|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
06-1364380
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
Securities registered pursuant to Section 12(b) of the Act:
|
||||
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Common stock, $0.0001 par value
|
|
RHT
|
|
New York Stock Exchange
|
|
Large accelerated filer
|
x
|
|
Accelerated filer
|
¨
|
|
|
Non-accelerated filer
|
¨
|
|
Smaller reporting company
|
¨
|
|
|
|
|
|
Emerging growth company
|
¨
|
|
|
|
Page
|
|
|
|
|
PART I FINANCIAL INFORMATION
|
|
ITEM 1:
|
|
|
|
Consolidated Balance Sheets at May 31, 2019 (unaudited) and February 28, 2019 (derived from audited financial statements)
|
|
|
Consolidated Statements of Operations for the three months ended May 31, 2019 (unaudited) and 2018 (unaudited)
|
|
|
Consolidated Statements of Comprehensive Income for the three months ended May 31, 2019 (unaudited) and 2018 (unaudited)
|
|
|
Consolidated Statements of Cash Flows for the three months ended May 31, 2019 (unaudited) and 2018 (unaudited)
|
|
|
||
|
NOTE 1—Company and Merger Agreement
|
|
|
NOTE 2—Summary of Significant Accounting Policies
|
|
|
NOTE 3—Accounts Receivable
|
|
|
NOTE 4—Leases
|
|
|
NOTE 5—Identifiable Intangible Assets
|
|
|
NOTE 6—Deferred Selling Costs
|
|
|
NOTE 7—Derivative Instruments
|
|
|
NOTE 8—Income Taxes
|
|
|
NOTE 9—Convertible Notes
|
|
|
NOTE 10—Commitments and Contingencies
|
|
|
NOTE 11—Legal Proceedings
|
|
|
NOTE 12—Stockholders’ Equity
|
|
|
NOTE 13—Deferred Revenue and Performance Obligations
|
|
|
NOTE 14—Earnings Per Share
|
|
|
NOTE 15—Share-based Awards
|
|
|
NOTE 16—Assets and Liabilities Measured at Fair Value on a Recurring Basis
|
|
|
NOTE 17—Segment Reporting
|
|
|
NOTE 18—Business Combinations
|
|
|
|
|
ITEM 2:
|
||
ITEM 3:
|
||
ITEM 4:
|
||
|
|
|
|
PART II OTHER INFORMATION
|
|
ITEM 1:
|
||
ITEM 1A:
|
||
ITEM 2:
|
||
ITEM 6:
|
||
|
|
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
May 31, 2019 (Unaudited)
|
|
February 28, 2019
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash, cash equivalents and restricted cash
|
$
|
2,295,396
|
|
|
$
|
1,883,096
|
|
Investments in debt securities, short-term
|
177,625
|
|
|
293,361
|
|
||
Accounts receivable, net of allowances for doubtful accounts of $4,452 and $4,561, respectively
|
529,115
|
|
|
980,188
|
|
||
Prepaid expenses
|
250,571
|
|
|
282,507
|
|
||
Other current assets
|
36,743
|
|
|
24,504
|
|
||
Total current assets
|
3,289,450
|
|
|
3,463,656
|
|
||
Property and equipment, net of accumulated depreciation and amortization of $331,642 and $316,432, respectively
|
200,015
|
|
|
198,969
|
|
||
Operating right-of-use assets, net (1)
|
224,371
|
|
|
—
|
|
||
Goodwill
|
1,273,494
|
|
|
1,276,853
|
|
||
Identifiable intangibles, net
|
198,914
|
|
|
206,083
|
|
||
Investments in debt securities, long-term
|
188,172
|
|
|
248,512
|
|
||
Deferred tax assets, net
|
119,128
|
|
|
112,568
|
|
||
Other assets, net
|
80,395
|
|
|
81,648
|
|
||
Total assets
|
$
|
5,573,939
|
|
|
$
|
5,588,289
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
458,456
|
|
|
$
|
491,259
|
|
Deferred revenue, short-term
|
2,016,488
|
|
|
2,161,206
|
|
||
Other current obligations
|
256
|
|
|
282
|
|
||
Convertible notes
|
188,553
|
|
|
69,827
|
|
||
Total current liabilities
|
2,663,753
|
|
|
2,722,574
|
|
||
Deferred revenue, long-term
|
781,043
|
|
|
821,218
|
|
||
Convertible notes
|
—
|
|
|
231,540
|
|
||
Operating lease liabilities (1)
|
188,133
|
|
|
—
|
|
||
Other long-term obligations
|
183,074
|
|
|
199,025
|
|
||
Commitments and contingencies (NOTES 10 and 11)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.0001 per share par value, 5,000,000 shares authorized, none outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.0001 per share par value, 300,000,000 shares authorized, 246,289,980 and 244,402,737 shares issued, and 178,083,153 and 176,800,502 shares outstanding, respectively
|
25
|
|
|
24
|
|
||
Additional paid-in capital
|
2,853,105
|
|
|
2,791,895
|
|
||
Retained earnings
|
2,195,189
|
|
|
2,054,069
|
|
||
Treasury stock, at cost, 68,206,827 and 67,602,235 shares, respectively
|
(3,242,725
|
)
|
|
(3,189,434
|
)
|
||
Accumulated other comprehensive loss
|
(47,658
|
)
|
|
(42,622
|
)
|
||
Total stockholders’ equity
|
1,757,936
|
|
|
1,613,932
|
|
||
Total liabilities and stockholders’ equity
|
$
|
5,573,939
|
|
|
$
|
5,588,289
|
|
(1)
|
Effective March 1, 2019, the Company adopted Accounting Standard Update 2016-02, Leases (Topic 842) (“ASC 842”). See NOTE 2—Summary of Significant Accounting Policies and NOTE 4—Leases for detailed information on adoption of ASC 842.
