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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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Accelerated filer
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¨
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Emerging growth company
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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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Page
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Item 1.
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|
Condensed Consolidated Financial Statements (unaudited):
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a)
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Consolidated Statements of Operations for the three and nine months ended June 30, 2017 and 2016
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b)
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Consolidated Statements of Comprehensive Loss for the three and nine months ended
June 30, 2017 and 2016
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c)
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Consolidated Balance Sheets at June 30, 2017 and September 30, 2016
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d)
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Consolidated Statements of Cash Flows for the nine months ended June 30, 2017 and 2016
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e)
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Item 2.
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Item 3.
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Item 4.
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||||
Item 1.
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|
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Item 1A.
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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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||||
Certifications
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Three Months Ended June 30,
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Nine Months Ended June 30,
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||||||||||||
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2017
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2016
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2017
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2016
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||||||||
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(Unaudited)
(In thousands, except per share amounts)
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||||||||||||||
Revenues:
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||||||||
Professional services and hosting
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$
|
251,488
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|
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$
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242,331
|
|
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$
|
763,595
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|
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$
|
709,662
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Product and licensing
|
154,228
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153,015
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465,238
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490,687
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||||
Maintenance and support
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80,505
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82,505
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244,619
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242,350
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||||
Total revenues
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486,221
|
|
|
477,851
|
|
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1,473,452
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|
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1,442,699
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||||
Cost of revenues:
|
|
|
|
|
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||||||||
Professional services and hosting
|
169,439
|
|
|
158,412
|
|
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498,501
|
|
|
466,383
|
|
||||
Product and licensing
|
17,637
|
|
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20,785
|
|
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54,805
|
|
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65,020
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||||
Maintenance and support
|
13,410
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13,574
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|
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40,248
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|
|
40,496
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|
||||
Amortization of intangible assets
|
15,727
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|
|
15,107
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48,487
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|
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47,077
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|
||||
Total cost of revenues
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216,213
|
|
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207,878
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642,041
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618,976
|
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||||
Gross profit
|
270,008
|
|
|
269,973
|
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831,411
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|
|
823,723
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
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||||||||
Research and development
|
66,565
|
|
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67,761
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199,119
|
|
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205,512
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|
||||
Sales and marketing
|
97,011
|
|
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96,012
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|
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292,201
|
|
|
289,439
|
|
||||
General and administrative
|
42,329
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40,328
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123,637
|
|
|
126,769
|
|
||||
Amortization of intangible assets
|
29,160
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|
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26,748
|
|
|
84,931
|
|
|
80,229
|
|
||||
Acquisition-related costs, net
|
7,646
|
|
|
4,721
|
|
|
22,051
|
|
|
8,426
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|
||||
Restructuring and other charges, net
|
13,035
|
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5,717
|
|
|
39,649
|
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20,257
|
|
||||
Total operating expenses
|
255,746
|
|
|
241,287
|
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|
761,588
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730,632
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|
||||
Income from operations
|
14,262
|
|
|
28,686
|
|
|
69,823
|
|
|
93,091
|
|
||||
Other (expense) income:
|
|
|
|
|
|
|
|
||||||||
Interest income
|
1,952
|
|
|
1,012
|
|
|
4,255
|
|
|
3,511
|
|
||||
Interest expense
|
(40,422
|
)
|
|
(33,184
|
)
|
|
(116,296
|
)
|
|
(95,392
|
)
|
||||
Other expense, net
|
(1,019
|
)
|
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(489
|
)
|
|
(21,251
|
)
|
|
(7,284
|
)
|
||||
Loss before income taxes
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(25,227
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)
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(3,975
|
)
|
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(63,469
|
)
|
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(6,074
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)
|
||||
Provision for income taxes
|
2,609
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|
|
7,846
|
|
|
22,103
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|
|
24,858
|
|
||||
Net loss
|
$
|
(27,836
|
)
|
|
$
|
(11,821
|
)
|
|
$
|
(85,572
|
)
|
|
$
|
(30,932
|
)
|
Net loss per share:
|
|
|
|
|
|
|
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||||||||
Basic
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$
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(0.10
|
)
|
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$
|
(0.04
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.10
|
)
|
Diluted
|
$
|
(0.10
|
)
|
|
$
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(0.04
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.10
|
)
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
287,856
|
|
|
279,373
|
|
|
289,269
|
|
|
295,319
|
|
||||
Diluted
|
287,856
|
|
|
279,373
|
|
|
289,269
|
|
|
295,319
|
|
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Three Months Ended June 30,
|
|
Nine Months Ended June 30,
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||||||||||||
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2017
|
|
2016
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2017
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2016
|
||||||||
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(Unaudited)
|
||||||||||||||
|
(In thousands)
|
||||||||||||||
Net loss
|
$
|
(27,836
|
)
|
|
$
|
(11,821
|
)
|
|
$
|
(85,572
|
)
|
|
$
|
(30,932
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
13,185
|
|
|
(9,614
|
)
|
|
566
|
|
|
(951
|
)
|
||||
Pension adjustments
|
(250
|
)
|
|
81
|
|
|
(14
|
)
|
|
231
|
|
||||
Unrealized (loss) gain on marketable securities
|
(15
|
)
|
|
73
|
|
|
(19
|
)
|
|
106
|
|
||||
Total other comprehensive income (loss), net
|
12,920
|
|
|
(9,460
|
)
|
|
533
|
|
|
(614
|
)
|
||||
Comprehensive loss
|
$
|
(14,916
|
)
|
|
$
|
(21,281
|
)
|
|
$
|
(85,039
|
)
|
|
$
|
(31,546
|
)
|
|
June 30, 2017
|
|
September 30, 2016
|
||||
|
(Unaudited)
|
||||||
|
(In thousands, except per
share amounts)
|
||||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
693,594
|
|
|
$
|
481,620
|
|
Marketable securities
|
175,615
|
|
|
98,840
|
|
||
Accounts receivable, less allowances for doubtful accounts of $12,681 and $11,038
|
359,497
|
|
|
380,004
|
|
||
Prepaid expenses and other current assets
|
90,794
|
|
|
78,126
|
|
||
Total current assets
|
1,319,500
|
|
|
1,038,590
|
|
||
Marketable securities
|
31,926
|
|
|
27,632
|
|
||
Land, building and equipment, net
|
161,826
|
|
|
185,169
|
|
||
Goodwill
|
3,578,689
|
|
|
3,508,879
|
|
||
Intangible assets, net
|
708,077
|
|
|
762,220
|
|
||
Other assets
|
137,475
|
|
|
138,980
|
|
||
Total assets
|
$
|
5,937,493
|
|
|
$
|
5,661,470
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
||||||
Current portion of long-term debt
|
$
|
371,321
|
|
|
$
|
—
|
|
Contingent and deferred acquisition payments
|
31,561
|
|
|
9,468
|
|
||
Accounts payable
|
107,560
|
|
|
94,599
|
|
||
Accrued expenses and other current liabilities
|
218,155
|
|
|
237,659
|
|
||
Deferred revenue
|
374,033
|
|
|
349,173
|
|
||
Total current liabilities
|
1,102,630
|
|
|
690,899
|
|
||
Long-term portion of debt
|
2,229,336
|
|
|
2,433,152
|
|
||
Deferred revenue, net of current portion
|
424,635
|
|
|
386,960
|
|
||
Deferred tax liabilities
|
130,152
|
|
|
115,435
|
|
||
Other liabilities
|
96,200
|
|
|
103,694
|
|
||
Total liabilities
|
3,982,953
|
|
|
3,730,140
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 16)
|
|
|
|
||||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.001 par value per share; 560,000 shares authorized; 292,217 and 291,384 shares issued and 288,467 and 287,633 shares outstanding, respectively
|
292
|
|
|
291
|
|
||
Additional paid-in capital
|
2,601,239
|
|
|
2,492,992
|
|
||
Treasury stock, at cost (3,751 shares)
|
(16,788
|
)
|
|
(16,788
|
)
|
||
Accumulated other comprehensive loss
|
(115,601
|
)
|
|
(116,134
|
)
|
||
Accumulated deficit
|
(514,602
|
)
|
|
(429,031
|
)
|
||
Total stockholders’ equity
|
1,954,540
|
|
|
1,931,330
|
|
||
Total liabilities and stockholders’ equity
|
$
|
5,937,493
|
|
|
$
|
5,661,470
|
|
|
Nine Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
|
(Unaudited)
(In thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(85,572
|
)
|
|
$
|
(30,932
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
174,955
|
|
|
173,093
|
|
||
Stock-based compensation
|
121,809
|
|
|
122,957
|
|
||
Non-cash interest expense
|
42,912
|
|
|
34,044
|
|
||
Deferred tax provision
|
6,762
|
|
|
6,480
|
|
||
Loss on extinguishment of debt
|
18,565
|
|
|
4,851
|
|
||
Other
|
20,610
|
|
|
12
|
|
||
Changes in operating assets and liabilities, net of effects from acquisitions:
|
|
|
|
||||
Accounts receivable
|
28,132
|
|
|
23,374
|
|
||
Prepaid expenses and other assets
|
(14,531
|
)
|
|
(12,526
|
)
|
||
Accounts payable
|
12,209
|
|
|
25,041
|
|
||
Accrued expenses and other liabilities
|
(4,040
|
)
|
|
18,549
|
|
||
Deferred revenue
|
60,552
|
|
|
61,984
|
|
||
Net cash provided by operating activities
|
382,363
|
|
|
426,927
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(34,033
|
)
|
|
(41,423
|
)
|
||
Payments for business and asset acquisitions, net of cash acquired
|
(110,220
|
)
|
|
(28,194
|
)
|
||
Purchases of marketable securities and other investments
|
(192,062
|
)
|
|
(36,251
|
)
|
||
Proceeds from sales and maturities of marketable securities and other investments
|
106,444
|
|
|
66,254
|
|
||
Net cash used in investing activities
|
(229,871
|
)
|
|
(39,614
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Payments of debt
|
(634,055
|
)
|
|
(511,844
|
)
|
||
Proceeds from issuance of long-term debt, net of issuance costs
|
838,081
|
|
|
959,860
|
|
||
Payments for repurchase of common stock
|
(99,077
|
)
|
|
(699,472
|
)
|
||
Net payments on other long-term liabilities
|
(424
|
)
|
|
(1,320
|
)
|
||
Proceeds from issuance of common stock from employee stock plans
|
8,682
|
|
|
8,461
|
|
||
Cash used to net share settle employee equity awards
|
(52,523
|
)
|
|
(67,047
|
)
|
||
Net cash provided by (used in) financing activities
|
60,684
|
|
|
(311,362
|
)
|
||
Effects of exchange rate changes on cash and cash equivalents
|
(1,202
|
)
|
|
3,655
|
|
||
Net increase in cash and cash equivalents
|
211,974
|
|
|
79,606
|
|
||
Cash and cash equivalents at beginning of period
|
481,620
|
|
|
479,449
|
|
||
Cash and cash equivalents at end of period
|
$
|
693,594
|
|
|
$
|
559,055
|
|
1.
