
60,594
|
|
|
53,215
|
|
||||
Income (loss) before income taxes
|
$
|
2,199
|
|
|
$
|
(3,039
|
)
|
|
$
|
(2,099
|
)
|
|
$
|
(47,720
|
)
|
|
Three Months Ended March 31,
|
|
Six Months Ended March 31,
|
||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Domestic
|
$
|
5,021
|
|
|
$
|
5,832
|
|
|
$
|
9,559
|
|
|
$
|
9,634
|
|
Foreign
|
4,224
|
|
|
5,227
|
|
|
7,453
|
|
|
7,239
|
|
||||
Provision for income taxes
|
$
|
9,245
|
|
|
$
|
11,059
|
|
|
$
|
17,012
|
|
|
$
|
16,873
|
|
Effective tax rate
|
420.4
|
%
|
|
(363.9
|
)%
|
|
(810.5
|
)%
|
|
(35.4
|
)%
|
15.
|
Commitments and Contingencies
|
16.
|
Segment and Geographic Information
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
March 31,
|
|
March 31,
|
|||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
Segment revenues
(a)
:
|
|
|
|
|
|
|
|
||||||||
Healthcare
|
$
|
244,391
|
|
|
$
|
243,328
|
|
|
$
|
492,475
|
|
|
$
|
494,138
|
|
Mobile
|
91,835
|
|
|
101,967
|
|
|
188,238
|
|
|
189,483
|
|
||||
Enterprise
|
94,443
|
|
|
83,302
|
|
|
183,219
|
|
|
173,945
|
|
||||
Imaging
|
56,744
|
|
|
59,466
|
|
|
118,351
|
|
|
119,527
|
|
||||
Total segment revenues
|
487,413
|
|
|
488,063
|
|
|
982,283
|
|
|
977,093
|
|
||||
Less: acquisition related revenues adjustments
|
(8,680
|
)
|
|
(13,004
|
)
|
|
(17,435
|
)
|
|
(28,015
|
)
|
||||
Total consolidated revenues
|
478,733
|
|
|
475,059
|
|
|
964,848
|
|
|
949,078
|
|
||||
Segment profit:
|
|
|
|
|
|
|
|
||||||||
Healthcare
|
78,382
|
|
|
82,847
|
|
|
159,611
|
|
|
161,247
|
|
||||
Mobile
|
33,448
|
|
|
31,859
|
|
|
67,212
|
|
|
44,367
|
|
||||
Enterprise
|
34,059
|
|
|
19,615
|
|
|
60,270
|
|
|
44,964
|
|
||||
Imaging
|
22,192
|
|
|
22,080
|
|
|
49,177
|
|
|
42,008
|
|
||||
Total segment profit
|
168,081
|
|
|
156,401
|
|
|
336,270
|
|
|
292,586
|
|
||||
Corporate expenses and other, net
|
(35,878
|
)
|
|
(36,831
|
)
|
|
(66,598
|
)
|
|
(74,053
|
)
|
||||
Acquisition-related revenues and cost of revenues adjustment
|
(8,471
|
)
|
|
(12,088
|
)
|
|
(17,060
|
)
|
|
(26,378
|
)
|
||||
Stock-based compensation
|
(38,163
|
)
|
|
(30,917
|
)
|
|
(80,511
|
)
|
|
(78,271
|
)
|
||||
Amortization of intangible assets
|
(42,787
|
)
|
|
(40,959
|
)
|
|
(85,451
|
)
|
|
(82,917
|
)
|
||||
Acquisition-related costs, net
|
(1,225
|
)
|
|
(6,523
|
)
|
|
(3,705
|
)
|
|
(11,279
|
)
|
||||
Restructuring and other charges, net
|
(6,652
|
)
|
|
333
|
|
|
(14,540
|
)
|
|
(1,895
|
)
|
||||
Costs associated with IP collaboration agreements
|
(2,000
|
)
|
|
(2,938
|
)
|
|
(4,000
|
)
|
|
(5,876
|
)
|
||||
Other expense, net
|
(30,706
|
)
|
|
(29,517
|
)
|
|
(66,504
|
)
|
|
(59,637
|
)
|
||||
Income (loss) before income taxes
|
$
|
2,199
|
|
|
$
|
(3,039
|
)
|
|
$
|
(2,099
|
)
|
|
$
|
(47,720
|
)
|
(a)
|
Segment revenues differ from reported revenues due to certain revenue adjustments related to acquisitions that will not be fully recognized in accordance with authoritative guidance for the purchase accounting of business combinations. Segment revenues also include revenue that the business would have otherwise recognized had we not acquired intellectual property and other assets from the same customer. These revenues are included to allow for more complete comparisons to the financial results of historical operations and in evaluating management performance.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
March 31,
|
|
March 31,
|
|||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
United States
|
$
|
338,710
|
|
|
$
|
352,448
|
|
|
$
|
694,524
|
|
|
$
|
700,122
|
|
International
|
140,023
|
|
|
122,611
|
|
|
270,324
|
|
|
248,956
|
|
||||
Total revenues
|
$
|
478,733
|
|
|
$
|
475,059
|
|
|
$
|
964,848
|
|
|
$
|
949,078
|
|
•
|
our future bookings, revenues, cost of revenues, research and development expenses, selling, general and administrative expenses, amortization of intangible assets and gross margin;
|
•
|
our strategy relating to our segments;
|
•
|
our transformation program to reduce costs and optimize processes;
|
•
|
market trends;
|
•
|
technological advancements;
|
•
|
the potential of future product releases;
|
•
|
our product development plans and the timing, amount and impact of investments in research and development;
|
•
|
future acquisitions, and anticipated benefits from acquisitions;
|
•
|
international operations and localized versions of our products; and
|
•
|
the conduct, timing and outcome of legal proceedings and litigation matters.
|
•
|
Healthcare.
Trends in our healthcare business include continuing customer preference for hosted solutions and other time-based licenses and increasing interest in the use of mobile devices to access healthcare systems and records. We continue to see strong demand for transactions which involve the sale and delivery of both software and non-software related services or products, as well as transactions which involve the sale of multiple solutions, such as both hosted transcription services and Dragon Medical licenses
.
The volume processed in our hosted transcription services has experienced some erosion in lines processed when customers adopt electronic medical record ("EMR") systems, and when in some cases customers use our licensed Dragon Medical product to support input into the EMR, which has been partially offset by expansion in our customer base. We believe an important trend in the healthcare market is the desire to improve efficiency in the coding and revenue cycle management process. Our solutions reduce costs by increasing automation of this important workflow and also enable hospitals to improve documentation used to support billings. The industry’s recent shift in international classification of diseases ("ICD") from ICD-9 to ICD-10, together with evolving reimbursement reform that is increasingly focused on clinical outcomes, has increased the complexity of the clinical documentation and coding processes. This recent shift is reinforcing our customers’ desire for improved efficiency. We are investing to expand our product set to address the various opportunities, including deeper integration with our clinical documentation solutions; investing in our cloud-based products and operations; entering new and adjacent markets such as ambulatory care; and expanding our international capabilities.
|
•
|
Mobile.