|
|
Three Months Ended
|
||||||
|
May 31,
2019 |
|
May 31,
2018 |
||||
Revenue:
|
|
|
|
||||
Subscriptions
|
$
|
814,952
|
|
|
$
|
711,521
|
|
Training and services
|
119,159
|
|
|
102,009
|
|
||
Total revenue
|
934,111
|
|
|
813,530
|
|
||
Cost of revenue:
|
|
|
|
||||
Subscriptions
|
61,899
|
|
|
52,173
|
|
||
Training and services
|
82,384
|
|
|
70,526
|
|
||
Total cost of revenue
|
144,283
|
|
|
122,699
|
|
||
Gross profit
|
789,828
|
|
|
690,831
|
|
||
Operating expense:
|
|
|
|
||||
Sales and marketing
|
394,201
|
|
|
348,815
|
|
||
Research and development
|
182,961
|
|
|
166,506
|
|
||
General and administrative
|
80,548
|
|
|
63,354
|
|
||
Total operating expense
|
657,710
|
|
|
578,675
|
|
||
Income from operations
|
132,118
|
|
|
112,156
|
|
||
Interest income
|
9,254
|
|
|
7,834
|
|
||
Interest expense
|
1,959
|
|
|
6,319
|
|
||
Other expense, net
|
766
|
|
|
2,194
|
|
||
Income before provision for income taxes
|
138,647
|
|
|
111,477
|
|
||
Benefit for income taxes
|
(2,473
|
)
|
|
(1,713
|
)
|
||
Net income
|
$
|
141,120
|
|
|
$
|
113,190
|
|
Net income per share:
|
|
|
|
||||
Basic
|
$
|
0.80
|
|
|
$
|
0.64
|
|
Diluted
|
$
|
0.76
|
|
|
$
|
0.59
|
|
Weighted average shares outstanding:
|
|
|
|
||||
Basic
|
177,400
|
|
|
177,302
|
|
||
Diluted
|
186,635
|
|
|
190,739
|
|
|
Three Months Ended
|
||||||
|
May 31,
2019 |
|
May 31,
2018 |
||||
Net income
|
$
|
141,120
|
|
|
$
|
113,190
|
|
Other comprehensive income (loss):
|
|
|
|
||||
Change in foreign currency translation adjustment, net of tax benefit of $465 and $0, respectively
|
(6,256
|
)
|
|
(10,831
|
)
|
||
Available-for-sale securities:
|
|
|
|
||||
Unrealized gain on available-for-sale securities during the period
|
2,023
|
|
|
38
|
|
||
Reclassification for gain realized on available-for-sale securities, reported in Other expense, net
|
(239
|
)
|
|
(128
|
)
|
||
Tax (expense) benefit
|
(564
|
)
|
|
16
|
|
||
Net change in available-for-sale securities (net of tax)
|
1,220
|
|
|
(74
|
)
|
||
Total other comprehensive loss
|
(5,036
|
)
|
|
(10,905
|
)
|
||
Comprehensive income
|
$
|
136,084
|
|
|
$
|
102,285
|
|
|
Three Months Ended
|
||||||
|
May 31, 2019
|
|
May 31, 2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
141,120
|
|
|
$
|
113,190
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
36,754
|
|
|
27,054
|
|
||
Amortization of debt discount and transaction costs
|
1,885
|
|
|
5,838
|
|
||
Repayments of convertible notes attributable to debt discount
|
(13,981
|
)
|
|
—
|
|
||
Share-based compensation expense
|
50,168
|
|
|
46,005
|
|
||
Net amortization of bond premium on debt securities available for sale
|
271
|
|
|
743
|
|
||
Other
|
(872
|
)
|
|
(2,298
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
445,186
|
|
|
299,439
|
|
||
Other receivables
|
(12,278
|
)
|
|
(35,160
|
)
|
||
Prepaid expenses
|
28,844
|
|
|
25,382
|
|
||
Accounts payable and accrued expenses
|
(58,271
|
)
|
|
(28,642
|
)
|
||
Deferred revenue
|
(158,729
|
)
|
|
(104,592
|
)
|
||
Other
|
(143
|
)
|
|
(800
|
)
|
||
Net cash provided by operating activities
|
459,954
|
|
|
346,159
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchase of investment in debt securities available for sale
|
—
|
|
|
(108,336
|
)
|
||
Proceeds from maturities of investment in debt securities available for sale
|
110,431
|
|
|
87,004
|
|
||
Proceeds from sales of investment in debt securities available for sale
|
64,899
|
|
|
525
|
|
||
Proceeds from sales of strategic equity investments
|
—
|
|
|
1,300
|
|
||
Purchase of developed software and other intangible assets
|
(4,134
|
)
|
|
(2,866
|
)
|
||
Payments for property and equipment
|
(23,513
|
)
|
|
(12,963
|
)
|
||
Other
|
(124
|
)
|
|
(986
|
)
|
||
Net cash provided by (used in) investing activities
|
147,559
|
|
|
(36,322
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from exercise of common stock options
|
369
|
|
|
875
|
|
||
Proceeds from employee stock purchase program
|
7,501
|
|
|
15,262
|
|
||
Payments related to net settlement of share-based compensation awards
|
(81,274
|
)
|
|
(77,094
|
)
|
||
Purchase of treasury stock
|
—
|
|
|
(150,019
|
)
|
||
Proceeds (payments) on other borrowings, net
|
26
|
|
|
(299
|
)
|
||
Repayments of convertible notes attributable to principal
|
(102,163
|
)
|
|
(25,953
|
)
|
||
Net cash used in financing activities
|
(175,541
|
)
|
|
(237,228
|
)
|
||
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash
|
(19,672
|
)
|
|
(28,261
|
)
|
||
Net increase in cash, cash equivalents and restricted cash
|
412,300
|
|
|
44,348
|
|
||
Cash, cash equivalents and restricted cash at beginning of the period
|
1,883,096
|
|
|
1,724,132
|
|
||
Cash, cash equivalents and restricted cash at end of the period
|
$
|
2,295,396
|
|
|
$
|
1,768,480
|
|
Restricted cash included in cash, cash equivalents and restricted cash
|
$
|
—
|
|
|
$
|
1,137
|
|
As of
|
|
Balance at
beginning
of period
|
|
Charged to (recovery of)
expense
|
|
Adjustments (1)
|
|
Balance at
end of
period
|
||||||
February 28, 2019
|
|
$
|
2,167
|
|
|
3,247
|
|
|
(853
|
)
|
|
$
|
4,561
|
|
May 31, 2019
|
|
$
|
4,561
|
|
|
(195
|
)
|
|
86
|
|
|
$
|
4,452
|
|
(1)
|
Represents foreign currency translation adjustments and amounts written-off as uncollectible accounts receivable.
|
|
Balance Sheet Classification
|
|
May 31, 2019
|
|
February 28, 2019
|
||||
Assets:
|
|
|
|
|
|
||||
Operating
|
Operating right-of-use assets, net
|
|
$
|
224,371
|
|
|
$
|
—
|
|
Finance
|
Property and equipment, net of accumulated depreciation and amortization
|
|
579
|
|
|
281
|
|
||
Total leased assets
|
|
|
$
|
224,950
|
|
|
$
|
281
|
|
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
|
|
||||
Current:
|
|
|
|
|
|
||||
Operating
|
Accounts payable and accrued expenses
|
|
$
|
46,633
|
|
|
$
|
—
|
|
Finance
|
Other current obligations
|
|
256
|
|
|
282
|
|
||
Long-term:
|
|
|
|
|
|
||||
Operating
|
Operating lease liabilities
|
|
188,133
|
|
|
—
|
|
||
Finance
|
Other long-term obligations
|
|
336
|
|
|
6
|
|
||
Total lease liabilities
|
|
|
$
|
235,358
|
|
|
$
|
288
|
|
|
May 31, 2019
|
|
Weighted average discount rate:
|
|
|
Operating leases
|
3.7
|
%
|
Finance leases
|
3.3
|
%
|
|
|
|
Three Months Ended
|
||||||
|
Statement of Operations Classification
|
|
May 31, 2019
|
|
May 31, 2018
|
||||
Operating lease expense
|
Cost of revenue, Operating expense
|
|
$
|
14,666
|
|
|
see note (1)
|
|
|
Variable lease expense
|
Cost of revenue, Operating expense
|
|
1,176
|
|
|
see note (1)
|
|
||
Finance lease expense:
|
|
|
|
|
|
||||
Amortization of leased assets
|
Cost of revenue, Operating expense
|
|
146
|
|
|
276
|
|
||
Interest on lease liabilities
|
Interest expense
|
|
6
|
|
|
7
|
|
||
Total lease expense (2)
|
|
|
$
|
15,994
|
|
|
$
|
283
|
|
(1)
|
Rent expense under operating leases was $13.4 million for the three months ended May 31, 2018.