|
Organization and Presentation
|
2.
|
Malware Incident and Subsequent Events
|
3.
|
Summary of Significant Accounting Policies
|
4.
|
Business Acquisitions
|
|
Touch-Commerce
|
||
Purchase consideration:
|
|
||
Cash
|
$
|
113,008
|
|
Common stock
(a)
|
85,000
|
|
|
Deferred acquisition payment
|
19,458
|
|
|
Total purchase consideration
|
$
|
217,466
|
|
|
|
||
Allocation of the purchase consideration:
|
|
||
Cash
|
$
|
137
|
|
Accounts receivable
(b)
|
14,897
|
|
|
Goodwill
|
117,178
|
|
|
Identifiable intangible assets
(c)
|
110,800
|
|
|
Other assets
|
1,521
|
|
|
Total assets acquired
|
244,533
|
|
|
Current liabilities
|
(4,134
|
)
|
|
Deferred tax liability
|
(19,515
|
)
|
|
Deferred revenue
|
(2,784
|
)
|
|
Other long term liabilities
|
(634
|
)
|
|
Total liabilities assumed
|
(27,067
|
)
|
|
Net assets acquired
|
$
|
217,466
|
|
(a)
|
5,749,807
shares of our common stock valued at
$14.78
per share were issued at closing.
|
(b)
|
Accounts receivable have been recorded at their estimated fair values and the fair value reserve was not material.
|
(c)
|
The following are the identifiable intangible assets acquired and their respective weighted average useful lives, as determined based on preliminary valuations (dollars in thousands):
|
|
TouchCommerce
|
||||
|
Amount
|
|
Weighted
Average
Life
(Years)
|
||
Core and completed technology
|
$
|
26,000
|
|
|
6.0
|
Customer relationships
|
81,600
|
|
|
10.0
|
|
Trade names
|
3,200
|
|
|
5.0
|
|
Total
|
$
|
110,800
|
|
|
|
|
Three Months Ended June 30,
|
|
Nine Months Ended June 30,
|
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Transition and integration costs
|
$
|
3,722
|
|
|
$
|
1,332
|
|
|
$
|
11,044
|
|
|
$
|
3,367
|
|
Professional service fees
|
3,905
|
|
|
3,531
|
|
|
11,896
|
|
|
6,131
|
|
||||
Acquisition-related adjustments
|
19
|
|
|
(142
|
)
|
|
(889
|
)
|
|
(1,072
|
)
|
||||
Total
|
$
|
7,646
|
|
|
$
|
4,721
|
|
|
$
|
22,051
|
|
|
$
|
8,426
|
|
5.
|
Goodwill and Intangible Assets
|
|
Goodwill
|
|
Intangible
Assets
|
||||
Balance at September 30, 2016
|
$
|
3,508,879
|
|
|
$
|
762,220
|
|
Acquisitions
|
61,823
|
|
|
78,403
|
|
||
Purchase accounting adjustments
|
(321
|
)
|
|
—
|
|
||
Amortization
|
—
|
|
|
(133,418
|
)
|
||
Effect of foreign currency translation
|
8,308
|
|
|
872
|
|
||
Balance at June 30, 2017
|
$
|
3,578,689
|
|
|
$
|
708,077
|
|
6.
|
Financial Instruments and Hedging Activities
|
|
|
|
|
|
|
|
Derivatives Not Designated as Hedges:
|
|
Balance Sheet Classification
|
|
Fair Value
|
||||||
|
June 30, 2017
|
|
September 30, 2016
|
|||||||
Foreign currency contracts
|
|
Prepaid expenses and other current assets
|
|
$
|
202
|
|
|
$
|
335
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Nine Months Ended June 30,
|
||||||||||||
Derivatives Not Designated as Hedges
|
|
Location of Gain (Loss) Recognized in Income
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Foreign currency contracts
|
|
Other expense, net
|
|
$
|
175
|
|
|
$
|
(2,261
|
)
|
|
$
|
(7,885
|
)
|
|
$
|
(27
|
)
|
•
|
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.
|
|
June 30, 2017
|
||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
(a)
|
$
|
556,549
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
556,549
|
|
US government agency securities
(a)
|
1,005
|
|
|
—
|
|
|
—
|
|
|
1,005
|
|
||||
Time deposits
(b)
|
—
|
|
|
87,190
|
|
|
—
|
|
|
87,190
|
|
||||
Commercial paper, $51,116 at cost
(b)
|
—
|
|
|
51,147
|
|
|
—
|
|
|
51,147
|
|
||||
Corporate notes and bonds, $69,154 at cost
(b)
|
—
|
|
|
69,204
|
|
|
—
|
|
|
69,204
|
|
||||
Foreign currency exchange contracts
(b)
|
—
|
|
|
202
|
|
|
—
|
|
|
202
|
|
||||
Total assets at fair value
|
$
|
557,554
|
|
|
$
|
207,743
|
|
|
$
|
—
|
|
|
$
|
765,297
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent acquisition payments
(c)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(11,351
|
)
|
|
$
|
(11,351
|
)
|
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(11,351
|
)
|
|
$
|
(11,351
|
)
|
|
September 30, 2016
|
||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
(a)
|
$
|
331,419
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
331,419
|
|
US government agency securities
(a)
|
1,002
|
|
|
—
|
|
|
—
|
|
|
1,002
|
|
||||
Time deposits
(b)
|
—
|
|
|
33,794
|
|
|
—
|
|
|
33,794
|
|
||||
Commercial paper, $38,108 at cost
(b)
|
—
|
|
|
38,142
|
|
|
—
|
|
|
38,142
|
|
||||
Corporate notes and bonds, $54,484 at cost
(b)
|
—
|
|
|
54,536
|
|
|
—
|
|
|
54,536
|
|
||||
Foreign currency exchange contracts
(b)
|
—
|
|
|
335
|
|
|
—
|
|
|
335
|
|
||||
Total assets at fair value
|
$
|
332,421
|
|
|
$
|
126,807
|
|
|
$
|
—
|
|
|
$
|
459,228
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent acquisition payments
(c)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(8,240
|
)
|
|
$
|
(8,240
|
)
|
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(8,240
|
)
|
|
$
|
(8,240
|
)
|
(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 time deposits, commercial paper and corporate notes and bonds mature within three years and have a weighted average maturity of
0.75 years
as of
June 30, 2017
.
|
(c)
|
The fair values 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 June 30,
|
|
Nine Months Ended June 30,
|
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Balance at beginning of period
|
$
|
6,377
|
|
|
$
|
20,825
|
|
|
$
|
8,240
|
|
|
$
|
15,961
|
|
Earn-out liabilities established at time of acquisition
|
5,000
|
|
|
1,455
|
|
|
8,253
|
|
|
3,955
|
|
||||
Payments and foreign currency translation
|
(26
|
)
|
|
1,538
|
|
|
(4,283
|
)
|
|
2,910
|
|
||||
Adjustments to fair value included in acquisition-related costs, net
|
—
|
|
|
333
|
|
|
(859
|
)
|
|
1,325
|
|
||||
Balance at end of period
|
$
|
11,351
|
|
|
$
|
24,151
|
|
|
$
|
11,351
|
|
|
$
|
24,151
|
|
8.
|
Accrued Expenses and Other Current Liabilities
|
|
June 30, 2017
|
|
September 30, 2016
|
||||
Compensation
|
$
|
132,572
|
|
|
$
|
154,028
|
|
Accrued interest payable
|
23,429
|
|
|
20,409
|
|
||
Cost of revenue related liabilities
|
16,875
|
|
|
19,351
|
|
||
Consulting and professional fees
|
16,062
|
|
|
18,001
|
|
||
Facilities related liabilities
|
8,248
|
|
|
7,382
|
|
||
Sales and other taxes payable
|
3,792
|
|
|
2,708
|
|
||
Sales and marketing incentives
|
3,334
|
|
|
6,508
|
|
||
Other
|
13,843
|
|
|
9,272
|
|
||
Total
|
$
|
218,155
|
|
|
$
|
237,659
|
|
9.
|
Deferred Revenue
|
|
June 30, 2017
|
|
September 30, 2016
|
||||
Current liabilities:
|
|
|
|
||||
Deferred maintenance revenue
|
$
|
158,939
|
|
|
$
|
165,902
|
|
Unearned revenue
|
215,094
|
|
|
183,271
|
|
||
Total current deferred revenue
|
$
|
374,033
|
|
|
$
|
349,173
|
|
Long-term liabilities:
|
|
|
|
||||
Deferred maintenance revenue
|
$
|
59,604
|
|
|
$
|
59,955
|
|
Unearned revenue
|
365,031
|
|
|
327,005
|
|
||
Total long-term deferred revenue
|
$
|
424,635
|
|
|
$
|
386,960
|
|
10.