Trends in our mobile business include device manufacturers requiring custom applications to deliver unique and differentiated products such as virtual assistants, broadening keyboard technologies to take advantage of touch screens, increasing hands-free capabilities on cell phones and in automobiles, and the adoption of our technology on a broadening scope of devices, such as televisions, set-top boxes, e-book readers, tablet and laptop computers, cameras and third-party applications. The more powerful capabilities of mobile devices require us to supply a broader portfolio of specialized virtual assistants and connected services built on voice recognition, text-to-speech, natural language understanding, dialog and text input. Within given levels of our technology set, we have seen growth opportunities limited by the consolidation of the device market to a small number of customers as well as increased competition in voice recognition and natural language technologies and services sold to OEMs. We continue to see strong demand involving the sale and delivery of both software and non-software related services, as well as products to help customers define, design and implement increasingly robust and complex custom solutions such as virtual assistants. We continue to see an increasing proportion of revenue from on-demand and transactional arrangements as opposed to traditional perpetual licensing of our mobile products and solutions. Although this has a negative impact on near-term revenue, we believe this model will build stronger and more predictable revenues over time. We are investing in the expansion of the cloud capabilities and content of our Automotive solutions; expansion across the Internet-of-Things in our Device solutions; and geographic expansion of our mobile operator services.
|
•
|
Enterprise.
Trends in our enterprise business include increasing interest in the use of mobile applications and web sites to access customer care systems and records, voice-based authentication of users, increasing interest in coordinating actions and data across customer care channels, and the ability of a broader set of hardware providers and systems integrators to serve the market. In fiscal year 2015, revenues and bookings from on-demand solutions continued to increase, as a growing proportion of customers choose our cloud-based solutions for call center, web and mobile customer care solutions. We expect these trends to continue in fiscal year 2016. We are investing to extend our technology capabilities with intelligent self-service and artificial intelligence for customer service; expand our OnDemand multichannel cloud to international markets; expand our sales and solution for voice biometrics; and expand our OnPremise product and services portfolio.
|
•
|
Imaging.
The imaging market is evolving to include more networked solutions to multi-function printing devices, as well as more mobile access to those networked solutions, and away from packaged software. We are investing to merge the scan and print technology platforms to improve mobile access to our solutions and technologies; expand our distribution channels and embedding relationships; and expand our language coverage for optical character recognition ("OCR") in order to drive a more comprehensive and compelling offering to our partners.
|
•
|
Total revenues increased by
$15.8 million
to
$964.8 million
;
|
•
|
Net loss decreased by
$45.5 million
to a loss of
$19.1 million
;
|
•
|
Gross margins increased by
0.9
percentage points to
57.4%
;
|
•
|
Operating margins increased by
5.4
percentage points to
6.7%
; and
|
•
|
Cash provided by operating activities increased
$85.4 million
to
$301.1 million
.
|
•
|
Total deferred revenue increased
17.4%
from
$637.8 million
to
$748.5 million
driven by growth in our on-demand automotive business in our Mobile segment as well as growth in maintenance and support contracts.
|
•
|
Net new bookings increased
3.0%
from one year ago to
$313.7 million
, primarily driven by strong bookings performance in our Enterprise segment.
|
•
|
Segment recurring revenue represented
69.0%
and
65.2%
of total segment revenue for
six months ended
March 31, 2016
and
March 31, 2015
, respectively. Segment recurring revenue represents the sum of recurring product and licensing, on-demand, and maintenance and support revenues as well as the portion of professional services revenue delivered under ongoing contracts. Recurring product and licensing revenue comprises term-based and ratable licenses as well as revenues from royalty arrangements;
|
•
|
Annualized line run-rate in our on-demand healthcare solutions decreased
5%
from one year ago to approximately
5.1 billion
lines per year. The annualized line run-rate is determined using billed equivalent line counts in a given quarter, multiplied by four; and
|
•
|
Estimated three-year value of total on-demand contracts decreased
1%
from one year ago to approximately
$2.2 billion
. We determine this value as of the end of the period reported, by using our estimate of three years of anticipated future revenue streams under signed on-demand contracts then in place, whether or not they are guaranteed through a minimum commitment clause. Our estimate is based on assumptions used in evaluating the contracts and determining sales compensation, adjusted for changes in estimated launch dates, actual volumes achieved and other factors deemed relevant. For contracts with an expiration date beyond three years, we include only the value expected within three years. For other contracts, we assume renewal consistent with historic renewal rates unless there is a known cancellation. Contracts are generally priced by volume of usage and typically have no or low minimum commitments. Actual revenue could vary from our estimates due to factors such as cancellations, non-renewals or volume fluctuations.