|
(2)
|
Sublease income is recognized as a reduction to operating expense in the Consolidated Statement of Operations and is not material.
|
|
|
Three Months Ended May 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
||
Operating cash outflows from operating leases
|
|
$
|
14,043
|
|
Operating cash outflows from finance leases
|
|
$
|
6
|
|
Financing cash outflows from finance leases
|
|
$
|
112
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
|
||
Operating leases
|
|
$
|
762
|
|
Finance leases
|
|
$
|
133
|
|
Fiscal Year
|
Operating leases
|
|
Finance leases
|
||||
2020 (excluding the three months ended May 31, 2019)
|
$
|
40,737
|
|
|
$
|
258
|
|
2021
|
47,858
|
|
|
101
|
|
||
2022
|
42,467
|
|
|
101
|
|
||
2023
|
33,438
|
|
|
101
|
|
||
2024
|
26,339
|
|
|
82
|
|
||
Thereafter
|
79,125
|
|
|
—
|
|
||
Total lease payments
|
269,964
|
|
|
643
|
|
||
Less imputed interest
|
(35,198
|
)
|
|
(51
|
)
|
||
Total
|
$
|
234,766
|
|
|
$
|
592
|
|
Fiscal Year
|
|
Operating
Leases
|
|
Capital Leases
|
||||
2020
|
|
$
|
60,722
|
|
|
$
|
282
|
|
2021
|
|
51,060
|
|
|
6
|
|
||
2022
|
|
41,173
|
|
|
—
|
|
||
2023
|
|
32,016
|
|
|
—
|
|
||
2024
|
|
27,479
|
|
|
—
|
|
||
Thereafter
|
|
79,530
|
|
|
—
|
|
||
Total minimum lease payments
|
|
$
|
291,980
|
|
|
$
|
288
|
|
|
May 31, 2019
|
|
February 28, 2019
|
||||||||||||||||||||
|
Gross
Amount |
|
Accumulated
Amortization |
|
Net
Amount |
|
Gross
Amount |
|
Accumulated
Amortization |
|
Net
Amount |
||||||||||||
Trademarks, copyrights and patents
|
$
|
180,240
|
|
|
$
|
(86,132
|
)
|
|
$
|
94,108
|
|
|
$
|
176,704
|
|
|
$
|
(82,967
|
)
|
|
$
|
93,737
|
|
Purchased technologies
|
218,561
|
|
|
(118,705
|
)
|
|
99,856
|
|
|
219,196
|
|
|
(113,617
|
)
|
|
105,579
|
|
||||||
Customer and reseller relationships
|
105,562
|
|
|
(102,047
|
)
|
|
3,515
|
|
|
105,737
|
|
|
(100,947
|
)
|
|
4,790
|
|
||||||
Covenants not to compete
|
15,661
|
|
|
(14,800
|
)
|
|
861
|
|
|
15,787
|
|
|
(14,728
|
)
|
|
1,059
|
|
||||||
Other intangible assets
|
8,833
|
|
|
(8,259
|
)
|
|
574
|
|
|
8,833
|
|
|
(7,915
|
)
|
|
918
|
|
||||||
Total identifiable intangible assets
|
$
|
528,857
|
|
|
$
|
(329,943
|
)
|
|
$
|
198,914
|
|
|
$
|
526,257
|
|
|
$
|
(320,174
|
)
|
|
$
|
206,083
|
|
|
Three Months Ended
|
||||||
|
May 31, 2019
|
|
May 31, 2018
|
||||
Cost of revenue
|
$
|
6,660
|
|
|
$
|
6,485
|
|
Sales and marketing
|
1,194
|
|
|
1,362
|
|
||
Research and development
|
34
|
|
|
34
|
|
||
General and administrative
|
2,517
|
|
|
2,373
|
|
||
Total amortization expense
|
$
|
10,405
|
|
|
$
|
10,254
|
|
|
May 31, 2019
|
|
February 28, 2019
|
||||
Deferred commissions, current
|
$
|
183,462
|
|
|
$
|
201,971
|
|
Deferred commissions, non-current
|
45,860
|
|
|
47,849
|
|
||
Total deferred commissions
|
$
|
229,322
|
|
|
$
|
249,820
|
|
|
May 31, 2019
|
|
Classification of
Gain (Loss) Recognized in Income on Derivatives |
|
Three Months Ended May 31, 2019
|
||||||||||
|
Balance Sheet
Classification |
|
Fair
Value |
|
Notional
Value |
|
|
||||||||
Assets—foreign currency forward contracts not designated as hedges
|
Other current assets
|
|
$
|
233
|
|
|
$
|
18,185
|
|
|
Other expense, net
|
|
$
|
645
|
|
Liabilities—foreign currency forward contracts not designated as hedges
|
Accounts payable and accrued expenses
|
|
(173
|
)
|
|
42,821
|
|
|
Other expense, net
|
|
(651
|
)
|
|||
Total
|
|
|
$
|
60
|
|
|
$
|
61,006
|
|
|
|
|
$
|
(6
|
)
|
|
May 31, 2018
|
|
Classification of
Gain (Loss) Recognized in Income on Derivatives |
|
Three Months Ended May 31, 2018
|
||||||||||
|
Balance Sheet
Classification |
|
Fair
Value |
|
Notional
Value |
|
|
||||||||
Assets—foreign currency forward contracts not designated as hedges
|
Other current assets
|
|
$
|
111
|
|
|
$
|
21,554
|
|
|
Other expense, net
|
|
$
|
289
|
|
Liabilities—foreign currency forward contracts not designated as hedges
|
Accounts payable and accrued expenses
|
|
(790
|
)
|
|
28,112
|
|
|
Other expense, net
|
|
(1,136
|
)
|
|||
Total
|
|
|
$
|
(679
|
)
|
|
$
|
49,666
|
|
|
|
|
$
|
(847
|
)
|
|
Three Months Ended
|
||||||
|
May 31, 2019
|
|
May 31, 2018
|
||||
Coupon rate 0.25% per year, payable semiannually
|
$
|
69
|
|
|
$
|
471
|
|
Amortization of convertible note issuance costs — liability component
|
384
|
|
|
831
|
|
||
Accretion of debt discount
|
1,501
|
|
|
5,007
|
|
||
Total interest expense related to convertible notes
|
$
|
1,954
|
|
|
$
|
6,309
|
|
|
May 31, 2019
|
||||||
|
Fair Value
|
|
Carrying Value
|
||||
Convertible notes
|
$
|
188,798
|
|
|
$
|
188,553
|
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Treasury
Stock |
|
Accumulated
Other Comprehensive Loss |
|
Total
Stockholders’ Equity |
|||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
Balance at February 28, 2019
|
244,403
|
|
|
$
|
24
|
|
|
$
|
2,791,895
|
|
|
$
|
2,054,069
|
|
|
$
|
(3,189,434
|
)
|
|
$
|
(42,622
|
)
|
|
$
|
1,613,932
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
141,120
|
|
|
—
|
|
|
—
|
|
|
141,120
|
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,036
|
)
|
|
(5,036
|
)
|
||||||
Vest and exercise of share-based awards
|
944