|
Restructuring and Other Charges, net
|
|
Personnel
|
|
Facilities
|
|
Total
|
||||||
Balance at September 30, 2016
|
$
|
2,661
|
|
|
$
|
11,132
|
|
|
$
|
13,793
|
|
Restructuring charges, net
|
12,279
|
|
|
5,708
|
|
|
17,987
|
|
|||
Non-cash adjustment
|
—
|
|
|
(1,433
|
)
|
|
(1,433
|
)
|
|||
Cash payments
|
(11,747
|
)
|
|
(5,104
|
)
|
|
(16,851
|
)
|
|||
Balance at June 30, 2017
|
$
|
3,193
|
|
|
$
|
10,303
|
|
|
$
|
13,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Three Months Ended June 30,
|
||||||||||||||||||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||||||||||||||||||
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
||||||||||||||||||||
Healthcare
|
$
|
993
|
|
|
$
|
—
|
|
|
$
|
993
|
|
|
$
|
4,065
|
|
|
$
|
5,058
|
|
|
$
|
49
|
|
|
$
|
1,344
|
|
|
$
|
1,393
|
|
|
$
|
—
|
|
|
$
|
1,393
|
|
Mobile
|
866
|
|
|
(511
|
)
|
|
355
|
|
|
—
|
|
|
355
|
|
|
62
|
|
|
1,222
|
|
|
1,284
|
|
|
—
|
|
|
1,284
|
|
||||||||||
Enterprise
|
1,910
|
|
|
2,040
|
|
|
3,950
|
|
|
—
|
|
|
3,950
|
|
|
(8
|
)
|
|
494
|
|
|
486
|
|
|
—
|
|
|
486
|
|
||||||||||
Imaging
|
43
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
43
|
|
|
7
|
|
|
294
|
|
|
301
|
|
|
—
|
|
|
301
|
|
||||||||||
Corporate
|
241
|
|
|
25
|
|
|
266
|
|
|
3,363
|
|
|
3,629
|
|
|
(249
|
)
|
|
2,502
|
|
|
2,253
|
|
|
—
|
|
|
2,253
|
|
||||||||||
Total
|
$
|
4,053
|
|
|
$
|
1,554
|
|
|
$
|
5,607
|
|
|
$
|
7,428
|
|
|
$
|
13,035
|
|
|
$
|
(139
|
)
|
|
$
|
5,856
|
|
|
$
|
5,717
|
|
|
$
|
—
|
|
|
$
|
5,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Nine Months Ended June 30,
|
||||||||||||||||||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||||||||||||||||||
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
||||||||||||||||||||
Healthcare
|
$
|
3,554
|
|
|
$
|
870
|
|
|
$
|
4,424
|
|
|
$
|
4,065
|
|
|
$
|
8,489
|
|
|
$
|
1,363
|
|
|
$
|
1,352
|
|
|
$
|
2,715
|
|
|
$
|
—
|
|
|
$
|
2,715
|
|
Mobile
|
4,133
|
|
|
(460
|
)
|
|
3,673
|
|
|
10,773
|
|
|
14,446
|
|
|
4,973
|
|
|
1,172
|
|
|
6,145
|
|
|
46
|
|
|
6,191
|
|
||||||||||
Enterprise
|
2,722
|
|
|
2,904
|
|
|
5,626
|
|
|
—
|
|
|
5,626
|
|
|
1,035
|
|
|
2,528
|
|
|
3,563
|
|
|
—
|
|
|
3,563
|
|
||||||||||
Imaging
|
629
|
|
|
387
|
|
|
1,016
|
|
|
—
|
|
|
1,016
|
|
|
219
|
|
|
478
|
|
|
697
|
|
|
—
|
|
|
697
|
|
||||||||||
Corporate
|
1,241
|
|
|
2,007
|
|
|
3,248
|
|
|
6,824
|
|
|
10,072
|
|
|
1,820
|
|
|
5,210
|
|
|
7,030
|
|
|
61
|
|
|
7,091
|
|
||||||||||
Total
|
$
|
12,279
|
|
|
$
|
5,708
|
|
|
$
|
17,987
|
|
|
$
|
21,662
|
|
|
$
|
39,649
|
|
|
$
|
9,410
|
|
|
$
|
10,740
|
|
|
$
|
20,150
|
|
|
$
|
107
|
|
|
$
|
20,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11.
|
Debt and Credit Facilities
|
|
June 30, 2017
|
|
September 30, 2016
|
||||
5.625% Senior Notes due 2026, net of deferred issuance costs of $6.2 million. Effective interest rate 5.625%.
|
$
|
493,797
|
|
|
$
|
—
|
|
5.375% Senior Notes due 2020, net of unamortized premium of $1.0 million and $3.0 million, respectively, and deferred issuance costs of $2.5 million and $7.3 million, respectively. Effective interest rate 5.375%.
|
448,511
|
|
|
1,046,851
|
|
||
6.000% Senior Notes due 2024, net of deferred issuance costs of $2.2 million and $2.4 million, respectively. Effective interest rate 6.000%.
|
297,833
|
|
|
297,601
|
|
||
1.00% Convertible Debentures due 2035, net of unamortized discount of $146.7 million and $163.5 million, respectively, and deferred issuance costs of $7.2 million and $8.2 million, respectively. Effective interest rate 5.622%.
|
522,576
|
|
|
504,712
|
|
||
2.75% Convertible Debentures due 2031, net of unamortized discount of $6.1 million and $19.2 million, respectively, and deferred issuance costs of $0.3 million and $1.1 million, respectively. Effective interest rate 7.432%.
|
371,321
|
|
|
375,208
|
|
||
1.25% Convertible Debentures due 2025, net of unamortized discount of $95.1 million, and deferred issuance costs of $4.4 million. Effective interest rate 5.578%.
|
250,439
|
|
|
—
|
|
||
1.50% Convertible Debentures due 2035, net of unamortized discount of $44.9 million and $51.7 million, respectively, and deferred issuance costs of $1.6 million and $1.9 million, respectively. Effective interest rate 5.394%.
|
217,437
|
|
|
210,286
|
|
||
Deferred issuance costs related to our Revolving Credit Facility
|
(1,257
|
)
|
|
(1,506
|
)
|
||
Total long-term debt
|
2,600,657
|
|
|
2,433,152
|
|
||
Less: current portion
|
371,321
|
|
|
—
|
|
||
Non-current portion of long-term debt
|
$
|
2,229,336
|
|
|
$
|
2,433,152
|
|
Fiscal Year
|
|
Convertible Debentures
(1)
|
|
Senior Notes
|
|
Total
|
||||||
2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2018
|
|
377,740
|
|
|
—
|
|
|
377,740
|
|
|||
2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
2020
|
|
—
|
|
|
450,000
|
|
|
450,000
|
|
|||
2021
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Thereafter
|
|
1,290,383
|
|
|
800,000
|
|
|
2,090,383
|
|
|||
Total before unamortized discount
|
|
1,668,123
|
|
|
1,250,000
|
|
|
2,918,123
|
|
|||
Less: unamortized discount and issuance costs
|
|
(306,350
|
)
|
|
(11,116
|
)
|
|
(317,466
|
)
|
|||
Total long-term debt
|
|
$
|
1,361,773
|
|
|
$
|
1,238,884
|
|
|
$
|
2,600,657
|
|
(1)
|
Holders of the 1.0% 2035 Debentures have the right to require us to redeem the debentures on December 15, 2022, 2027 and 2032. Holders of the 2031 Debentures have the right to require us to redeem the debentures on November 1, 2017, 2021, and 2026. Holders of the 1.5% 2035 Debentures have the right to require us to redeem the debentures on November 1, 2021, 2026, and 2031.
|
12.
|
Stockholders' Equity
|
13.
|
Net Loss Per Share
|
|
|
|
|
14.
|
Stock-Based Compensation
|
|
Three Months Ended June 30,
|
|
Nine Months Ended June 30,
|
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Cost of professional services and hosting
|
$
|
8,385
|
|
|
$
|
8,112
|
|
|
$
|
24,875
|
|
|
$
|
23,626
|
|
Cost of product and licensing
|
104
|
|
|
42
|
|
|
298
|
|
|
286
|
|
||||
Cost of maintenance and support
|
1,130
|
|
|
1,083
|
|
|
3,117
|
|
|
3,074
|
|
||||
Research and development
|
9,610
|
|
|
9,157
|
|
|
26,498
|
|
|
27,056
|
|
||||
Selling and marketing
|
11,981
|
|
|
13,726
|
|
|
34,968
|
|
|
37,023
|
|
||||
General and administrative
|
11,121
|
|
|
10,327
|
|
|
32,053
|
|
|
31,892
|
|
||||
Total
|
$
|
42,331
|
|
|
$
|
42,447
|
|
|
$
|
121,809
|
|
|
$
|
122,957
|
|
|
Number of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(a)
|
|||||
Outstanding at September 30, 2016
|
1,965,826
|
|
|
$
|
15.01
|
|
|
|
|
|
||
Exercised
|
(1,932,286
|
)
|
|
$
|
14.98
|
|
|
|
|
|
||
Expired
|
(7,595
|
)
|
|
$
|
20.01
|
|
|
|
|
|
||
Outstanding at June 30, 2017
|
25,945
|
|
|
$
|
15.77
|
|
|
2.8 years
|
|
$
|
0.1
|
million
|
Exercisable at June 30, 2017
|
25,936
|
|
|
$
|
15.78
|
|
|
2.8 years
|
|
$
|
0.1
|
million
|
Exercisable at June 30, 2016
|
1,975,656
|
|
|
$
|
14.97
|
|
|
1.0 year
|
|
$
|
2.2
|
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
June 30, 2017
(
$17.41
) and the exercise price of the underlying options.
|
|
Number of Shares Underlying Restricted Units — Contingent Awards
|
|
Number of Shares Underlying Restricted Units — Time-Based Awards
|
||
Outstanding at September 30, 2016
|
4,224,488
|
|
|
5,884,023
|
|
Granted
|
3,108,321
|
|
|
6,267,257
|
|
Earned/released
|
(1,788,014
|
)
|
|
(5,454,085
|
)
|
Forfeited
|
(455,176
|
)
|
|
(476,398
|
)
|
Outstanding at June 30, 2017
|
5,089,619
|
|
|
6,220,797
|
|
Weighted average remaining recognition period of outstanding restricted units
|
1.4 years
|
|
|
1.7 years
|
|
Unearned stock-based compensation expense of outstanding restricted units
|
$56.5 million
|
|
$68.1 million
|
||
Aggregate intrinsic value of outstanding restricted units
(a)
|
$88.6 million
|
|
$108.4 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
June 30, 2017
(
$17.41
) and the purchase price of the underlying restricted units.