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Six Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
March 31,
|
|
|
March 31,
|
|
|||||||||||||||||||||||||
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
|||||||||||||||||||||
Product and licensing
|
$
|
158.6
|
|
|
$
|
174.5
|
|
|
$
|
(15.9
|
)
|
|
(9.1
|
)%
|
|
$
|
337.7
|
|
|
$
|
344.1
|
|
|
$
|
(6.4
|
)
|
|
(1.9
|
)%
|
Professional services and hosting
|
240.2
|
|
|
224.5
|
|
|
15.7
|
|
|
7.0
|
%
|
|
467.3
|
|
|
450.7
|
|
|
16.6
|
|
|
3.7
|
%
|
||||||
Maintenance and support
|
79.9
|
|
|
76.1
|
|
|
3.8
|
|
|
5.0
|
%
|
|
159.8
|
|
|
154.3
|
|
|
5.5
|
|
|
3.6
|
%
|
||||||
Total Revenues
|
$
|
478.7
|
|
|
$
|
475.1
|
|
|
$
|
3.5
|
|
|
0.8
|
%
|
|
$
|
964.8
|
|
|
$
|
949.1
|
|
|
$
|
15.8
|
|
|
1.7
|
%
|
United States
|
$
|
338.7
|
|
|
$
|
352.5
|
|
|
$
|
(13.8
|
)
|
|
(3.9
|
)%
|
|
$
|
694.5
|
|
|
$
|
700.1
|
|
|
$
|
(5.6
|
)
|
|
(0.8
|
)%
|
International
|
140.0
|
|
|
122.6
|
|
|
17.4
|
|
|
14.2
|
%
|
|
270.3
|
|
|
249.0
|
|
|
21.3
|
|
|
8.6
|
%
|
||||||
Total Revenues
|
$
|
478.7
|
|
|
$
|
475.1
|
|
|
$
|
3.6
|
|
|
0.8
|
%
|
|
$
|
964.8
|
|
|
$
|
949.1
|
|
|
$
|
15.7
|
|
|
1.7
|
%
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Six Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
March 31,
|
|
|
March 31,
|
|
|||||||||||||||||||||||||
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
|||||||||||||||||||||
Product and licensing revenue
|
$
|
158.6
|
|
|
$
|
174.5
|
|
|
$
|
(15.9
|
)
|
|
(9.1
|
)%
|
|
$
|
337.7
|
|
|
$
|
344.1
|
|
|
$
|
(6.4
|
)
|
|
(1.9
|
)%
|
As a percentage of total revenue
|
33.1
|
%
|
|
36.7
|
%
|
|
|
|
|
|
35.0
|
%
|
|
36.3
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Six Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
March 31,
|
|
|
March 31,
|
|
|||||||||||||||||||||||||
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
|||||||||||||||||||||
Professional services and hosting revenue
|
$
|
240.2
|
|
|
$
|
224.5
|
|
|
$
|
15.7
|
|
|
7.0
|
%
|
|
$
|
467.3
|
|
|
$
|
450.7
|
|
|
$
|
16.6
|
|
|
3.7
|
%
|
As a percentage of total revenue
|
50.2
|
%
|
|
47.3
|
%
|
|
|
|
|
|
48.4
|
%
|
|
47.5
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Six Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
March 31,
|
|
|
March 31,
|
|
|||||||||||||||||||||||||
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
|||||||||||||||||||||
Maintenance and support revenue
|
$
|
79.9
|
|
|
$
|
76.1
|
|
|
$
|
3.8
|
|
|
5.0
|
%
|
|
$
|
159.8
|
|
|
$
|
154.3
|
|
|
$
|
5.5
|
|
|
3.6
|
%
|
As a percentage of total revenue
|
16.7
|
%
|
|
16.0
|
%
|
|
|
|
|
|
16.6
|
%
|
|
16.3
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Six Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
March 31,
|
|
|
March 31,
|
|
|||||||||||||||||||||||||
2016
|
|
2015
|
|
|
2016
|
|
2015
|
|
|||||||||||||||||||||
Cost of product and licensing revenue
|
$
|
20.8
|
|
|
$
|
23.3
|
|
|
$
|
(2.5
|
)
|
|
(10.7
|
)%
|
|
$
|
44.2
|
|
|
$
|
47.2
|
|
|
$
|
(3.0
|
)
|
|
(6.4
|
)%
|
As a percentage of product and licensing revenue
|
13.1
|
%
|
|
13.4
|
%
|
|
|
|
|
|
13.1
|
%
|
|
13.7
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Six Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
March 31,
|
|
March 31,
|
|
||||||||||||||||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|
||||||||||||||||||||||
Cost of professional services and hosting revenue
|
$
|
154.7
|
|
|
$
|
150.7
|
|
|
$
|
4.0
|
|
|
2.7
|
%
|
|
$
|
308.0
|
|
|
$
|
307.6
|
|
|
$
|
0.4
|
|
|
0.1
|
%
|
As a percentage of professional services and hosting revenue
|
64.4
|
%
|
|
67.1
|
%
|
|
|
|
|
|
65.9
|
%
|
|
68.2
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Six Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
March 31,
|
|
March 31,
|
|
||||||||||||||||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|
||||||||||||||||||||||
Cost of maintenance and support revenue
|
$
|
13.6
|
|
|
$
|
13.4
|
|
|
$
|
0.2
|
|
|
1.5
|
%
|
|
$
|
26.9
|
|
|
$
|
27.4
|
|
|
$
|
(0.5
|
)
|
|
(1.8
|
)%
|
As a percentage of maintenance and support revenue
|
17.0
|
%
|
|
17.6
|
%
|
|
|
|
|
|
16.8
|
%
|
|
17.8
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Six Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
March 31,
|
|
March 31,
|
|
||||||||||||||||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|
||||||||||||||||||||||
Research and development expense
|
$
|
67.2
|
|
|
$
|
73.7
|
|
|
$
|
(6.5
|
)
|
|
(8.8
|
)%
|
|
$
|
137.8
|
|
|
$
|
155.1
|
|
|
$
|
(17.3
|
)
|
|
(11.2
|
)%
|
As a percentage of total revenue
|
14.0
|
%
|
|
15.5
|
%
|
|
|
|
|
|
14.3
|
%
|
|
16.3
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Six Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
March 31,
|
|
March 31,
|
|
||||||||||||||||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|
||||||||||||||||||||||
Sales and marketing expense
|
$
|
92.8
|
|
|
$
|
93.2
|
|
|
$
|
(0.4
|
)
|
|
(0.4
|
)%
|
|
$
|
193.4
|
|
|
$
|
204.5
|
|
|
$
|
(11.1
|
)
|
|
(5.4
|
)%
|
As a percentage of total revenue
|
19.4
|
%
|
|
19.6
|
%
|
|
|
|
|
|
20.0
|
%
|
|
21.5
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Six Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
March 31,
|
|
March 31,
|
|
||||||||||||||||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|
||||||||||||||||||||||
General and administrative expense
|
$
|
45.9
|
|
|
$
|
47.1
|
|
|
$
|
(1.2
|
)
|
|
(2.5
|
)%
|
|
$
|
86.4
|
|
|
$
|
99.2
|
|
|
$
|
(12.8
|
)
|
|
(12.9
|
)%
|
As a percentage of total revenue
|
9.6
|
%
|
|