|
|
|
1
|
|
|
368
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
369
|
|
||||||
Common stock repurchase
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
50,168
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,168
|
|
||||||
Minimum tax withholdings paid by the Company on behalf of employees related to net settlement of employee share-based awards
|
—
|
|
|
—
|
|
|
(81,274
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(81,274
|
)
|
||||||
Re-issuance of treasury stock under employee stock purchase plan
|
|
|
—
|
|
|
23,323
|
|
|
—
|
|
|
16,614
|
|
|
—
|
|
|
39,937
|
|
|||||||
Convertible note conversions
|
943
|
|
|
—
|
|
|
(1,296
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,296
|
)
|
||||||
Exercises of convertible note hedges
|
—
|
|
|
—
|
|
|
69,380
|
|
|
—
|
|
|
(69,364
|
)
|
|
—
|
|
|
16
|
|
||||||
Other adjustments
|
|
|
|
|
|
541
|
|
|
—
|
|
|
(541
|
)
|
|
—
|
|
|
—
|
|
|||||||
Balance at May 31, 2019
|
246,290
|
|
|
$
|
25
|
|
|
$
|
2,853,105
|
|
|
$
|
2,195,189
|
|
|
$
|
(3,242,725
|
)
|
|
$
|
(47,658
|
)
|
|
$
|
1,757,936
|
|
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Treasury
Stock |
|
Accumulated
Other Comprehensive Loss |
|
Total
Stockholders’ Equity |
|||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
Balance at February 28, 2018
|
238,689
|
|
|
$
|
24
|
|
|
$
|
2,416,080
|
|
|
$
|
1,619,688
|
|
|
$
|
(2,525,072
|
)
|
|
$
|
(32,596
|
)
|
|
$
|
1,478,124
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
113,190
|
|
|
—
|
|
|
—
|
|
|
113,190
|
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,905
|
)
|
|
(10,905
|
)
|
||||||
Vest and exercise of share-based awards
|
905
|
|
|
—
|
|
|
875
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
875
|
|
||||||
Common stock repurchase
|
—
|
|
|
—
|
|
|
(17,175
|
)
|
|
—
|
|
|
(132,844
|
)
|
|
—
|
|
|
(150,019
|
)
|
||||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
46,005
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46,005
|
|
||||||
Minimum tax withholdings paid by the Company on behalf of employees related to net settlement of employee share-based awards
|
—
|
|
|
—
|
|
|
(77,094
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(77,094
|
)
|
||||||
Re-issuance of treasury stock under employee stock purchase plan
|
|
|
—
|
|
|
18,471
|
|
|
—
|
|
|
13,740
|
|
|
—
|
|
|
32,211
|
|
|||||||
Convertible note conversions
|
185
|
|
|
—
|
|
|
(835
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(835
|
)
|
||||||
Exercises of convertible note hedges
|
|
|
—
|
|
|
13,598
|
|
|
—
|
|
|
(13,598
|
)
|
|
—
|
|
|
—
|
|
|||||||
Cumulative-effect adjustment from adoption of ASU 2016-01
|
|
|
—
|
|
|
—
|
|
|
392
|
|
|
—
|
|
|
—
|
|
|
392
|
|
|||||||
Balance at May 31, 2018
|
239,779
|
|
|
$
|
24
|
|
|
$
|
2,399,925
|
|
|
$
|
1,733,270
|
|
|
$
|
(2,657,774
|
)
|
|
$
|
(43,501
|
)
|
|
$
|
1,431,944
|
|
|
|
May 31, 2019
|
|
February 28, 2019
|
||||
Accumulated loss from foreign currency translation adjustment, net of tax
|
|
$
|
(47,756
|
)
|
|
$
|
(41,500
|
)
|
Accumulated unrealized gain (loss), net of tax, on available-for-sale securities
|
|
98
|
|
|
(1,122
|
)
|
||
Accumulated other comprehensive loss
|
|
$
|
(47,658
|
)
|
|
$
|
(42,622
|
)
|
|
|
February 28, 2019
|
|
Revenue recognized from opening balance
|
|
Deferred revenue, net (1)
|
|
May 31, 2019
|
||||||||
Deferred revenue, short-term
|
|
$
|
2,161,206
|
|
|
$
|
(705,210
|
)
|
|
$
|
560,492
|
|
|
$
|
2,016,488
|
|
Deferred revenue, long-term
|
|
821,218
|
|
|
—
|
|
|
(40,175
|
)
|
|
781,043
|
|
||||
Total deferred revenue
|
|
$
|
2,982,424
|
|
|
$
|
(705,210
|
)
|
|
$
|
520,317
|
|
|
$
|
2,797,531
|
|
(1)
|
Includes revenue recognized from current period customer contracts and the impact from foreign currency exchange rate fluctuations.
|
|
Three Months Ended
|
||||||
|
May 31, 2019
|
|
May 31, 2018
|
||||
Net income available to common stockholders
|
$
|
141,120
|
|
|
$
|
113,190
|
|
Weighted average common shares outstanding
|
177,400
|
|
|
177,302
|
|
||
Incremental shares attributable to assumed vesting or exercise of outstanding equity award shares
|
2,803
|
|
|
3,833
|
|
||
Dilutive effect of convertible notes
|
1,554
|
|
|
5,686
|
|
||
Dilutive effect of warrants
|
4,878
|
|
|
3,918
|
|
||
Diluted shares
|
186,635
|
|
|
190,739
|
|
||
Diluted net income per share
|
$
|
0.76
|
|
|
$
|
0.59
|
|
|
Three Months Ended
|
||||
|
May 31, 2019
|
|
May 31, 2018
|
||
Number of shares considered anti-dilutive for calculating diluted EPS
|
43
|
|
|
—
|
|
|
|
Three Months Ended
|
||||||
|
|
May 31, 2019
|
|
May 31, 2018
|
||||
Cost of revenue
|
|
$
|
4,945
|
|
|
$
|
5,128
|
|
Sales and marketing
|
|
21,904
|
|
|
19,520
|
|
||
Research and development
|
|
16,002
|
|
|
14,782
|
|
||
General and administrative
|
|
7,317
|
|
|
6,575
|
|
||
Total share-based compensation expense (1)
|
|
$
|
50,168
|
|
|
$
|
46,005
|
|
(1)
|
Total share-based compensation expense included $1.7 million and $4.0 million, respectively, of expense related to the Company’s employee stock purchase plan (“ESPP”) for the three months ended May 31, 2019 and May 31, 2018.