|
|
Nine Months Ended June 30,
|
||||||
2017
|
|
2016
|
|||||
Weighted-average grant-date fair value per share
|
$
|
16.10
|
|
|
$
|
19.20
|
|
Total intrinsic value of shares vested (in millions)
|
$
|
119.2
|
|
|
$
|
150.7
|
|
|
Number of Shares Underlying Restricted Stock
|
|
Weighted Average Grant Date Fair Value
|
|||
Outstanding at September 30, 2016
|
—
|
|
|
$
|
—
|
|
Granted
|
250,000
|
|
|
$
|
15.55
|
|
Outstanding at June 30, 2017
|
250,000
|
|
|
$
|
15.55
|
|
Weighted average remaining recognition period of outstanding restricted stock awards
|
0.3 years
|
|
|
|
||
Unearned stock-based compensation expense of outstanding restricted stock awards
|
$1.1 million
|
|
|
|||
Aggregate intrinsic value of outstanding restricted stock awards
(a)
|
$4.4 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
June 30, 2017
(
$17.41
) and the purchase price of the underlying restricted stock awards.
|
15.
|
Income Taxes
|
|
Three Months Ended June 30,
|
|
Nine Months Ended June 30,
|
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Domestic
|
$
|
(58,871
|
)
|
|
$
|
(39,615
|
)
|
|
$
|
(148,257
|
)
|
|
$
|
(102,308
|
)
|
Foreign
|
33,644
|
|
|
35,640
|
|
|
84,788
|
|
|
96,234
|
|
||||
Loss before income taxes
|
$
|
(25,227
|
)
|
|
$
|
(3,975
|
)
|
|
$
|
(63,469
|
)
|
|
$
|
(6,074
|
)
|
|
Three Months Ended June 30,
|
|
Nine Months Ended June 30,
|
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Domestic
|
$
|
(3,029
|
)
|
|
$
|
3,411
|
|
|
$
|
5,952
|
|
|
$
|
12,970
|
|
Foreign
|
5,638
|
|
|
4,435
|
|
|
16,151
|
|
|
11,888
|
|
||||
Provision for income taxes
|
$
|
2,609
|
|
|
$
|
7,846
|
|
|
$
|
22,103
|
|
|
$
|
24,858
|
|
Effective tax rate
|
(10.3
|
)%
|
|
(197.4
|
)%
|
|
(34.8
|
)%
|
|
(409.3
|
)%
|
16.
|
Commitments and Contingencies
|
17.
|
Segment and Geographic Information
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
June 30,
|
|
June 30,
|
|||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Segment revenues
(a)
:
|
|
|
|
|
|
|
|
||||||||
Healthcare
|
$
|
232,641
|
|
|
$
|
240,986
|
|
|
$
|
710,315
|
|
|
$
|
733,461
|
|
Mobile
|
101,515
|
|
|
91,778
|
|
|
293,525
|
|
|
280,017
|
|
||||
Enterprise
|
112,064
|
|
|
95,249
|
|
|
344,359
|
|
|
278,467
|
|
||||
Imaging
|
49,404
|
|
|
56,848
|
|
|
154,541
|
|
|
175,199
|
|
||||
Total segment revenues
|
495,624
|
|
|
484,861
|
|
|
1,502,740
|
|
|
1,467,144
|
|
||||
Less: acquisition-related revenues adjustments
|
(9,403
|
)
|
|
(7,010
|
)
|
|
(29,288
|
)
|
|
(24,445
|
)
|
||||
Total consolidated revenues
|
486,221
|
|
|
477,851
|
|
|
1,473,452
|
|
|
1,442,699
|
|
||||
Segment profit:
|
|
|
|
|
|
|
|
||||||||
Healthcare
|
70,457
|
|
|
78,129
|
|
|
232,353
|
|
|
237,740
|
|
||||
Mobile
|
41,428
|
|
|
30,983
|
|
|
115,336
|
|
|
98,196
|
|
||||
Enterprise
|
34,419
|
|
|
31,065
|
|
|
108,149
|
|
|
91,336
|
|
||||
Imaging
|
16,943
|
|
|
20,597
|
|
|
53,029
|
|
|
69,774
|
|
||||
Total segment profit
|
163,247
|
|
|
160,774
|
|
|
508,867
|
|
|
497,046
|
|
||||
Corporate expenses and other, net
|
(31,683
|
)
|
|
(30,888
|
)
|
|
(92,829
|
)
|
|
(97,489
|
)
|
||||
Acquisition-related revenues and cost of revenues adjustments
|
(9,403
|
)
|
|
(6,460
|
)
|
|
(29,288
|
)
|
|
(23,520
|
)
|
||||
Stock-based compensation
|
(42,331
|
)
|
|
(42,447
|
)
|
|
(121,809
|
)
|
|
(122,957
|
)
|
||||
Amortization of intangible assets
|
(44,887
|
)
|
|
(41,855
|
)
|
|
(133,418
|
)
|
|
(127,306
|
)
|
||||
Acquisition-related costs, net
|
(7,646
|
)
|
|
(4,721
|
)
|
|
(22,051
|
)
|
|
(8,426
|
)
|
||||
Restructuring and other charges, net
|
(13,035
|
)
|
|
(5,717
|
)
|
|
(39,649
|
)
|
|
(20,257
|
)
|
||||
Costs associated with IP collaboration agreements
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,000
|
)
|
||||
Other expense, net
|
(39,489
|
)
|
|
(32,661
|
)
|
|
(133,292
|
)
|
|
(99,165
|
)
|
||||
Loss before income taxes
|
$
|
(25,227
|
)
|
|
$
|
(3,975
|
)
|
|
$
|
(63,469
|
)
|
|
$
|
(6,074
|
)
|
(a)
|
Segment revenues differ from reported revenues due to certain revenue adjustments related to acquisitions that would otherwise have been recognized but for the purchase accounting treatment of the business combinations. 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
|
|
Nine Months Ended
|
||||||||||||
June 30,
|
|
June 30,
|
|||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
United States
|
$
|
341,826
|
|
|
$
|
341,252
|
|
|
$
|
1,043,933
|
|
|
$
|
1,035,776
|
|
International
|
144,395
|
|
|
136,599
|
|
|
429,519
|
|
|
406,923
|
|
||||
Total revenues
|
$
|
486,221
|
|
|
$
|
477,851
|
|
|
$
|
1,473,452
|
|
|
$
|
1,442,699
|
|
•
|
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 growing customer preference for hosted solutions and subscription-based license models and increased use of mobile devices to access healthcare systems and create clinical
|
•
|
Mobile.
Trends in our mobile business include automotive original equipment manufacturers ("OEM") differentiating their offerings by using voice and content to provide an enhanced experience for drivers; consumer electronics companies and cable operators competing to develop virtual assistant technologies for the home; geographic expansion of our mobile operator services; and the adoption of our technology on a broadening scope of devices, such as televisions, set-top boxes, and third-party applications. The more powerful capabilities within automobiles and mobile devices require us to supply a broader portfolio of specialized virtual assistants and connected services providing voice recognition, content integration, text-to-speech, and natural language understanding capabilities. We continue to see increased demand for our enhanced offerings that combine speech and natural language understanding technology with artificial intelligence particularly from large automotive OEMs for our embedded and connected solutions. We are continuing to see a decline in our handset devices revenue resulting from the consolidation of the handset device market to a small number of customers as well as increased competition in voice recognition and natural language solutions and services sold to handset device OEMs. We continue to see demand for products and services that 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 more predictable revenues over time. We are investing in the expansion of the cloud capabilities and content of our automotive solutions; machine learning technologies, expansion across the Internet of Things in our devices solutions; and go-to market strategies with mobile operators.
|
•
|
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 addition, for large enterprise businesses around the world, customer service interactions are accelerating toward more pervasive digital engagement across web, mobile and social platforms. In order to acquire and retain customers, enterprises need to be able to provide a customer service experience when and how the customer desires. This is creating a growing market opportunity for our omni-channel enterprise solutions and, with the acquisition of TouchCommerce, Inc., which closed during the fourth quarter of fiscal year 2016, we are able to provide an end-to-end engagement platform that merges intelligent self-service with assisted service to increase customer satisfaction, strengthen customer loyalty and improve business results. In fiscal year
2016
, 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. These trends have continued in fiscal year
2017
. We are investing to extend our technology capabilities with intelligent self-service and artificial intelligence for customer service; extend the market for our on-demand omni-channel enterprise solutions into international markets; expand our sales and solutions for voice biometrics; and expand our on-premise product and services portfolio.
|
•
|
Imaging.