9.9
|
%
|
|
|
|
|
|
9.0
|
%
|
|
10.5
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Six Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
March 31,
|
|
March 31,
|
|
||||||||||||||||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|
||||||||||||||||||||||
Cost of revenue
|
$
|
16.3
|
|
|
$
|
15.6
|
|
|
$
|
0.7
|
|
|
4.5
|
%
|
|
$
|
32.0
|
|
|
$
|
30.8
|
|
|
$
|
1.2
|
|
|
3.9
|
%
|
Operating expenses
|
26.4
|
|
|
25.3
|
|
|
1.1
|
|
|
4.3
|
%
|
|
53.5
|
|
|
52.2
|
|
|
1.3
|
|
|
2.5
|
%
|
||||||
Total amortization expense
|
$
|
42.8
|
|
|
$
|
40.9
|
|
|
$
|
1.9
|
|
|
4.6
|
%
|
|
$
|
85.5
|
|
|
$
|
83.0
|
|
|
$
|
2.5
|
|
|
3.0
|
%
|
As a percentage of total revenue
|
8.9
|
%
|
|
8.6
|
%
|
|
|
|
|
|
8.9
|
%
|
|
8.7
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Six Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
March 31,
|
|
March 31,
|
|||||||||||||||||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||||||||||||||||
Transition and integration costs
|
$
|
1.0
|
|
|
$
|
2.8
|
|
|
$
|
(1.8
|
)
|
|
(64.3
|
)%
|
|
$
|
2.0
|
|
|
$
|
6.2
|
|
|
$
|
(4.2
|
)
|
|
(67.7
|
)%
|
Professional service fees
|
1.2
|
|
|
3.4
|
|
|
(2.2
|
)
|
|
(64.7
|
)%
|
|
2.6
|
|
|
5.7
|
|
|
(3.1
|
)
|
|
(54.4
|
)%
|
||||||
Acquisition-related adjustments
|
(1.0
|
)
|
|
0.3
|
|
|
(1.3
|
)
|
|
(433.3
|
)%
|
|
(0.9
|
)
|
|
(0.6
|
)
|
|
(0.3
|
)
|
|
50.0
|
%
|
||||||
Total acquisition-related costs, net
|
$
|
1.2
|
|
|
$
|
6.5
|
|
|
$
|
(5.3
|
)
|
|
(81.5
|
)%
|
|
$
|
3.7
|
|
|
$
|
11.3
|
|
|
$
|
(7.6
|
)
|
|
(67.3
|
)%
|
As a percentage of total revenue
|
0.3
|
%
|
|
1.4
|
%
|
|
|
|
|
|
0.4
|
%
|
|
1.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Three Months Ended March 31,
|
||||||||||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||||||||||||||||||||||
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
||||||||||||||||||||
Healthcare
|
$
|
613
|
|
|
$
|
8
|
|
|
$
|
621
|
|
|
$
|
—
|
|
|
$
|
621
|
|
|
$
|
(81
|
)
|
|
$
|
—
|
|
|
$
|
(81
|
)
|
|
$
|
—
|
|
|
$
|
(81
|
)
|
Mobile and Consumer
|
2,729
|
|
|
(652
|
)
|
|
2,077
|
|
|
46
|
|
|
2,123
|
|
|
(125
|
)
|
|
(172
|
)
|
|
(297
|
)
|
|
—
|
|
|
(297
|
)
|
||||||||||
Enterprise
|
(41
|
)
|
|
2,014
|
|
|
1,973
|
|
|
—
|
|
|
1,973
|
|
|
71
|
|
|
—
|
|
|
71
|
|
|
—
|
|
|
71
|
|
||||||||||
Imaging
|
(1
|
)
|
|
184
|
|
|
183
|
|
|
—
|
|
|
183
|
|
|
(1
|
)
|
|
(60
|
)
|
|
(61
|
)
|
|
—
|
|
|
(61
|
)
|
||||||||||
Corporate
|
1,691
|
|
|
—
|
|
|
1,691
|
|
|
61
|
|
|
1,752
|
|
|
35
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
||||||||||
Total
|
$
|
4,991
|
|
|
$
|
1,554
|
|
|
$
|
6,545
|
|
|
$
|
107
|
|
|
$
|
6,652
|
|
|
$
|
(101
|
)
|
|
$
|
(232
|
)
|
|
$
|
(333
|
)
|
|
$
|
—
|
|
|
$
|
(333
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Six Months Ended March 31,
|
||||||||||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||||||||||||||||||||||
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
||||||||||||||||||||
Healthcare
|
$
|
1,314
|
|
|
$
|
8
|
|
|
$
|
1,322
|
|
|
$
|
—
|
|
|
$
|
1,322
|
|
|
$
|
(209
|
)
|
|
$
|
—
|
|
|
$
|
(209
|
)
|
|
$
|
—
|
|
|
$
|
(209
|
)
|
Mobile
|
4,911
|
|
|
(50
|
)
|
|
4,861
|
|
|
46
|
|
|
4,907
|
|
|
(113
|
)
|
|
(172
|
)
|
|
(285
|
)
|
|
—
|
|
|
(285
|
)
|
||||||||||
Enterprise
|
1,043
|
|
|
2,034
|
|
|
3,077
|
|
|
—
|
|
|
3,077
|
|
|
289
|
|
|
95
|
|
|
384
|
|
|
—
|
|
|
384
|
|
||||||||||
Imaging
|
212
|
|
|
184
|
|
|
396
|
|
|
—
|
|
|
396
|
|
|
1,479
|
|
|
333
|
|
|
1,812
|
|
|
—
|
|
|
1,812
|
|
||||||||||
Corporate
|
2,069
|
|
|
2,708
|
|
|
4,777
|
|
|
61
|
|
|
4,838
|
|
|
193
|
|
|
—
|
|
|
193
|
|
|
—
|
|
|
193
|
|
||||||||||
Total
|
$
|
9,549
|
|
|
$
|
4,884
|
|
|
$
|
14,433
|
|
|
$
|
107
|
|
|
$
|
14,540
|
|
|
$
|
1,639
|
|
|
$
|
256
|
|
|
$
|
1,895
|
|
|
$
|
—
|
|
|
$
|
1,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Six Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
March 31,
|
|
March 31,
|
|
||||||||||||||||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|
||||||||||||||||||||||
Interest income
|
$
|
1.6
|
|
|
$
|
0.6
|
|
|
$
|
1.0
|
|
|
166.7
|
%
|
|
$
|
2.5
|
|
|
$
|
1.2
|
|
|
$
|
1.3
|
|
|
108.3
|
%
|
Interest expense
|
(32.3
|
)
|
|
(30.0
|
)
|
|
(2.3
|
)
|
|
7.7
|
%
|
|
(62.2
|
)
|
|
(59.9
|
)
|
|
(2.3
|
)
|
|
3.8
|
%
|
||||||
Other income (expense), net
|
—
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
(100.0
|
)%
|
|
(6.8
|
)
|
|
(0.9
|
)
|
|
(5.9
|
)
|
|
655.6
|
%
|
||||||
Total other expense, net
|
$
|
(30.7
|
)
|
|
$
|
(29.5
|
)
|
|
$
|
(1.2
|
)
|
|
4.1
|
%
|
|
$
|
(66.5
|
)
|
|
$
|
(59.6
|
)
|
|
$
|
(6.9
|
)
|
|
11.6
|
%
|
As a percentage of total revenue
|
6.4
|
%
|
|
6.2
|
%
|
|
|
|
|
|
6.9
|
%
|
|
6.3
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Six Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
March 31,
|
|
March 31,
|
|
||||||||||||||||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|
||||||||||||||||||||||
Provision for income taxes
|
$
|
9.2
|
|
|
$
|
11.1
|
|
|
$
|
(1.9
|
)
|
|
(17.1
|
)%
|
|
$
|
17.0
|
|
|
$
|
16.9
|
|
|
$
|
0.1
|
|
|
0.6
|
%
|
Effective income tax rate
|
420.4
|
%
|
|
(363.9
|
)%
|
|
|
|
|
|
(810.5
|
)%
|
|
(35.4
|
)%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|
Percent
Change
|
|
Six Months Ended
|
|
Change
|
|
Percent
Change
|
||||||||||||||||||
March 31,
|
|
March 31,
|
|
||||||||||||||||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|
||||||||||||||||||||||
Segment Revenues
(a)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Healthcare
|
$
|
244.4
|
|
|
$
|
243.3
|
|
|
$
|