|
|
Three Months Ended
|
||||||||||||
|
May 31, 2019
|
|
May 31, 2018
|
||||||||||
|
Shares and
Share Units
Underlying Awards
|
|
Weighted
Average Per Share Award Fair Value |
|
Shares and
Share Units Underlying Awards |
|
Weighted
Average Per Share Award Fair Value |
||||||
Service-based shares and share units
|
885,436
|
|
(1)(2)
|
$
|
183.37
|
|
|
669,450
|
|
(1)
|
$
|
160.53
|
|
Performance share units—target
|
—
|
|
|
$
|
—
|
|
|
173,014
|
|
|
$
|
163.56
|
|
Performance share awards
|
—
|
|
|
$
|
—
|
|
|
64,219
|
|
(2)
|
$
|
163.56
|
|
Total share-based awards
|
885,436
|
|
|
$
|
183.37
|
|
|
906,683
|
|
|
$
|
161.32
|
|
(1)
|
Service-based shares and share units granted during the three months ended May 31, 2019 include 639,439 share units that vest over a three-year period with one-third vesting on the first anniversary of the grant date and one-twelfth vesting quarterly over the remaining two years and 56,487 share units that vest over a three-year period with one-third vesting annually over the three-year period. Service-based share units granted during the three months ended May 31, 2018 vest over a four-year period with one-quarter vesting annually over the four- year period.
|
(2)
|
Service-based shares and share units granted during the three months ended May 31, 2019 include 189,510 restricted stock awards that vest over a three-year period with one-third vesting annually over the three-year period. Restricted stock awards granted during the three months ended May 31, 2018 were subject to the achievement of a specified dollar amount of revenue for fiscal 2019 (the “RSA Performance Goal”). Since the Company achieved the RSA Performance Goal, 25% of the restricted stock vests on or about July 16, 2019, and the remainder vests ratably on a quarterly basis over the course of the subsequent three-year period, provided that the grantee’s business relationship with the Company has not ceased.
|
|
May 31, 2019
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money markets (1)
|
$
|
901,570
|
|
|
$
|
901,570
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Available-for-sale securities (1):
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
255,780
|
|
|
—
|
|
|
255,780
|
|
|
—
|
|
||||
U.S. agency securities
|
203,135
|
|
|
—
|
|
|
203,135
|
|
|
—
|
|
||||
Corporate securities
|
162,662
|
|
|
—
|
|
|
162,662
|
|
|
—
|
|
||||
Foreign currency derivatives (2)
|
233
|
|
|
—
|
|
|
233
|
|
|
—
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivatives (3)
|
(173
|
)
|
|
—
|
|
|
(173
|
)
|
|
—
|
|
||||
Total
|
$
|
1,523,207
|
|
|
$
|
901,570
|
|
|
$
|
621,637
|
|
|
$
|
—
|
|
(1)
|
Included in Cash, cash equivalents and restricted cash, Investments in debt securities, short-term or Investments in debt securities, long-term in the Company’s Consolidated Balance Sheet at May 31, 2019, in addition to $1.14 billion of cash.
|
(2)
|
Included in Other current assets in the Company’s Consolidated Balance Sheet at May 31, 2019.
|
(3)
|
Included in Accounts payable and accrued expenses in the Company’s Consolidated Balance Sheet at May 31, 2019.
|
|
February 28, 2019
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money markets (1)
|
$
|
398,056
|
|
|
$
|
398,056
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest-bearing deposits (1)
|
56,883
|
|
|
—
|
|
|
56,883
|
|
|
—
|
|
||||
Available-for-sale securities (1):
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
541,753
|
|
|
—
|
|
|
541,753
|
|
|
—
|
|
||||
U.S. agency securities
|
222,298
|
|
|
—
|
|
|
222,298
|
|
|
—
|
|
||||
Corporate securities
|
262,692
|
|
|
—
|
|
|
262,692
|
|
|
—
|
|
||||
Foreign currency derivatives (2)
|
24
|
|
|
—
|
|
|
24
|
|
|
—
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivatives (3)
|
(245
|
)
|
|
—
|
|
|
(245
|
)
|
|
—
|
|
||||
Total
|
$
|
1,481,461
|
|
|
$
|
398,056
|
|
|
$
|
1,083,405
|
|
|
$
|
—
|
|
(1)
|
Included in Cash, cash equivalents and restricted cash, Investments in debt securities, short-term or Investments in debt securities, long-term in the Company’s Consolidated Balance Sheet at February 28, 2019, in addition to $943.3 million of cash.
|
(2)
|
Included in Other current assets in the Company’s Consolidated Balance Sheet at February 28, 2019.
|
(3)
|
Included in Accounts payable and accrued expenses in the Company’s Consolidated Balance Sheet at February 28, 2019.
|
|
|
|
|
|
|
|
|
|
Balance Sheet Classification
|
||||||||||||||||||
|
Amortized
Cost |
|
Gross Unrealized
|
|
Aggregate
Fair Value |
|
Cash Equivalent Marketable Securities
|
|
Investments in debt securities, short-term
|
|
Investments in debt securities, long-term
|
||||||||||||||||
|
|
Gains
|
|
Losses (1)
|
|
|
|
|
|||||||||||||||||||
Money markets
|
$
|
901,570
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
901,570
|
|
|
$
|
901,570
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial paper
|
255,780
|
|
|
—
|
|
|
—
|
|
|
255,780
|
|
|
255,780
|
|
|
—
|
|
|
—
|
|
|||||||
U.S. agency securities
|
203,746
|
|
|
13
|
|
|
(624
|
)
|
|
203,135
|
|
|
—
|
|
|
68,682
|
|
|
134,453
|
|
|||||||
Corporate securities
|
162,629
|
|
|
284
|
|
|
(251
|
)
|
|
162,662
|
|
|
—
|
|
|
108,943
|
|
|
53,719
|
|
|||||||
Total
|
$
|
1,523,725
|
|
|
$
|
297
|
|
|
$
|
(875
|
)
|
|
$
|
1,523,147
|
|
|
$
|
1,157,350
|
|
|
$
|
177,625
|
|
|
$
|
188,172
|
|
(1)
|
As of May 31, 2019, there were $0.9 million of accumulated unrealized losses related to investments that have been in a continuous unrealized loss position for 12 months or longer. The aggregate related fair value of investments with unrealized losses was $268.0 million.