The imaging market is evolving to include more networked solutions to multi-function printing ("MFP") 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
$30.8 million
to
$1,473.5 million
;
|
•
|
Net loss increased by
$54.6 million
to a loss of
$85.6 million
;
|
•
|
Gross margins decreased by
0.7
percentage points to
56.4%
;
|
•
|
Operating margins decreased by
1.7
percentage points to
4.7%
; and
|
•
|
Cash provided by operating activities decreased
$44.6 million
to
$382.4 million
.
|
•
|
Total deferred revenue increased
9.5%
from
$729.1 million
to
$798.7 million
driven primarily by our hosting solutions, most notably for our automotive connected services in our Mobile segment.
|
•
|
Net new bookings increased
20.8%
from one year ago to
$438.5 million
. The net new bookings growth benefited from strong bookings performance primarily in our Enterprise and Mobile segments, offset by $10.2 million impact of the Malware Incident.
|
•
|
Recurring revenue represented
73.1%
and
69.7%
of total revenue for
nine months ended
June 30, 2017
and
June 30, 2016
, respectively. Recurring revenue represents the sum of recurring product and licensing, hosting, 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 14% from one year ago to approximately 4.3 billion lines per year. The decrease was primarily due to continued erosion in our transcription services combined with a loss of 0.2 billion annualized lines due to the disruption of transcription services in the final days of the quarter as a result of the Malware Incident. The annualized line run-rate is determined using billed equivalent line counts in a given quarter, multiplied by four;
|
•
|
Estimated three-year value of total on-demand contracts at
June 30, 2017
increased
9%
from one year ago to approximately
$2.4 billion
. The increase was primarily due to our Enterprise omni-channel solutions, offset by adjustments of $0.2 billion related to the Malware Incident. 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
|
|
Nine Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
June 30,
|
|
|
June 30,
|
|
|||||||||||||||||||||||||
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|||||||||||||||||||||
Professional services and hosting
|
$
|
251.5
|
|
|
$
|
242.3
|
|
|
$
|
9.2
|
|
|
3.8
|
%
|
|
$
|
763.6
|
|
|
$
|
709.7
|
|
|
$
|
53.9
|
|
|
7.6
|
%
|
Product and licensing
|
154.2
|
|
|
153.0
|
|
|
1.2
|
|
|
0.8
|
%
|
|
465.2
|
|
|
490.7
|
|
|
(25.4
|
)
|
|
(5.2
|
)%
|
||||||
Maintenance and support
|
80.5
|
|
|
82.5
|
|
|
(2.0
|
)
|
|
(2.4
|
)%
|
|
244.6
|
|
|
242.4
|
|
|
2.3
|
|
|
0.9
|
%
|
||||||
Total Revenues
|
$
|
486.2
|
|
|
$
|
477.9
|
|
|
$
|
8.4
|
|
|
1.8
|
%
|
|
$
|
1,473.5
|
|
|
$
|
1,442.7
|
|
|
$
|
30.8
|
|
|
2.1
|
%
|
United States
|
$
|
341.8
|
|
|
$
|
341.3
|
|
|
$
|
0.6
|
|
|
0.2
|
%
|
|
$
|
1,043.9
|
|
|
$
|
1,035.8
|
|
|
$
|
8.2
|
|
|
0.8
|
%
|
International
|
144.4
|
|
|
136.6
|
|
|
7.8
|
|
|
5.7
|
%
|
|
429.5
|
|
|
406.9
|
|
|
22.6
|
|
|
5.6
|
%
|
||||||
Total Revenues
|
$
|
486.2
|
|
|
$
|
477.9
|
|
|
$
|
8.4
|
|
|
1.8
|
%
|
|
$
|
1,473.5
|
|
|
$
|
1,442.7
|
|
|
$
|
30.8
|
|
|
2.1
|
%
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Nine Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
June 30,
|
|
|
June 30,
|
|
|||||||||||||||||||||||||
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|||||||||||||||||||||
Professional services revenue
|
$
|
62.1
|
|
|
$
|
61.2
|
|
|
$
|
0.9
|
|
|
1.4
|
%
|
|
$
|
178.8
|
|
|
$
|
166.5
|
|
|
$
|
12.3
|
|
|
7.4
|
%
|
Hosting revenue
|
189.4
|
|
|
181.1
|
|
|
8.3
|
|
|
4.6
|
%
|
|
584.8
|
|
|
543.2
|
|
|
41.6
|
|
|
7.7
|
%
|
||||||
Professional services and hosting revenue
|
$
|
251.5
|
|
|
$
|
242.3
|
|
|
$
|
9.2
|
|
|
3.8
|
%
|
|
$
|
763.6
|
|
|
$
|
709.7
|
|
|
$
|
53.9
|
|
|
7.6
|
%
|
As a percentage of total revenue
|
51.7
|
%
|
|
50.7
|
%
|
|
|
|
|
|
51.8
|
%
|
|
49.2
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Nine Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
June 30,
|
|
|
June 30,
|
|
|||||||||||||||||||||||||
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|||||||||||||||||||||
Product and licensing revenue
|
$
|
154.2
|
|
|
$
|
153.0
|
|
|
$
|
1.2
|
|
|
0.8
|
%
|
|
$
|
465.2
|
|
|
$
|
490.7
|
|
|
$
|
(25.4
|
)
|
|
(5.2
|
)%
|
As a percentage of total revenue
|
31.7
|
%
|
|
32.0
|
%
|
|
|
|
|
|
31.6
|
%
|
|
34.0
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Nine Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
June 30,
|
|
|
June 30,
|
|
|||||||||||||||||||||||||
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|||||||||||||||||||||
Maintenance and support revenue
|
$
|
80.5
|
|
|
$
|
82.5
|
|
|
$
|
(2.0
|
)
|
|
(2.4
|
)%
|
|
$
|
244.6
|
|
|
$
|
242.4
|
|
|
$
|
2.3
|
|
|
0.9
|
%
|
As a percentage of total revenue
|
16.6
|
%
|
|
17.3
|
%
|
|
|
|
|
|
16.6
|
%
|
|
16.8
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Nine Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
June 30,
|
|
June 30,
|
|
||||||||||||||||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||||||||||||||||
Cost of professional services and hosting revenue
|
$
|
169.4
|
|
|
$
|
158.4
|
|
|
$
|
11.0
|
|
|
7.0
|
%
|
|
$
|
498.5
|
|
|
$
|
466.4
|
|
|
$
|
32.1
|
|
|
6.9
|
%
|
As a percentage of professional services and hosting revenue
|
67.4
|
%
|
|
65.4
|
%
|
|
|
|
|
|
65.3
|
%
|
|
65.7
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Nine Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
June 30,
|
|
|
June 30,
|
|
|||||||||||||||||||||||||
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|||||||||||||||||||||
Cost of product and licensing revenue
|
$
|
17.6
|
|
|
$
|
20.8
|
|
|
$
|
(3.1
|
)
|
|
(15.1
|
)%
|
|
$
|
54.8
|
|
|
$
|
65.0
|
|
|
$
|
(10.2
|
)
|
|
(15.7
|
)%
|
As a percentage of product and licensing revenue
|
11.4
|
%
|
|
13.6
|
%
|
|
|
|
|
|
11.8
|
%
|
|
13.3
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Nine Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
June 30,
|
|
June 30,
|
|
||||||||||||||||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||||||||||||||||
Cost of maintenance and support revenue
|
$
|
13.4
|
|
|
$
|
13.6
|
|
|
$
|
(0.2
|
)
|
|
(1.2
|
)%
|
|
$
|
40.2
|
|
|
$
|
40.5
|
|
|
$
|
(0.2
|
)
|
|
(0.6
|
)%
|
As a percentage of maintenance and support revenue
|
16.7
|
%
|
|
16.5
|
%
|
|
|
|
|
|
16.5
|
%
|
|
16.7
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Nine Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
June 30,
|
|
June 30,
|
|
||||||||||||||||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||||||||||||||||
Research and development expense
|
$
|
66.6
|
|
|
$
|
67.8
|
|
|
$
|
(1.2
|
)
|
|
(1.8
|
)%
|
|
$
|
199.1
|
|
|
$
|
205.5
|
|
|
$
|
(6.4
|
)
|
|
(3.1
|
)%
|
As a percentage of total revenue
|
13.7
|
%
|
|
14.2
|
%
|
|
|
|
|
|
13.5
|
%
|
|
14.2
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Nine Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
June 30,
|
|
June 30,
|
|
||||||||||||||||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||||||||||||||||
Sales and marketing expense
|
$
|
97.0
|
|
|
$
|
96.0
|
|
|
$
|
1.0
|
|
|
1.0
|
%
|
|
$
|
292.2
|
|
|
$
|
289.4
|
|
|
$
|
2.8
|
|
|
1.0
|
%
|
As a percentage of total revenue
|
20.0
|
%
|
|
20.1
|
%
|
|
|
|
|
|
19.8
|
%
|
|
20.1
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Nine Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
June 30,
|
|
June 30,
|
|
||||||||||||||||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||||||||||||||||
General and administrative expense
|
$
|
42.3
|
|
|
$
|
40.3
|
|
|
$
|
2.0
|
|
|
5.0
|
%
|
|
$
|
123.6
|
|
|
$
|
126.8
|
|
|
$
|
(3.1
|
)
|
|
(2.5
|
)%
|
As a percentage of total revenue
|
8.7
|
%
|
|
8.4
|
%
|
|
|
|
|
|
8.4
|
%
|
|
8.8
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Nine Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
June 30,
|
|
June 30,
|
|