1.1
|
|
|
0.5
|
%
|
|
$
|
492.5
|
|
|
$
|
494.1
|
|
|
$
|
(1.6
|
)
|
|
(0.3
|
)%
|
Mobile
|
91.8
|
|
|
102.0
|
|
|
(10.2
|
)
|
|
(10.0
|
)%
|
|
188.2
|
|
|
189.5
|
|
|
(1.3
|
)
|
|
(0.7
|
)%
|
||||||
Enterprise
|
94.4
|
|
|
83.3
|
|
|
11.1
|
|
|
13.3
|
%
|
|
183.2
|
|
|
173.9
|
|
|
9.3
|
|
|
5.3
|
%
|
||||||
Imaging
|
56.7
|
|
|
59.5
|
|
|
(2.8
|
)
|
|
(4.7
|
)%
|
|
118.4
|
|
|
119.6
|
|
|
(1.2
|
)
|
|
(1.0
|
)%
|
||||||
Total segment revenues
|
$
|
487.4
|
|
|
$
|
488.1
|
|
|
$
|
(0.8
|
)
|
|
(0.1
|
)%
|
|
$
|
982.3
|
|
|
$
|
977.1
|
|
|
$
|
5.2
|
|
|
0.5
|
%
|
Less: acquisition related revenues adjustments
|
(8.7
|
)
|
|
(13.0
|
)
|
|
4.3
|
|
|
(33.1
|
)%
|
|
(17.4
|
)
|
|
(28.0
|
)
|
|
10.6
|
|
|
(37.9
|
)%
|
||||||
Total revenues
|
$
|
478.7
|
|
|
$
|
475.1
|
|
|
$
|
3.6
|
|
|
0.8
|
%
|
|
$
|
964.8
|
|
|
$
|
949.1
|
|
|
$
|
15.8
|
|
|
1.7
|
%
|
Segment Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Healthcare
|
$
|
78.4
|
|
|
$
|
82.8
|
|
|
$
|
(4.4
|
)
|
|
(5.3
|
)%
|
|
$
|
159.6
|
|
|
$
|
161.2
|
|
|
$
|
(1.6
|
)
|
|
(1.0
|
)%
|
Mobile
|
33.4
|
|
|
31.9
|
|
|
1.5
|
|
|
4.7
|
%
|
|
67.2
|
|
|
44.4
|
|
|
22.8
|
|
|
51.4
|
%
|
||||||
Enterprise
|
34.1
|
|
|
19.6
|
|
|
14.5
|
|
|
74.0
|
%
|
|
60.3
|
|
|
45.0
|
|
|
15.3
|
|
|
34.0
|
%
|
||||||
Imaging
|
22.2
|
|
|
22.1
|
|
|
0.1
|
|
|
0.5
|
%
|
|
49.2
|
|
|
42.0
|
|
|
7.2
|
|
|
17.1
|
%
|
||||||
Total segment profit
|
$
|
168.1
|
|
|
$
|
156.4
|
|
|
$
|
11.7
|
|
|
7.5
|
%
|
|
$
|
336.3
|
|
|
$
|
292.6
|
|
|
$
|
43.7
|
|
|
14.9
|
%
|
Segment Profit Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Healthcare
|
32.1
|
%
|
|
34.0
|
%
|
|
(1.9
|
)%
|
|
|
|
32.4
|
%
|
|
32.6
|
%
|
|
(0.2
|
)%
|
|
|
||||||||
Mobile
|
36.4
|
%
|
|
31.3
|
%
|
|
5.1
|
%
|
|
|
|
35.7
|
%
|
|
23.4
|
%
|
|
12.3
|
%
|
|
|
||||||||
Enterprise
|
36.1
|
%
|
|
23.5
|
%
|
|
12.6
|
%
|
|
|
|
32.9
|
%
|
|
25.9
|
%
|
|
7.0
|
%
|
|
|
||||||||
Imaging
|
39.2
|
%
|
|
37.1
|
%
|
|
2.1
|
%
|
|
|
|
41.6
|
%
|
|
35.1
|
%
|
|
6.5
|
%
|
|
|
||||||||
Total segment profit margin
|
34.5
|
%
|
|
32.0
|
%
|
|
2.5
|
%
|
|
|
|
34.2
|
%
|
|
29.9
|
%
|
|
4.3
|
%
|
|
|
(a)
|
Segment revenues differ from reported revenues due to certain revenue adjustments related to acquisitions that will not be fully recognized in accordance with authoritative guidance for the purchase accounting of business combinations. Segment revenues also include revenue that the business would have otherwise recognized had we not acquired intellectual property and other assets from the same customer. These revenues are included to allow for more complete comparisons to the financial results of historical operations and in evaluating management performance.
|
•
|
Healthcare segment revenues
increased
$1.1 million
for the
three months ended
March 31, 2016
, as compared to the
three months ended
March 31, 2015
. Maintenance and support revenues increased $2.4 million driven by strong renewals. Professional services and hosting revenues decreased $0.3 million primarily driven by a decrease of $5.4 million in hosting revenues as we continue to experience some erosion of revenue in our transcription services owed in part to the growing penetration of our Dragon Medical solutions, offset by an increase of $5.1million in sales of professional services. Product and licensing revenues decreased $1.0 million driven by lower revenues from our Dragon Medical licenses sales as we transition from perpetual to subscription models.
|
•
|
Mobile segment revenues
decreased
$10.2 million
for the
three months ended
March 31, 2016
, as compared to the
three months ended
March 31, 2015
. Product and licensing revenues decreased $15.4 million from lower perpetual licensing sales due to deterioration in mature markets as well as timing of sales with OEMs. Maintenance and support revenue decreased $1.3 million. Professional services and hosting revenues increased by $6.6 million driven primarily by on-demand revenue growth from a recent acquisition in our mobile operator services as well as a continued trend toward cloud services in our automotive and devices solutions.
|
•
|
Enterprise segment revenues
increased
$11.1 million
for the
three months ended
March 31, 2016
, as compared to the
three months ended
March 31, 2015
. Professional services and hosting revenues increased $8.4 million driven by higher on-demand revenue. Product and licensing revenues increased $2.2 million.
|
•
|
Imaging segment revenues
decreased
$2.8 million
for the
three months ended
March 31, 2016
, as compared to the
three months ended
March 31, 2015
, primarily driven by lower product and licensing sales, partially offset by higher maintenance and support revenue in our multi-functional peripheral products.
|
•
|
Healthcare segment revenues
decreased
$1.6 million
for the
six months ended
March 31, 2016
, as compared to the
six months ended
March 31, 2015
. Professional services and hosting revenues decreased $7.1 million primarily driven by a decrease of $10.9 million in hosting revenues as we continue to experience some erosion of revenue in our transcription services owed in part to the growing penetration of our Dragon Medical solutions, partially offset by an increase of $3.7 million in professional services. Maintenance and support revenues increased $3.5 million driven by strong renewals. Product and licensing revenues increased $2.0 million driven by higher revenues from our clinical documentation solutions offset by lower sales of Dragon desktop consumer products.