|
|
As of May 31, 2019
|
|
Less than 1 Year
|
|
1-5 Years
|
|
More than 5 Years
|
||||||||
Maturity of available-for-sale debt securities
|
$
|
365,797
|
|
|
$
|
177,625
|
|
|
$
|
188,172
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Classification
|
||||||||||||||||||
|
Amortized
Cost |
|
Gross Unrealized
|
|
Aggregate
Fair Value |
|
Cash Equivalent Marketable Securities
|
|
Investments in debt securities, short-term
|
|
Investments in debt securities, long-term
|
||||||||||||||||
|
|
Gains
|
|
Losses (1)
|
|
|
|
|
|||||||||||||||||||
Money markets
|
$
|
398,056
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
398,056
|
|
|
$
|
398,056
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest-bearing deposits
|
56,883
|
|
|
—
|
|
|
—
|
|
|
56,883
|
|
|
—
|
|
|
56,883
|
|
|
—
|
|
|||||||
Commercial paper
|
541,753
|
|
|
—
|
|
|
—
|
|
|
541,753
|
|
|
541,753
|
|
|
—
|
|
|
—
|
|
|||||||
U.S. agency securities
|
224,293
|
|
|
—
|
|
|
(1,995
|
)
|
|
222,298
|
|
|
—
|
|
|
75,037
|
|
|
147,261
|
|
|||||||
Corporate securities
|
263,059
|
|
|
299
|
|
|
(666
|
)
|
|
262,692
|
|
|
—
|
|
|
161,441
|
|
|
101,251
|
|
|||||||
Total
|
$
|
1,484,044
|
|
|
$
|
299
|
|
|
$
|
(2,661
|
)
|
|
$
|
1,481,682
|
|
|
$
|
939,809
|
|
|
$
|
293,361
|
|
|
$
|
248,512
|
|
(1)
|
As of February 28, 2019, there were $2.6 million of accumulated unrealized losses related to investments that have been in a continuous unrealized loss position for 12 months or longer. The aggregate related fair value of investments with unrealized losses was $387.8 million.
|
|
Americas
|
|
EMEA
|
|
Asia Pacific
|
|
Corporate (1)
|
|
Consolidated
|
||||||||||
|
Three Months Ended May 31, 2019
|
||||||||||||||||||
Revenue from unaffiliated customers
|
$
|
582,290
|
|
|
$
|
216,951
|
|
|
$
|
134,870
|
|
|
$
|
—
|
|
|
$
|
934,111
|
|
Income (loss) from operations
|
$
|
83,555
|
|
|
$
|
54,909
|
|
|
$
|
43,822
|
|
|
$
|
(50,168
|
)
|
|
$
|
132,118
|
|
Total cash, cash equivalents, restricted cash and available-for-sale investment securities
|
$
|
1,429,795
|
|
|
$
|
730,228
|
|
|
$
|
501,170
|
|
|
$
|
—
|
|
|
$
|
2,661,193
|
|
Total assets
|
$
|
3,567,096
|
|
|
$
|
1,258,782
|
|
|
$
|
748,061
|
|
|
$
|
—
|
|
|
$
|
5,573,939
|
|
|
Three Months Ended May 31, 2018
|
||||||||||||||||||
Revenue from unaffiliated customers
|
$
|
500,306
|
|
|
$
|
195,148
|
|
|
$
|
118,076
|
|
|
$
|
—
|
|
|
$
|
813,530
|
|
Income (loss) from operations
|
$
|
71,864
|
|
|
$
|
48,860
|
|
|
$
|
37,437
|
|
|
$
|
(46,005
|
)
|
|
$
|
112,156
|
|
Total cash, cash equivalents, restricted cash and available-for-sale investment securities
|
$
|
1,524,311
|
|
|
$
|
576,171
|
|
|
$
|
426,647
|
|
|
$
|
—
|
|
|
$
|
2,527,129
|
|
Total assets
|
$
|
3,559,900
|
|
|
$
|
1,015,187
|
|
|
$
|
616,474
|
|
|
$
|
—
|
|
|
$
|
5,191,561
|
|
(1)
|
Amounts represent share-based compensation expense that was not allocated to geographic segments.
|
|
Three Months Ended
|
||||||
|
May 31, 2019
|
|
May 31, 2018
|
||||
U.S., the Company’s country of domicile
|
$
|
511,716
|
|
|
$
|
442,421
|
|
Foreign
|
422,395
|
|
|
371,109
|
|
||
Total revenue from unaffiliated customers
|
$
|
934,111
|
|
|
$
|
813,530
|
|
|
May 31, 2019
|
|
February 28, 2019
|
||||
U.S., the Company’s country of domicile
|
$
|
131,071
|
|
|
$
|
129,387
|
|
Foreign
|
68,944
|
|
|
69,582
|
|
||
Total tangible long-lived assets
|
$
|
200,015
|
|
|
$
|
198,969
|
|
|
Three Months Ended
|
||||||
|
May 31, 2019
|
|
May 31, 2018
|
||||
Subscription revenue:
|
|
|
|
||||
Infrastructure-related offerings
|
$
|
580,306
|
|
|
$
|
522,402
|
|
Application Development-related and other emerging technology offerings
|
234,646
|
|
|
189,119
|
|
||
Total subscription revenue
|
814,952
|
|
|
711,521
|
|
||
Training and services revenue:
|
|
|
|
||||
Consulting services
|
93,423
|
|
|
79,147
|
|
||
Training
|
25,736
|
|
|
22,862
|
|
||
Total training and services revenue
|
119,159
|
|
|
102,009
|
|
||
Total revenue
|
$
|
934,111
|
|
|
$
|
813,530
|
|
Balance at February 28, 2019
|
$
|
1,276,853
|
|
Impact of foreign currency fluctuations
|
(3,359
|
)
|
|
Balance at May 31, 2019
|
$
|
1,273,494
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended
|
||||||||
|
May 31, 2019
|
|
May 31, 2018
|
|
Year-Over-Year Growth Rate
|
||||
Infrastructure-related subscription revenue, as reported
|
$
|
580,306
|
|
|
$
|
522,402
|
|
|
11.1%
|
Adjustment for foreign currency exchange rates
|
15,207
|
|
|
—
|
|
|
|
||
Infrastructure-related subscription revenue, excluding foreign currency impact
|
595,513
|
|
|
522,402
|
|
|
14.0%
|
||
|
|
|
|
|
|
||||
Application Development-related and other emerging technology subscription revenue, as reported
|
234,646
|
|
|
189,119
|
|
|
24.1%
|
||
Adjustment for foreign currency exchange rates
|
8,903
|
|
|
—
|
|
|
|
||
Application Development-related and other emerging technology subscription revenue, excluding foreign currency impact
|
243,549
|
|
|
189,119
|
|
|
28.8%
|
||
|
|
|
|
|
|
||||
Total subscription revenue, as reported
|
814,952
|
|
|
711,521
|
|
|
14.5%
|
||
Adjustment for foreign currency exchange rates
|
24,110
|
|
|
—
|
|
|
|
||
Total subscription revenue, excluding foreign currency impact
|
839,062
|
|
|
711,521
|
|
|
17.9%
|
||
|
|
|
|
|
|
||||
Total training and services revenue, as reported
|
119,159
|
|
|
102,009
|
|
|
16.8%
|
||
Adjustment for foreign currency exchange rates