||||||||||||||||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||||||||||||||||
Cost of revenue
|
$
|
15.7
|
|
|
$
|
15.1
|
|
|
$
|
0.6
|
|
|
4.1
|
%
|
|
$
|
48.5
|
|
|
$
|
47.1
|
|
|
$
|
1.4
|
|
|
3.0
|
%
|
Operating expenses
|
29.2
|
|
|
26.7
|
|
|
2.4
|
|
|
9.0
|
%
|
|
84.9
|
|
|
80.2
|
|
|
4.7
|
|
|
5.9
|
%
|
||||||
Total amortization expense
|
$
|
44.9
|
|
|
$
|
41.9
|
|
|
$
|
3.0
|
|
|
7.2
|
%
|
|
$
|
133.4
|
|
|
$
|
127.3
|
|
|
$
|
6.1
|
|
|
4.8
|
%
|
As a percentage of total revenue
|
9.2
|
%
|
|
8.8
|
%
|
|
|
|
|
|
9.1
|
%
|
|
8.8
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Nine Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
June 30,
|
|
June 30,
|
|||||||||||||||||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||||||||||||||||
Transition and integration costs
|
$
|
3.7
|
|
|
$
|
1.3
|
|
|
$
|
2.4
|
|
|
179.4
|
%
|
|
$
|
11.0
|
|
|
$
|
3.4
|
|
|
$
|
7.7
|
|
|
228.0
|
%
|
Professional service fees
|
3.9
|
|
|
3.5
|
|
|
0.4
|
|
|
10.6
|
%
|
|
11.9
|
|
|
6.1
|
|
|
5.8
|
|
|
94.0
|
%
|
||||||
Acquisition-related adjustments
|
—
|
|
|
(0.1
|
)
|
|
0.2
|
|
|
(113.4
|
)%
|
|
(0.9
|
)
|
|
(1.1
|
)
|
|
0.2
|
|
|
(17.1
|
)%
|
||||||
Total acquisition-related costs, net
|
$
|
7.6
|
|
|
$
|
4.7
|
|
|
$
|
2.9
|
|
|
62.0
|
%
|
|
$
|
22.1
|
|
|
$
|
8.4
|
|
|
$
|
13.6
|
|
|
161.7
|
%
|
As a percentage of total revenue
|
1.6
|
%
|
|
1.0
|
%
|
|
|
|
|
|
1.5
|
%
|
|
0.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Three Months Ended June 30,
|
||||||||||||||||||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||||||||||||||||||
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
||||||||||||||||||||
Healthcare
|
$
|
993
|
|
|
$
|
—
|
|
|
$
|
993
|
|
|
$
|
4,065
|
|
|
$
|
5,058
|
|
|
$
|
49
|
|
|
$
|
1,344
|
|
|
$
|
1,393
|
|
|
$
|
—
|
|
|
$
|
1,393
|
|
Mobile
|
866
|
|
|
(511
|
)
|
|
355
|
|
|
—
|
|
|
355
|
|
|
62
|
|
|
1,222
|
|
|
1,284
|
|
|
—
|
|
|
1,284
|
|
||||||||||
Enterprise
|
1,910
|
|
|
2,040
|
|
|
3,950
|
|
|
—
|
|
|
3,950
|
|
|
(8
|
)
|
|
494
|
|
|
486
|
|
|
—
|
|
|
486
|
|
||||||||||
Imaging
|
43
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
43
|
|
|
7
|
|
|
294
|
|
|
301
|
|
|
—
|
|
|
301
|
|
||||||||||
Corporate
|
241
|
|
|
25
|
|
|
266
|
|
|
3,363
|
|
|
3,629
|
|
|
(249
|
)
|
|
2,502
|
|
|
2,253
|
|
|
—
|
|
|
2,253
|
|
||||||||||
Total
|
$
|
4,053
|
|
|
$
|
1,554
|
|
|
$
|
5,607
|
|
|
$
|
7,428
|
|
|
$
|
13,035
|
|
|
$
|
(139
|
)
|
|
$
|
5,856
|
|
|
$
|
5,717
|
|
|
$
|
—
|
|
|
$
|
5,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Nine Months Ended June 30,
|
||||||||||||||||||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||||||||||||||||||
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
|
Personnel
|
|
Facilities
|
|
Total Restructuring
|
|
Other Charges
|
|
Total
|
||||||||||||||||||||
Healthcare
|
$
|
3,554
|
|
|
$
|
870
|
|
|
$
|
4,424
|
|
|
$
|
4,065
|
|
|
$
|
8,489
|
|
|
$
|
1,363
|
|
|
$
|
1,352
|
|
|
$
|
2,715
|
|
|
$
|
—
|
|
|
$
|
2,715
|
|
Mobile
|
4,133
|
|
|
(460
|
)
|
|
3,673
|
|
|
10,773
|
|
|
14,446
|
|
|
4,973
|
|
|
1,172
|
|
|
6,145
|
|
|
46
|
|
|
6,191
|
|
||||||||||
Enterprise
|
2,722
|
|
|
2,904
|
|
|
5,626
|
|
|
—
|
|
|
5,626
|
|
|
1,035
|
|
|
2,528
|
|
|
3,563
|
|
|
—
|
|
|
3,563
|
|
||||||||||
Imaging
|
629
|
|
|
387
|
|
|
1,016
|
|
|
—
|
|
|
1,016
|
|
|
219
|
|
|
478
|
|
|
697
|
|
|
—
|
|
|
697
|
|
||||||||||
Corporate
|
1,241
|
|
|
2,007
|
|
|
3,248
|
|
|
6,824
|
|
|
10,072
|
|
|
1,820
|
|
|
5,210
|
|
|
7,030
|
|
|
61
|
|
|
7,091
|
|
||||||||||
Total
|
$
|
12,279
|
|
|
$
|
5,708
|
|
|
$
|
17,987
|
|
|
$
|
21,662
|
|
|
$
|
39,649
|
|
|
$
|
9,410
|
|
|
$
|
10,740
|
|
|
$
|
20,150
|
|
|
$
|
107
|
|
|
$
|
20,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Nine Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
June 30,
|
|
June 30,
|
|
||||||||||||||||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||||||||||||||||
Interest income
|
$
|
2.0
|
|
|
$
|
1.0
|
|
|
$
|
0.9
|
|
|
92.9
|
%
|
|
$
|
4.3
|
|
|
$
|
3.5
|
|
|
$
|
0.7
|
|
|
21.2
|
%
|
Interest expense
|
(40.4
|
)
|
|
(33.2
|
)
|
|
(7.2
|
)
|
|
21.8
|
%
|
|
(116.3
|
)
|
|
(95.4
|
)
|
|
(20.9
|
)
|
|
21.9
|
%
|
||||||
Other expense, net
|
(1.0
|
)
|
|
(0.5
|
)
|
|
(0.5
|
)
|
|
100.0
|
%
|
|
(21.3
|
)
|
|
(7.3
|
)
|
|
(14.0
|
)
|
|
191.7
|
%
|
||||||
Total other expense, net
|
$
|
(39.5
|
)
|
|
$
|
(32.7
|
)
|
|
$
|
(6.8
|
)
|
|
20.9
|
%
|
|
$
|
(133.3
|
)
|
|
$
|
(99.2
|
)
|
|
|
|
34.4
|
%
|
||
As a percentage of total revenue
|
8.1
|
%
|
|
6.8
|
%
|
|
|
|
|
|
9.0
|
%
|
|
6.9
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
|
Nine Months Ended
|
|
Dollar
Change
|
|
Percent
Change
|
||||||||||||||||||
June 30,
|
|
June 30,
|
|
||||||||||||||||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||||||||||||||||
Provision for income taxes
|
$
|
2.6
|
|
|
$
|
7.8
|
|
|
$
|
(5.2
|
)
|
|
(66.7
|
)%
|
|
$
|
22.1
|
|
|
$
|
24.9
|
|
|
$
|
(2.8
|
)
|
|
(11.1
|
)%
|
Effective income tax rate
|
(10.3
|
)%
|
|
(197.4
|
)%
|
|
|
|
|
|
(34.8
|
)%
|
|
(409.3
|
)%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|
Percent
Change
|
|
Nine Months Ended
|
|
Change
|
|
Percent
Change
|
||||||||||||||||||
June 30,
|
|
June 30,
|
|
||||||||||||||||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||||||||||||||||
Segment Revenues
(a)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Healthcare
|
$
|
232.6
|
|
|
$
|
241.0
|
|
|
$
|
(8.3
|
)
|
|
(3.5
|
)%
|
|
$
|
710.3
|
|
|
$
|
733.5
|
|
|
$
|
(23.1
|
)
|
|
(3.2
|
)%
|
Mobile
|
101.5
|
|
|
91.8
|
|
|
9.7
|
|
|
10.6
|
%
|
|
293.5
|
|
|
280.0
|
|
|
13.5
|
|
|
4.8
|
%
|
||||||
Enterprise
|
112.1
|
|
|
95.2
|
|
|
16.8
|
|
|
17.7
|
%
|
|
344.4
|
|
|
278.5
|
|
|
65.9
|
|
|
23.7
|
%
|
||||||
Imaging
|
49.4
|
|
|
56.8
|
|
|
(7.4
|
)
|
|
(13.1
|
)%
|
|
154.5
|
|
|
175.2
|
|
|
(20.7
|
)
|
|
(11.8
|
)%
|
||||||
Total segment revenues
|
$
|
495.6
|
|
|
$
|
484.9
|
|
|
$
|
10.7
|
|
|
2.2
|
%
|
|
$
|
1,502.7
|
|
|
$
|
1,467.1
|
|
|
$
|
35.6
|
|
|
2.4
|
%
|
Less: acquisition related revenues adjustments
|
(9.4
|
)
|
|
(7.0
|
)
|
|
(2.4
|
)
|
|
34.3
|
%
|
|
(29.3
|
)
|
|
(24.4
|
)
|
|
(4.8
|
)
|
|
19.8
|
%
|
||||||
Total revenues
|
$
|
486.2
|
|
|
$
|
477.9
|
|
|
$
|
8.3
|
|
|
1.7
|
%
|
|
$
|
1,473.5
|
|
|
$
|
1,442.7
|
|
|
$
|
30.8
|
|
|
2.1
|
%
|
Segment Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Healthcare
|
$
|
70.5
|
|
|
$
|
78.1
|
|
|
$
|
(7.6
|
)
|
|
(9.7
|
)%
|
|
$
|
232.4
|
|
|
$
|
237.7
|
|
|
$
|
(5.4
|
)
|
|
(2.3
|
)%
|
Mobile
|
41.4
|
|
|
31.0
|
|
|
10.4
|
|
|
33.5
|
%
|
|
115.3
|
|
|
98.2
|
|
|
17.1
|
|
|
17.5
|
%
|
||||||
Enterprise
|
34.4
|
|
|
31.1
|
|
|
3.3
|
|
|
10.6
|
%
|
|
108.1
|
|
|
91.3
|
|
|
16.8
|
|
|
18.4
|
%
|
||||||
Imaging
|
16.9
|
|
|
20.6
|
|
|
(3.7
|
)
|
|
(18.0
|
)%
|
|
53.0
|
|
|
69.8
|
|
|
(16.7
|
)
|
|
(24.0
|
)%
|
||||||
Total segment profit
|
$
|
163.2
|
|
|
$
|
160.8
|
|
|
$
|
2.4
|
|
|
1.5
|
%
|
|
$
|
508.9
|
|
|
$
|
497.0
|
|
|
$
|
11.8
|
|
|
2.4
|
%
|
Segment Profit Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Healthcare
|
30.3
|
%
|
|
32.4
|
%
|
|
(2.1
|
)
|
|
|
|
32.7
|
%
|
|
32.4
|
%
|
|
0.3
|
|
|
|
||||||||
Mobile
|
40.8
|
%
|
|
33.8
|
%
|
|
7.1
|
|
|
|
|
39.3
|
%
|
|
35.1
|
%
|
|
4.2
|
|
|
|
||||||||
Enterprise
|
30.7
|
%
|
|
32.6
|
%
|
|
(1.9
|
)
|
|
|
|
31.4
|
%
|
|
32.8
|
%
|
|
(1.4
|
)
|
|
|
||||||||
Imaging
|
34.3
|
%
|
|
36.2
|
%
|
|
(1.9
|
)
|
|
|
|
34.3
|
%
|
|
39.8
|
%
|
|
(5.5
|
)
|
|
|
||||||||
Total segment profit margin
|
32.9
|
%
|
|
33.2
|
%
|
|
(0.2
|
)
|
|
|
|
33.9
|
%
|
|
33.9
|
%
|
|
—
|
|
|
|
(a)
|
Segment revenues differ from reported revenues due to certain revenue adjustments related to acquisitions that would otherwise have been recognized but for the purchase accounting treatment of the business combinations. These revenues are included to allow for more complete comparisons to the financial results of historical operations and in evaluating management performance.