|
•
|
Mobile segment revenues
decreased
$1.3 million
for the
six months ended
March 31, 2016
, as compared to the
six months ended
March 31, 2015
. Product and licensing revenues decreased $12.4 million from lower perpetual licensing sales due to deterioration in mature markets as well as timing of sales with OEMs. Maintenance and support revenue decreased $2.4 million. Professional services and hosting revenues increased by $13.6 million driven primarily by on-demand revenue growth from a recent acquisition in our mobile operator services as well as a continued trend toward cloud services in our automotive and devices solutions.
|
•
|
Enterprise segment revenues
increased
$9.3 million
for the
six months ended
March 31, 2016
, as compared to the
six months ended
March 31, 2015
. Professional services and hosting revenues increased $7.5 million driven by higher on-demand revenue. Product and licensing revenues increased $2.1 million.
|
•
|
Imaging segment revenues
decreased
$1.2 million
for the
six months ended
March 31, 2016
, as compared to the
six months ended
March 31, 2015
, primarily driven by lower Imaging desktop consumer product sales.
|
•
|
Healthcare segment profit for the
three months ended
March 31, 2016
decreased
5.3%
from the same period last year, primarily driven by increased costs of professional services and higher sales and marketing expenses. Segment profit margin decreased
1.9
percentage points, from
34.0%
for the same period last year to
32.1%
during the current period. The decrease in segment profit margin was primarily driven by lower gross margins of 1.4 percentage points due to a shift in mix towards a higher percentage of professional services revenue, and 0.8 percentage point related to higher sales and marketing expenses.
|
•
|
Mobile segment profit for the
three months ended
March 31, 2016
increased
4.7%
from the same period last year, primarily driven by lower research and development spending. Segment profit margin increased
5.1
percentage points, from
31.3%
for the same period last year to
36.4%
during the current period. The increase in segment profit margin was primarily driven by our cost savings and process optimization initiatives with improvements of 3.9 percentage points related to decreased research and development spending and a 0.9 percentage point improvement in gross margin driven by margin expansion in our cloud-based services.
|
•
|
Enterprise segment profit for the
three months ended
March 31, 2016
increased
74.0%
from the same period last year, driven by increased professional services and hosting revenues and lower operating expenses. Segment profit margin increased
12.6
percentage points, from
23.5%
for the same period last year to
36.1%
in the current period. The increase in segment profit margin was primarily driven by increased professional services and hosting revenues and our cost savings and process optimization initiatives with improvements of 6.8 percentage points due to lower operating expenses and a 5.7 percentage point improvement in gross margin driven by increased professional services and hosting revenues.
|
•
|
Imaging segment profit for the
three months ended
March 31, 2016
increased
0.5%
from the same period last year. Segment profit margin increased
2.1
percentage points, from
37.1%
for the same period last year to
39.2%
during the current period. The increase in segment profit margin was primarily driven by our cost savings and process optimization initiatives with an improvement of 1.4 percentage points due to lower sales and marketing expenses and 1.3 percentage points improvement in gross margin, partially offset by a decrease of 0.7 percentage point related to research and development investments to support new product launches.
|
•
|
Healthcare segment profit for the
six months ended
March 31, 2016
decreased
1.0%
from the same period last year, primarily driven by lower sales and marketing expenses, partially offset by lower gross profit. Segment profit margin decreased
0.2
percentage points, from
32.6%
for the same period last year to
32.4%
during the current period. The decrease in segment profit margin was primarily driven by lower gross margins of 0.4 percentage points due to a shift in mix towards a higher percentage of professional services revenue.
|
•
|
Mobile segment profit for the
six months ended
March 31, 2016
increased
51.4%
from the same period last year, primarily driven by lower expenses. Segment profit margin increased
12.3
percentage points, from
23.4%
for the same period last year to
35.7%
during the current period. The increase in segment profit margin was primarily driven by our cost savings and process optimization initiatives with improvements of 9.6 percentage points due to lower operating expenses and a 2.7 percentage points improvement in gross margin driven by margin expansion in our cloud-based services.
|
•
|
Enterprise segment profit for the
six months ended
March 31, 2016
increased
34.0%
from the same period last year, driven by increased professional services and hosting revenues and lower operating expenses. Segment profit margin increased
7.0
percentage points, from
25.9%
for the same period last year to
32.9%
in the current period. The increase in segment profit margin was primarily driven by increased professional services and hosting revenues and our cost savings and process optimization initiatives with improvements of 4.3 percentage points due to lower operating expenses and a 2.8 percentage point improvement in gross margin driven by increased professional services and hosting revenues.
|
•
|
Imaging segment profit for the
six months ended
March 31, 2016
increased
17.1%
from the same period last year, primarily driven by lower expenses. Segment profit margin increased
6.5
percentage points, from
35.1%
for the same period last year to
41.6%
during the current period. The increase in segment profit margin was primarily driven by our cost savings and process optimization initiatives with improvements of 4.7 percentage points due to operating expenses and 1.7 percentage points due to improved gross margin.
|
•
|
An increase in cash flows of
$56.5 million
resulting from lower net loss, exclusive of non-cash adjustment items;
|
•
|
An increase of
$59.7 million
in cash flows generated by changes in working capital excluding deferred revenue; and
|
•
|
Partially offset by a decrease in cash flows of
$30.8 million
from deferred revenue. Deferred revenue continues to grow contributing cash inflow of
$78.8 million
for the
six months ended
March 31, 2016
, as compared to
$109.6 million
for the
six months ended
March 31, 2015
. The deferred revenue growth in the
six months ended
March 31, 2016
was driven primarily by Healthcare term licenses, mobile connected services and maintenance and support contracts.
|
•
|
A decrease in cash outflows of
$58.6 million
for purchases of marketable securities and other investments;
|
•
|
An increase in cash inflows of
$9.5 million
from the sales and maturities of marketable securities and other investments; and
|
•
|
A decrease in cash outflows of
$4.5 million
for business and technology acquisitions.