|
5,240
|
|
|
—
|
|
|
|
||
Total training and services revenue, excluding foreign currency impact
|
124,399
|
|
|
102,009
|
|
|
21.9%
|
||
|
|
|
|
|
|
||||
Total revenue, as reported
|
934,111
|
|
|
813,530
|
|
|
14.8%
|
||
Adjustment for foreign currency exchange rates
|
29,350
|
|
|
—
|
|
|
|
||
Total revenue, excluding foreign currency impact
|
$
|
963,461
|
|
|
$
|
813,530
|
|
|
18.4%
|
|
May 31, 2019
|
|
February 28, 2019
|
|
Year-to-Date Growth Rate
|
||||
Current deferred revenue, as reported
|
$
|
2,016,488
|
|
|
$
|
2,161,206
|
|
|
(6.7)%
|
Adjustment for foreign currency exchange rates
|
17,628
|
|
|
—
|
|
|
|
||
Current deferred revenue, excluding foreign currency impact
|
$
|
2,034,116
|
|
|
$
|
2,161,206
|
|
|
(5.9)%
|
|
|
|
|
|
|
||||
Long-term deferred revenue, as reported
|
$
|
781,043
|
|
|
$
|
821,218
|
|
|
(4.9)%
|
Adjustment for foreign currency exchange rates
|
8,536
|
|
|
—
|
|
|
|
||
Long-term deferred revenue, excluding foreign currency impact
|
$
|
789,579
|
|
|
$
|
821,218
|
|
|
(3.9)%
|
|
|
|
|
|
|
||||
Total deferred revenue, as reported
|
$
|
2,797,531
|
|
|
$
|
2,982,424
|
|
|
(6.2)%
|
Adjustment for foreign currency exchange rates
|
26,164
|
|
|
—
|
|
|
|
||
Total deferred revenue, excluding foreign currency impact
|
$
|
2,823,695
|
|
|
$
|
2,982,424
|
|
|
(5.3)%
|
|
May 31, 2019
|
|
May 31, 2018
|
|
Year-Over-Year Growth Rate
|
||||
Current deferred revenue, as reported
|
$
|
2,016,488
|
|
|
$
|
1,721,300
|
|
|
17.1%
|
Adjustment for foreign currency exchange rates
|
37,314
|
|
|
—
|
|
|
|
||
Current deferred revenue, excluding foreign currency impact
|
$
|
2,053,802
|
|
|
$
|
1,721,300
|
|
|
19.3%
|
|
|
|
|
|
|
||||
Long-term deferred revenue, as reported
|
$
|
781,043
|
|
|
$
|
723,207
|
|
|
8.0%
|
Adjustment for foreign currency exchange rates
|
19,307
|
|
|
—
|
|
|
|
||
Long-term deferred revenue, excluding foreign currency impact
|
$
|
800,350
|
|
|
$
|
723,207
|
|
|
10.7%
|
|
|
|
|
|
|
||||
Total deferred revenue, as reported
|
$
|
2,797,531
|
|
|
$
|
2,444,507
|
|
|
14.4%
|
Adjustment for foreign currency exchange rates
|
56,621
|
|
|
—
|
|
|
|
||
Total deferred revenue, excluding foreign currency impact
|
$
|
2,854,152
|
|
|
$
|
2,444,507
|
|
|
16.8%
|
|
Three Months Ended
|
||||||||
|
May 31, 2019
|
|
May 31, 2018
|
|
Year-Over-Year Growth Rate
|
||||
Revenue, as reported
|
$
|
934,111
|
|
|
$
|
813,530
|
|
|
14.8%
|
Change in deferred revenue, as reported on Statements of Cash Flows
|
(158,729
|
)
|
|
(104,592
|
)
|
|
|
||
Billings proxy
|
775,382
|
|
|
708,938
|
|
|
9.4%
|
||
Adjustment to revenue for foreign currency exchange rates
|
29,350
|
|
|
—
|
|
|
|
||
Billings proxy, excluding foreign currency impact
|
$
|
804,732
|
|
|
$
|
708,938
|
|
|
13.5%
|
|
Four-Fiscal-Quarter Period Ended
|
||||||||
|
May 31, 2019
|
|
May 31, 2018
|
|
Year-Over-Year Growth Rate
|
||||
Four-fiscal-quarter period rolling average billings proxy
|
$
|
973,074
|
|
|
$
|
857,626
|
|
|
13.5%
|
Adjustment to revenue for foreign currency exchange rates
|
18,167
|
|
|
—
|
|
|
|
||
Four-fiscal-quarter period rolling average billings proxy, excluding foreign currency impact
|
$
|
991,241
|
|
|
$
|
857,626
|
|
|
15.6%
|
|
|
Americas
|
|
EMEA
|
|
Asia Pacific
|
|
Consolidated
|
||||||||||||||||
Three Months Ended
|
|
Revenue
|
|
YoY Growth %
|
|
Revenue
|
|
YoY Growth %
|
|
Revenue
|
|
YoY Growth %
|
|
Revenue
|
|
YoY Growth %
|
||||||||
May 31, 2019, as reported
|
|
$
|
582,290
|
|
|
16.4%
|
|
$
|
216,951
|
|
|
11.2%
|
|
$
|
134,870
|
|
|
14.2%
|
|
$
|
934,111
|
|
|
14.8%
|
Adjustment for foreign currency exchange rates
|
|
5,786
|
|
|
|
|
17,523
|
|
|
|
|
6,041
|
|
|
|
|
29,350
|
|
|
|
||||
May 31, 2019, excluding foreign currency impact
|
|
$
|
588,076
|
|
|
17.5%
|
|
$
|
234,474
|
|
|
20.2%
|
|
$
|
140,911
|
|
|
19.3%
|
|
$
|
963,461
|
|
|
18.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
May 31, 2018, as reported
|
|
$
|
500,306
|
|
|
14.1%
|
|
$
|
195,148
|
|
|
35.8%
|
|
$
|
118,076
|
|
|
24.6%
|
|
$
|
813,530
|
|
|
20.2%
|
|
Americas
|
|
EMEA
|
|
Asia Pacific
|
|
Consolidated (1)
|
Three Months Ended May 31, 2019
|
85.1%
|
|
86.5%
|
|
82.9%
|
|
84.6%
|
Three Months Ended May 31, 2018
|
85.3%
|
|
87.9%
|
|
83.0%
|
|
84.9%
|
(1)
|
Consolidated gross profit includes corporate (non-allocated) share-based compensation expense for the three months ended May 31, 2019 and May 31, 2018 of $4.9 million and $5.1 million, respectively. Share-based compensation expense was not allocated to geographic segments. For additional information, see NOTE 15—Share-based Awards to our Consolidated Financial Statements.
|
|
Americas
|
|
EMEA
|
|
Asia Pacific
|
|
Consolidated (1)
|
Three Months Ended May 31, 2019
|
14.3%
|
|
25.3%
|
|
32.5%
|
|
14.1%
|
Three Months Ended May 31, 2018
|
14.4%
|
|
25.0%
|
|
31.7%
|
|
13.8%
|
(1)
|
Consolidated operating income includes corporate (non-allocated) share-based compensation expense for the three months ended May 31, 2019 and May 31, 2018 of $50.2 million and $46.0 million, respectively. Share-based compensation expense was not allocated to geographic segments. For additional information, see NOTE 15—Share-based Awards to our Consolidated Financial Statements.
|
•
|
Revenue recognition;
|
•
|
Goodwill and other long-lived assets;
|
•
|
Share-based compensation;
|
•
|
Income taxes; and
|
•
|
Loss contingencies.