|
•
|
Healthcare segment revenue
decreased
$8.3 million
for the
three months ended
June 30, 2017
, as compared to the
three months ended
June 30, 2016
. Product and licensing revenue increased $1.4 million driven by Diagnostics and Development, partially offset by lower revenue from our Dragon Medical perpetual license sales as we transition from perpetual to cloud offerings. Professional services and hosting revenue decreased $7.5 million primarily due to a decrease of $11.8 million attributable to continued erosion in our hosted transcription services as we continue to transition to cloud offerings, and a decrease in transcription service revenue of $10.2 million that we estimate is attributable to the service interruption from the Malware Incident, partially offset by a revenue increase in our Dragon Medical cloud revenue of $14.7 million. Maintenance and support revenue decreased $2.3 million.
|
•
|
Mobile segment revenue
increased
$9.7 million
for the
three months ended
June 30, 2017
, as compared to the
three months ended
June 30, 2016
. Professional services and hosting revenue increased $3.7 million driven primarily by a continued trend toward cloud-based services in our automotive solutions and strength in our mobile operator services.
|
•
|
Enterprise segment revenue
increased
$16.8 million
for the
three months ended
June 30, 2017
, as compared to the
three months ended
June 30, 2016
. Product and licensing revenue increased $1.5 million primarily related to revenue from recent acquisitions and growth in our embedded speech license sales. Professional services and hosting revenue increased $14.2 million driven by strong revenue across many of our omni-channel cloud offerings, including revenue from a recent acquisition. Maintenance and support revenue increased $1.1 million.
|
•
|
Imaging segment revenues
decreased
$7.4 million
for the
three months ended
June 30, 2017
, as compared to the
three months ended
June 30, 2016
, primarily driven by a $3.6 million decrease that we estimate is attributable to the Malware Incident and lower sales of our MFP products.
|
•
|
Healthcare segment revenue
decreased
$23.1 million
for the
nine months ended
June 30, 2017
, as compared to the
nine months ended
June 30, 2016
. Product and licensing revenue decreased $18.4 million driven by lower revenue from our Dragon Medical perpetual license sales as we transition from perpetual to cloud offerings. Hosting revenue decreased $9.6 million primarily due to $10.2 million that we estimate to be attributable to the service interruption from the Malware Incident, partially offset by a revenue growth in our Dragon Medical cloud services. These decreases were partially offset by a $6.4 million increase in professional services revenue driven by a recent acquisition.
|
•
|
Mobile segment revenue
increased
$13.5 million
for the
nine months ended
June 30, 2017
, as compared to the
nine months ended
June 30, 2016
. Professional services and hosting revenue increased $18.0 million driven primarily by a continued trend toward cloud-based services in our automotive solutions and strength in our mobile operator services. Product and licensing revenue decreased $1.9 million and maintenance and support revenue decreased $2.6 million, due to a decline in devices revenue from deterioration in mature markets, partially offset by the growth in recurring product and licensing revenue in our automotive business.
|
•
|
Enterprise segment revenue
increased
$65.9 million
for the
nine months ended
June 30, 2017
, as compared to the
nine months ended
June 30, 2016
. Professional services and hosting revenue increased $40.2 million driven by strong revenue across many of our omni-channel offerings, including revenue from a recent acquisition. Product and licensing revenue increased $20.7 million primarily related to revenue from recent acquisitions.
|
•
|
Imaging segment revenues
decreased
$20.7 million
for the
nine months ended
June 30, 2017
, as compared to the
nine months ended
June 30, 2016
, primarily driven by an estimated $3.6 million decrease that we attribute to the Malware Incident and lower sales of our MFP products.
|
•
|
Healthcare segment profit for the
three months ended
June 30, 2017
decreased
9.7%
from the same period last year, primarily driven by lower gross profit. Segment profit margin decreased
2.1%
percentage points, from
32.4%
for the same period last year to
30.3%
during the current period. The decrease in segment profit margin was primarily driven by lower gross profit by 1.8 percentage point and lower operating expenses of 0.3 percentage points. Decrease in segment profit was primarily due to an $10.2 million revenue loss that we estimate is attributable to the service interruption in hosted transcription services from the Malware Incident.
|
•
|
Mobile segment profit for the
three months ended
June 30, 2017
increased
33.5%
from the same period last year, primarily driven by higher gross profit. Segment profit margin increased
7.1%
percentage points, from
33.8%
for the same period last year to
40.8%
during the current period. The increase in segment profit margin was primarily driven by our cost savings and process optimization initiatives with improvements of 4.1 percentage points due to lower operating expenses and a 3.0 percentage point improvement in gross margin driven by margin expansion in our cloud-based services.
|
•
|
Enterprise segment profit for the
three months ended
June 30, 2017
increased
10.6%
from the same period last year, driven by higher gross profit due to increased revenue. Segment profit margin decreased
1.9%
percentage points, from
32.6%
for the same period last year to
30.7%
in the current period. The decrease in segment profit margin was primarily driven by lower gross margin resulting from a shift in mix towards a higher percentage of professional services and hosting revenue.
|
•
|
Imaging segment profit for the
three months ended
June 30, 2017
decreased
18.0%
from the same period last year, primarily driven by lower revenue. Segment profit margin decreased
1.9%
percentage points, from
36.2%
for the same period last year to
34.3%
during the current period. The decrease in segment profit margin was primarily driven by lower revenues primarily driven by lower sales of our MFP products and a $3.6 million decrease that we estimate is a result of the Malware Incident, and higher research and development expenses.
|
•
|
Healthcare segment profit for the
nine months ended
June 30, 2017
decreased
2.3%
from the same period last year, primarily driven by lower operating expenses and lost revenue in hosted transcription services of $10.2 million that we estimate is attributable to the service interruption from the Malware Incident. Segment profit margin increased
0.3
percentage points, from
32.4%
for the same period last year to
32.7%
during the current period. The increase in segment profit margin was primarily driven by lower operating expenses with improvements of 0.9 percentage point.
|
•
|
Mobile segment profit for the
nine months ended
June 30, 2017
increased
17.5%
from the same period last year, primarily driven by higher gross profit and lower operating expenses. Segment profit margin increased
4.2
percentage points, from
35.1%
for the same period last year to
39.3%
during the current period. The increase in segment profit margin was primarily driven by our cost savings and process optimization initiatives with improvements of 2.6 percentage point due to lower operating expenses and a 1.6 percentage point improvement in gross margin driven by margin expansion in our cloud-based services.
|
•
|
Enterprise segment profit for the
nine months ended
June 30, 2017
increased
18.4%
from the same period last year, driven by higher gross profit, partially offset by higher operating expenses from a recent acquisition. Segment profit margin decreased
1.4
percentage points, from
32.8%
for the same period last year to
31.4%
in the current period. The decrease in segment profit margin was primarily driven by lower gross margin resulting from a shift in mix towards a higher percentage of professional services and hosting revenue.
|
•
|
Imaging segment profit for the
nine months ended
June 30, 2017
decreased
24.0%
from the same period last year, primarily driven by lower revenue. Segment profit margin decreased
5.5
percentage points, from
39.8%
for the same period last year to
34.3%
during the current period. The decrease in segment profit margin was primarily driven by lower revenues and higher research and development expenses.
|
•
|
A decrease of
$32.7 million
in cash flows generated by changes in working capital excluding deferred revenue;
|
•
|
A decrease in cash flows of
$1.4 million
from deferred revenue. Deferred revenue contributed cash inflow of
$60.6 million
for the
nine months ended
June 30, 2017
, as compared to
$62.0 million
for the
nine months ended
June 30, 2016
. The deferred revenue growth in the
nine months ended
June 30, 2017
was driven primarily by our hosting solutions in automotive connected services within our Mobile segment and bundled offerings within our Healthcare segment; and
|
•
|
A decrease in cash flows of
$10.5 million
resulting from higher net loss, exclusive of non-cash adjustment items.
|
•
|
An increase in cash outflows of
$155.8 million
for purchases of marketable securities and other investments;
|
•
|
An increase in cash outflows of
$82.0 million
for business and asset acquisitions; and
|
•
|
Partially offset by an increase in cash inflows of
$40.2 million
from the sale of marketable securities and other investments.
|
•
|
A decrease in cash outflows of
$600.4 million
related to share repurchases. During the
nine months ended
June 30, 2017
, we repurchased
5.8 million
shares of our common stock for
$99.1 million
under our share repurchase program, as compared to
9.4 million
shares repurchased under our share repurchase program and
26.3 million
shares repurchased from the Icahn Group for total cash outflows of
$699.5 million
during the same period in the prior year;
|
•
|
A decrease in cash inflows of
$244.0 million
from debt activities. During the
nine months ended
June 30, 2017
, the net cash inflows from debt activities was $204.0 million including approximately
$495.0 million
net proceeds from the issuance of our 2026 Senior Notes, approximately
$343.6 million
net proceeds from the issuance of our 1.25% 2025 Debentures, offset by the repurchase of
$600.0 million
in aggregate principal of our 2020 Senior Notes and the repurchase of $17.8 million in aggregate principal of our 2031 Debentures. During the
nine months ended
June 30, 2016
, the net cash inflows from debt activities was $448.0 million including
$676.5 million
in aggregate principal from the issuance of our 1.0% 2035 Debentures, $300.0 million in aggregate principal from the issuance of 6.0% Senior Notes due 2024 offset by the $472.5 million repayment of our term loan and the repurchase of $38.3 million in aggregate principal on our 2031 Debentures; and
|
•
|
A decrease in cash outflows of
$14.5 million
as a result of lower cash payments required to net share settle employee equity awards, due to a decrease in vesting value as a result of lower stock prices during the
nine months ended
June 30, 2017
as compared to the same period in the prior year.