|
•
|
An increase in cash outflows of
$375.8 million
related to the Repurchase of
26.3 million
shares of our common stock from the Icahn Group, inclusive of fees associated with the transaction;
|
•
|
An increase in cash outflows of
$88.8 million
related to our share repurchase program. During the
six months ended
March 31, 2016
, we repurchased
9.4 million
shares of our common stock for total cash outflows of
$198.6 million
, as compared to 8.6 million shares of our common stock for total cash outflows of
$109.8 million
during the same period in the prior year;
|
•
|
An increase in cash outflows of
$10.0 million
as a result of higher cash payments required to net share settle employee equity awards, due to an increase in vesting value as a result of higher stock prices during the
six months ended
March 31, 2016
as compared to the same period in the prior year; and
|
•
|
Partially offset by an increase in net cash inflows of
$154.4 million
from the new convertible debt issuance net of the repayment of long-term debt. The activity during the
six months ended
March 31, 2016
included proceeds of
$663.8 million
, net of debt issuance costs, from the issuance of our 1.0% 2035 Debentures offset by the repurchase of
$38.3 million
in aggregate principal on our
2.75%
Senior Convertible Debentures due in 2031 (the “2031 Debentures”) and to repay the aggregate principal balance of
$472.5 million
on our term loan under the amended and restated credit agreement.
|
Description
|
|
Base Rate Margin
|
|
|
LIBOR Margin
|
|
Revolving facility due August 2018
|
|
0.50% - 0.75%
|
(a)
|
|
1.50% - 1.75%
|
(a)
|
(a)
|
The margin is determined based on our net leverage ratio at the date the interest rates are reset on the revolving credit agreement.
|
|
|
Payments Due by Fiscal Year Ended September 30,
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
2016
|
|
2017 and 2018
|
|
2019 and 2020
|
|
Thereafter
|
||||||||||
Short-term related party note payable
(1)
|
|
$
|
125.0
|
|
|
$
|
125.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Convertible debentures
(2)
|
|
1,335.9
|
|
|
—
|
|
|
395.5
|
|
|
—
|
|
|
940.4
|
|
|||||
Senior notes
|
|
1,050.0
|
|
|
—
|
|
|
—
|
|
|
1,050.0
|
|
|
|
|
|||||
Interest payable on long-term debt
(3)
|
|
347.1
|
|
|
39.3
|
|
|
150.6
|
|
|
134.4
|
|
|
22.8
|
|
|||||
Letters of credit
(4)
|
|
6.3
|
|
|
—
|
|
|
6.3
|
|
|
—
|
|
|
—
|
|
|||||
Lease obligations and other liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating leases
|
|
192.1
|
|
|
16.1
|
|
|
47.3
|
|
|
31.4
|
|
|
97.3
|
|
|||||
Operating leases under restructuring
(5)
|
|
55.5
|
|
|
4.2
|
|
|
15.6
|
|
|
11.2
|
|
|
24.5
|
|
|||||
Purchase commitments for inventory, property and equipment
(6)
|
|
12.6
|
|
|
12.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual cash obligations
|
|
$
|
3,124.5
|
|
|
$
|
197.2
|
|
|
$
|
615.3
|
|
|
$
|
1,227.0
|
|
|
$
|
1,085.0
|
|
(1)
|
In March 2016, in connection with the repurchase agreement with the Icahn Group, we issued a promissory note for approximately
$125.0 million
. The promissory note bears interest at a rate per annum equal to approximately
2.64%
and has a maturity date of June 13, 2016. On April 15, 2016, we fully repaid the promissory note.
|
(2)
|
Holders of the 1.5% 2035 Debentures have the right to require us to redeem the debentures on November 1, 2021, 2026, and 2031. Holders of the 1.0% 2035 Debentures have the right to require us to redeem the debentures on December 15, 2022, 2027 and 2032.
|
(3)
|
Interest per annum is due and payable semi-annually under 1.0% 2035 Debentures at a rate of 1.0%, under 2031 Debentures at a rate of 2.75%, and under 1.5% 2035 Debentures at a rate of 1.5%. Interest per annum is due and payable semi-annually on the Senior Notes at a rate of 5.375%.
|
(4)
|
Letters of Credit are in place primarily to secure future operating lease payments.
|
(5)
|
Obligations include contractual lease commitments related to facilities that were part of restructuring plans. As of
March 31, 2016
, we have subleased certain of the facilities with total sublease income of
$59.0 million
through fiscal year 2025.
|
(6)
|
These amounts include non-cancelable purchase commitments for property and equipment as well as inventory in the normal course of business to fulfill customers’ orders currently scheduled in our backlog.
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1A.
|
Risk Factors
|
•
|
the pace of the transition to an on-demand and transactional revenue model;
|
•
|
slowing sales by our distribution and fulfillment partners to their customers, which may place pressure on these partners to reduce purchases of our products;
|
•
|
volume, timing and fulfillment of customer orders and receipt of royalty reports;
|
•
|
customers delaying their purchasing decisions in anticipation of new versions of our products;
|
•
|
contractual counterparties are unable to, or do not, meet their contractual commitments to us;
|
•
|
introduction of new products by us or our competitors;
|
•
|
seasonality in purchasing patterns of our customers;
|
•
|
reduction in the prices of our products in response to competition, market conditions or contractual obligations;
|
•
|
returns and allowance charges in excess of accrued amounts;
|
•
|
timing of significant marketing and sales promotions;
|
•
|
impairment charges against goodwill and intangible assets;
|
•
|
delayed realization of synergies resulting from our acquisitions;
|
•
|
write-offs of excess or obsolete inventory and accounts receivable that are not collectible;
|
•
|
increased expenditures incurred pursuing new product or market opportunities;
|
•
|
general economic trends as they affect retail and corporate sales; and
|
•
|
higher than anticipated costs related to fixed-price contracts with our customers.
|
•
|
changes in foreign currency exchange rates or the lack of ability to hedge certain foreign currencies;
|
•
|
changes in a specific country's or region's economic conditions;
|
•
|
compliance with laws and regulations in many countries and any subsequent changes in such laws and regulations;
|
•
|
geopolitical turmoil, including terrorism and war;
|
•
|
trade protection measures and import or export licensing requirements imposed by the United States and/or by other countries;
|
•
|
negative consequences from changes in applicable tax laws;
|
•
|
difficulties in staffing and managing operations in multiple locations in many countries;
|
•
|
longer payment cycles of foreign customers and timing of collections in foreign jurisdictions; and
|
•
|
less effective protection of intellectual property than in the United States.
|
•
|
cause our customers to lose confidence in our solutions;
|
•
|
harm our reputation;
|
•
|
expose us to litigation and liability; and
|
•
|
increase our expenses from potential remediation costs.
|
•
|
difficulty in transitioning and integrating the operations and personnel of the acquired businesses;
|
•
|
potential disruption of our ongoing business and distraction of management;
|
•
|
potential difficulty in successfully implementing, upgrading and deploying in a timely and effective manner new operational information systems and upgrades of our finance, accounting and product distribution systems;
|
•
|
difficulty in incorporating acquired technology into our products and technology;
|
•
|
potential difficulties in completing projects associated with in-process research and development;
|
•
|
unanticipated expenses and delays in completing acquired development projects and technology integration and upgrades;
|
•
|
management of geographically remote business units both in the United States and internationally;
|
•
|
impairment of relationships with partners and customers;
|
•
|
assumption of unknown material liabilities of acquired companies;
|
•
|
accurate projection of revenue and bookings plans of the acquired entity in the due diligence process;
|
•
|
customers delaying purchases of our products pending resolution of product integration between our existing and our newly acquired products;
|
•
|
entering markets or types of businesses in which we have limited experience; and
|
•
|
potential loss of key employees of the acquired business.