|
|
|
Payments Due by Fiscal Year Ended September 30,
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
2017
|
|
2018 and 2019
|
|
2020 and 2021
|
|
Thereafter
|
||||||||||
Convertible debentures
(1)
|
|
$
|
1,668.1
|
|
|
$
|
—
|
|
|
$
|
377.7
|
|
|
$
|
—
|
|
|
$
|
1,290.4
|
|
Senior notes
|
|
1,250.0
|
|
|
—
|
|
|
—
|
|
|
450.0
|
|
|
800.0
|
|
|||||
Interest payable on long-term debt
(2)
|
|
582.0
|
|
|
21.1
|
|
|
176.0
|
|
|
146.6
|
|
|
238.3
|
|
|||||
Letters of credit
(3)
|
|
4.6
|
|
|
0.3
|
|
|
4.3
|
|
|
—
|
|
|
—
|
|
|||||
Lease obligations and other liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating leases
|
|
171.9
|
|
|
6.0
|
|
|
45.2
|
|
|
30.8
|
|
|
89.9
|
|
|||||
Operating leases under restructuring
(4)
|
|
64.4
|
|
|
3.1
|
|
|
17.8
|
|
|
14.9
|
|
|
28.6
|
|
|||||
Purchase commitments
(5)
|
|
40.0
|
|
|
10.0
|
|
|
12.0
|
|
|
14.4
|
|
|
3.6
|
|
|||||
Total contractual cash obligations
|
|
$
|
3,781.0
|
|
|
$
|
40.5
|
|
|
$
|
633.0
|
|
|
$
|
656.7
|
|
|
$
|
2,450.8
|
|
(1)
|
Holders of the 1.0% 2035 Debentures have the right to require us to redeem the debentures on December 15, 2022, 2027 and 2032. Holders of the 2031 Debentures have the right to require us to redeem the debentures on November 1, 2017, 2021, and 2026. Holders of the 1.5% 2035 Debentures have the right to require us to redeem the debentures on November 1, 2021, 2026, and 2031.
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(2)
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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%, under 1.25% 2025 Debentures at a rate of 1.25% and under 1.5% 2035 Debentures at a rate of 1.5%. Interest per annum is due and payable semi-annually on the 5.625% Senior Notes at a rate of 5.625%, 5.375% Senior Notes at a rate of 5.375%, and 6.0% Senior Notes at a rate of 6.0%.
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(3)
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Letters of Credit are in place primarily to secure future operating lease payments.
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(4)
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Obligations include contractual lease commitments related to facilities that were part of restructuring plans. As of
June 30, 2017
, we have subleased certain of the facilities with total sublease income of
$51.0 million
through fiscal year
2025
.
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(5)
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Purchase commitments include non-cancelable purchase commitments for property and equipment, inventory, and services in the normal course of business. These amounts also include arrangements that require a minimum purchase commitment by us.
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Item 3.
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Quantitative and Qualitative Disclosures about Market Risk
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Item 4.
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Controls and Procedures
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Item 1A.
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Risk Factors
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volume, timing and fulfillment of customer orders and receipt of royalty reports;
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the pace of the transition to an on-demand and transactional revenue model;
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slowing sales by our channel partners to their customers;
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customers delaying their purchasing decisions in anticipation of new versions of our products;
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contractual counterparties are unable to, or do not, meet their contractual commitments to us;
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introduction of new products by us or our competitors;
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seasonality in purchasing patterns of our customers;
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reduction in the prices of our products in response to competition, market conditions or contractual obligations;
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returns and allowance charges in excess of accrued amounts;
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timing of significant marketing and sales promotions;
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impairment of goodwill or intangible assets;
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delayed realization of synergies resulting from our acquisitions;
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unforeseen actions taken by hackers or other third parties, such as the Malware Incident we experienced in June 2017;
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accounts receivable that are not collectible and write-offs of excess or obsolete inventory;
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increased expenditures incurred pursuing new product or market opportunities;
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general economic trends as they affect retail and corporate sales; and
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higher than anticipated costs related to fixed-price contracts with our customers.
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the impact on local and global economies of the United Kingdom leaving the European Union;
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changes in foreign currency exchange rates or the lack of ability to hedge certain foreign currencies;
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changes in a specific country's or region's economic conditions;
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compliance with laws and regulations in many countries and any subsequent changes in such laws and regulations;
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geopolitical turmoil, including terrorism and war;
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trade protection measures and import or export licensing requirements imposed by the United States and/or by other countries;
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changes in applicable tax laws;
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difficulties in staffing and managing operations in multiple locations in many countries;
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longer payment cycles of foreign customers and timing of collections in foreign jurisdictions; and
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less effective protection of intellectual property than in the United States.
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cause our customers to lose confidence in our solutions;
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harm our reputation;
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expose us to litigation and liability; and
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require us to incur significant expenses for remediation.
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loss of revenue resulting from the operational disruption;
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loss of revenue or increased bad debt expense due to the inability to invoice properly;
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loss of revenue due to loss of customers;
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material remediation costs to restore systems;
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material investments in new or enhanced systems in order to enhance our security posture;
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cost of incentives offered to customers to restore confidence and maintain business relationships;
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reputational damage resulting in the failure to retain or attract customers;
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costs associated with potential litigation or governmental investigations;
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costs associated with any required notices of a data breach;
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costs associated with the potential loss of critical business data; and
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other consequences of which we are not currently aware but will discover through the remediation process
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difficulty in transitioning and integrating the operations and personnel of the acquired businesses;
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potential disruption of our ongoing business and distraction of management;
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difficulty in incorporating acquired products and technologies into our products and technologies;
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potential difficulties in completing projects associated with in-process research and development;
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unanticipated expenses and delays in completing acquired development projects and technology integration and upgrades;
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challenges associated with managing additional, geographically remote businesses;
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impairment of relationships with partners and customers;
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assumption of unknown material liabilities of acquired companies;
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accurate projection of revenue and bookings plans of the acquired entity in the due diligence process;
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customers delaying purchases of our products pending resolution of product integration between our existing and our newly acquired products;
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entering markets or types of businesses in which we have limited experience; and
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potential loss of key employees of the acquired business.
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costs incurred to combine the operations of businesses we acquire, such as transitional employee expenses and employee retention, redeployment or relocation expenses;
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impairment of goodwill or intangible assets;
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amortization of intangible assets acquired;
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a reduction in the useful lives of intangible assets acquired;
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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;
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charges to our operating results to eliminate certain duplicative pre-merger activities, to restructure our operations or to reduce our cost structure;
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charges to our operating results resulting from expenses incurred to effect the acquisition; and
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charges to our operating results due to the expensing of certain stock awards assumed in an acquisition.
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projected levels of taxable income;
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pre-tax income being lower than anticipated in countries with lower statutory rates or higher than anticipated in countries with higher statutory rates;
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increases or decreases to valuation allowances recorded against deferred tax assets;
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tax audits conducted and settled by various tax authorities;
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adjustments to income taxes upon finalization of income tax returns;
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the ability to claim foreign tax credits;
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the repatriation of non-U.S. earnings for which we have not previously provided for income taxes; and
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changes in tax laws and their interpretations in countries in which we are subject to taxation.
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significant underperformance relative to historical or projected future operating results;
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significant changes in the manner of or use of the acquired assets or the strategy for our overall business;
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significant negative industry or economic trends;
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significant decline in our stock price for a sustained period;
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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
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our market capitalization declining to below net book value.
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incur additional debt or issue guarantees;
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create liens;
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make certain investments;
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enter into transactions with our affiliates;
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sell certain assets;
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repurchase capital stock or make other restricted payments;
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declare or pay dividends or make other distributions to stockholders; and
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merge or consolidate with any entity.
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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;
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place us at a competitive disadvantage compared to our competitors that have less debt; and
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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.
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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Item 3.
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Defaults Upon Senior Securities
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Other Information
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Item 6.
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Exhibits
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Nuance Communications, Inc.
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By:
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/s/ Daniel D. Tempesta
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Daniel D. Tempesta
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Executive Vice President and Chief Financial Officer
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Incorporated by Reference
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Exhibit
Number
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Exhibit Description
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Form
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File No.
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Exhibit
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Filing
Date
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Filed
Herewith
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3.1
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Amended and Restated Certificate of Incorporation of the Registrant.
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10-Q
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0-27038
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3.2
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5/11/2001
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3.2
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Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Registrant.
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10-Q
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0-27038
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3.1
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8/9/2004
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3.3
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Certificate of Ownership and Merger.
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8-K
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0-27038
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3.1
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10/19/2005
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3.4
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Amended and Restated Bylaws of the Registrant.
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8-K
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0-27038
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3.1
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11/13/2007
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3.5
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Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Registrant, as amended.
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S-3
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333-142182
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3.3
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4/18/2007
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3.6
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Certificate of Elimination of the Series A Participating Preferred Stock.
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8-K
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0-27038
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3.1
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8/20/2013
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3.7
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Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock
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8-K
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0-27038
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3.2
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8/20/2013
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10.1
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Form of Change of Control and Severance Agreement
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X
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31.1
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Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a).
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X
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31.2
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Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a).
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X
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32.1
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Certification Pursuant to 18 U.S.C. Section 1350.
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X
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101.0
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The following materials from Nuance Communications, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Loss, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Condensed Consolidated Financial Statements.
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X
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a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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a.
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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
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b.
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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.
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By:
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/s/ Paul A. Ricci
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Paul A. Ricci
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Chief Executive Officer and Chairman of the Board
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a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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a.
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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
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b.
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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.
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By:
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/s/ Daniel D. Tempesta
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Daniel D. Tempesta
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Executive Vice President and Chief Financial Officer
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By:
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/s/ Paul A. Ricci
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Paul A. Ricci
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Chief Executive Officer and Chairman of the Board
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By:
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/s/ Daniel D. Tempesta
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Daniel D. Tempesta
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Executive Vice President and Chief Financial Officer
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