|
•
|
costs incurred to combine the operations of businesses we acquire, such as transitional employee expenses and employee retention, redeployment or relocation expenses;
|
•
|
impairment of goodwill or intangible assets;
|
•
|
amortization of intangible assets acquired;
|
•
|
a reduction in the useful lives of intangible assets acquired;
|
•
|
identification of or changes to assumed contingent liabilities, both income tax and non-income tax related, after our final determination of the amounts for these contingencies or the conclusion of the measurement period (generally up to one year from the acquisition date), whichever comes first;
|
•
|
charges to our operating results to eliminate certain duplicative pre-merger activities, to restructure our operations or to reduce our cost structure;
|
•
|
charges to our operating results resulting from expenses incurred to effect the acquisition; and
|
•
|
charges to our operating results due to the expensing of certain stock awards assumed in an acquisition.
|
•
|
projected levels of taxable income;
|
•
|
pre-tax income being lower than anticipated in countries with lower statutory rates or higher than anticipated in countries with higher statutory rates;
|
•
|
increases or decreases to valuation allowances recorded against deferred tax assets;
|
•
|
tax audits conducted and settled by various tax authorities;
|
•
|
adjustments to income taxes upon finalization of income tax returns;
|
•
|
the ability to claim foreign tax credits;
|
•
|
the repatriation of non-U.S. earnings for which we have not previously provided for income taxes; and
|
•
|
changes in tax laws and their interpretations in countries in which we are subject to taxation.
|
•
|
significant underperformance relative to historical or projected future operating results;
|
•
|
significant changes in the manner of or use of the acquired assets or the strategy for our overall business;
|
•
|
significant negative industry or economic trends;
|
•
|
significant decline in our stock price for a sustained period;
|
•
|
changes in our organization or management reporting structure that could result in additional reporting units, which may require alternative methods of estimating fair values or greater disaggregation or aggregation in our analysis by reporting unit; and
|
•
|
a decline in our market capitalization below net book value.
|
•
|
incur additional debt or issue guarantees;
|
•
|
create liens;
|
•
|
make certain investments;
|
•
|
enter into transactions with our affiliates;
|
•
|
sell certain assets;
|
•
|
repurchase capital stock or make other restricted payments;
|
•
|
declare or pay dividends or make other distributions to stockholders; and
|
•
|
merge or consolidate with any entity.
|
•
|
require us to use a large portion of our cash flow to pay principal and interest on debt, including the convertible debentures and the credit facility, which will reduce the availability of our cash flow to fund working capital, capital expenditures, acquisitions, research and development, exploiting business opportunities, and other business activities;
|
•
|
place us at a competitive disadvantage compared to our competitors that have less debt; and
|
•
|
limit, along with the financial and other restrictive covenants related to our debt, our ability to borrow additional funds, dispose of assets or pay cash dividends.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
(1)
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
(1)
|
||||||
January 1, 2016 - January 31, 2016
|
|
205
|
|
|
$
|
17.96
|
|
|
205
|
|
|
$
|
297,580
|
|
February 1, 2016 - February 29, 2016
|
|
288
|
|
|
$
|
17.27
|
|
|
288
|
|
|
$
|
292,617
|
|
March 1, 2016 - March 31, 2016
(2)
|
|
26,322
|
|
|
$
|
19.00
|
|
|
6
|
|
|
$
|
292,487
|
|
Total
|
|
26,815
|
|
|
|
|
499
|
|
|
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
|
|
|
|
|
Nuance Communications, Inc.
|
||
|
|
|
|
|
By:
|
|
/s/ Daniel D. Tempesta
|
|
|
|
Daniel D. Tempesta
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer and duly authorized signatory)
|
|
|
Incorporated by Reference
|
|||||||||
Exhibit
Number
|
Exhibit Description
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
3.1
|
Amended and Restated Certificate of Incorporation of the Registrant.
|
10-Q
|
|
000-27038
|
|
3.2
|
|
|
5/11/2001
|
|
|
3.2
|
Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Registrant.
|
10-Q
|
|
000-27038
|
|
3.1
|
|
|
8/9/2004
|
|
|
3.3
|
Certificate of Ownership and Merger.
|
8-K
|
|
000-27038
|
|
3.1
|
|
|
10/19/2005
|
|
|
3.4
|
Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Registrant.
|
S-3
|
|
333-142182
|
|
3.3
|
|
|
4/18/2007
|
|
|
3.5
|
Amended and Restated Bylaws of the Registrant.
|
8-K
|
|
000-27038
|
|
3.1
|
|
|
11/13/2007
|
|
|
3.6
|
Certificate of Elimination of the Series A Participating Preferred Stock
|
8-K
|
|
000-27038
|
|
3.1
|
|
|
8/20/2013
|
|
|
3.7
|
Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock
|
8-K
|
|
000-27038
|
|
3.2
|
|
|
8/20/2013
|
|
|
10.1*
|
2000 Stock Plan (as amended January 27, 2016)
|
|
|
|
|
|
|
|
|
X
|
|
10.2
|
Stock Purchase Agreement, dated March 9, 2016, by and among Nuance Communications, Inc. and the other parties thereto
|
8-K
|
|
001-36056
|
|
10.1
|
|
|
3/10/2016
|
|
|
10.3
|
Promissory Note issued by Nuance Communications, Inc. to Icahn Capital LP, dated March 15, 2016
|
8-K
|
|
001-36056
|
|
10.1
|
|
|
3/15/2016
|
|
|
31.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a).
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a).
|
|
|
|
|
|
|
|
|
X
|
|
32.1
|
Certification Pursuant to 18 U.S.C. Section 1350.
|
|
|
|
|
|
|
|
|
X
|
|
101
|
The following materials from Nuance Communications, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income (Loss), (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
X
|
|
|
to attract and retain the best available personnel for positions of substantial responsibility,
|
|
|
to provide additional incentive to Employees, Directors and Consultants, and
|
|
|
to promote the success of the Company’s business.
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
By:
|
|
/s/ Paul A. Ricci
|
|
|
|
Paul A. Ricci
|
|
|
|
Chief Executive Officer and Chairman of the Board
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
By:
|
|
/s/ Daniel D. Tempesta
|
|
|
|
Daniel D. Tempesta
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
By:
|
|
/s/ Paul A. Ricci
|
|
|
|
Paul A. Ricci
|
|
|
|
Chief Executive Officer and Chairman of the Board
|
|
By:
|
|
/s/ Daniel D. Tempesta
|
|
|
|
Daniel D. Tempesta
|
|
|
|
Executive Vice President and Chief Financial Officer
|