|
|
Three Months Ended
(Unaudited)
|
|
|
|
|
|||||||||
|
May 31,
2019 |
|
May 31,
2018 |
|
$
Change
|
|
%
Change
|
|||||||
Revenue:
|
|
|
|
|
|
|
|
|||||||
Subscriptions
|
$
|
814,952
|
|
|
$
|
711,521
|
|
|
$
|
103,431
|
|
|
14.5
|
%
|
Training and services
|
119,159
|
|
|
102,009
|
|
|
17,150
|
|
|
16.8
|
|
|||
Total revenue
|
934,111
|
|
|
813,530
|
|
|
120,581
|
|
|
14.8
|
|
|||
Cost of revenue:
|
|
|
|
|
|
|
|
|||||||
Subscriptions
|
61,899
|
|
|
52,173
|
|
|
9,726
|
|
|
18.6
|
|
|||
As a % of subscription revenue
|
7.6
|
%
|
|
7.3
|
%
|
|
|
|
|
|||||
Training and services
|
82,384
|
|
|
70,526
|
|
|
11,858
|
|
|
16.8
|
|
|||
As a % of training and services revenue
|
69.1
|
%
|
|
69.1
|
%
|
|
|
|
|
|||||
Total cost of revenue
|
144,283
|
|
|
122,699
|
|
|
21,584
|
|
|
17.6
|
|
|||
As a % of total revenue
|
15.4
|
%
|
|
15.1
|
%
|
|
|
|
|
|||||
Gross profit
|
789,828
|
|
|
690,831
|
|
|
98,997
|
|
|
14.3
|
|
|||
Operating expense:
|
|
|
|
|
|
|
|
|||||||
Sales and marketing
|
394,201
|
|
|
348,815
|
|
|
45,386
|
|
|
13.0
|
|
|||
Research and development
|
182,961
|
|
|
166,506
|
|
|
16,455
|
|
|
9.9
|
|
|||
General and administrative
|
80,548
|
|
|
63,354
|
|
|
17,194
|
|
|
27.1
|
|
|||
Total operating expense
|
657,710
|
|
|
578,675
|
|
|
79,035
|
|
|
13.7
|
|
|||
Income from operations
|
132,118
|
|
|
112,156
|
|
|
19,962
|
|
|
17.8
|
|
|||
Interest income
|
9,254
|
|
|
7,834
|
|
|
1,420
|
|
|
18.1
|
|
|||
Interest expense
|
1,959
|
|
|
6,319
|
|
|
(4,360
|
)
|
|
(69.0
|
)
|
|||
Other expense, net
|
766
|
|
|
2,194
|
|
|
(1,428
|
)
|
|
(65.1
|
)
|
|||
Income before provision for income taxes
|
138,647
|
|
|
111,477
|
|
|
27,170
|
|
|
24.4
|
|
|||
Benefit for income taxes
|
(2,473
|
)
|
|
(1,713
|
)
|
|
(760
|
)
|
|
44.4
|
|
|||
Net income
|
$
|
141,120
|
|
|
$
|
113,190
|
|
|
$
|
27,930
|
|
|
24.7
|
%
|
Gross profit margin—subscriptions
|
92.4
|
%
|
|
92.7
|
%
|
|
|
|
|
|||||
Gross profit margin—training and services
|
30.9
|
%
|
|
30.9
|
%
|
|
|
|
|
|||||
Gross profit margin
|
84.6
|
%
|
|
84.9
|
%
|
|
|
|
|
|||||
As a % of total revenue:
|
|
|
|
|
|
|
|
|||||||
Subscription revenue
|
87.2
|
%
|
|
87.5
|
%
|
|
|
|
|
|||||
Training and services revenue
|
12.8
|
%
|
|
12.5
|
%
|
|
|
|
|
|||||
Sales and marketing expense
|
42.2
|
%
|
|
42.9
|
%
|
|
|
|
|
|||||
Research and development expense
|
19.6
|
%
|
|
20.5
|
%
|
|
|
|
|
|||||
General and administrative expense
|
8.6
|
%
|
|
7.8
|
%
|
|
|
|
|
|||||
Total operating expenses
|
70.4
|
%
|
|
71.1
|
%
|
|
|
|
|
|||||
Income from operations
|
14.1
|
%
|
|
13.8
|
%
|
|
|
|
|
|||||
Income before provision for income taxes
|
14.8
|
%
|
|
13.7
|
%
|
|
|
|
|
|||||
Net income
|
15.1
|
%
|
|
13.9
|
%
|
|
|
|
|
|||||
Effective income tax rate (1)
|
(1.8
|
)%
|
|
(1.5
|
)%
|
|
|
|
|
(1)
|
See NOTE 8—Income Taxes to our Consolidated Financial Statements for further discussion.
|
•
|
funding the continued development of our technology offerings;
|
•
|
improving and extending our services and the technologies used to market and deliver these services to our customers and support our business;
|
•
|
pursuing strategic acquisitions and alliances;
|
•
|
investing in or acquiring businesses, products and technologies; and
|
•
|
investing in enhancements to the systems we use to run our business and the expansion of our office facilities.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
integrating the acquired business’ accounting, financial reporting, management, information and information security, human resource and other administrative systems to permit effective management and reporting, and the lack of control if such integration is delayed or not implemented;
|
•
|
incorporating and further developing acquired products or technology into our offerings and maintaining quality standards consistent with our brands;
|
•
|
effectively evaluating talent at an acquired business or identifying cultural challenges associated with integrating employees from the acquired business into our organization;
|
•
|
losing key employees of the acquired business;
|
•
|
achieving the expected benefits of the transaction, which may include generating greater market acceptance of our offerings and technologies, increasing our revenue or integrating the assets acquired into one or more of our current offerings;
|
•
|
increasing or adding operating expenses related to the acquired business or technology;
|
•
|
identifying acquisition targets that complement our strategic direction and technology road map;
|
•
|
gathering full information regarding a business or technology prior to a transaction, including the identification and assessment of liabilities, claims or other circumstances that could result in litigation or regulatory exposure, unfavorable accounting treatment, unexpected tax implications and other adverse effects on our business;
|
•
|
maintaining or establishing acceptable standards, controls, procedures and policies;
|
•
|
disrupting our ongoing business and distracting management;
|
•
|
impairing relationships with our employees, partners or customers as a result of any integration of new management and other personnel, products or technology or as a result of the changes in the competitive landscape affected by the transaction;
|
•
|
maintaining good relationships with customers or business partners of the acquired business;
|
•
|
incurring expenses related to the transaction;
|
•
|
assuming claims and liabilities from the acquired business or technology, or that are otherwise related to the transaction;
|
•
|
entering into new markets in which we have little or no experience or in which competitors may have stronger market positions;
|
•
|
impairing of intangible assets and goodwill acquired in transactions; and
|
•
|
for foreign transactions, managing additional risks related to the integration of operations across different cultures and languages, and the economic, political, compliance and regulatory risks associated with specific countries.
|
•
|
fluctuations in exchange rates;
|
•
|
pricing environments;
|
•
|
longer payment cycles and less financial stability of customers;
|
•
|
economic, political, compliance and regulatory risks associated with specific countries;
|
•
|
laws and policies of the U.S. and other jurisdictions affecting trade, foreign investment, loans, immigration and taxes, including any adverse effects that may result from the United Kingdom’s vote to exit the European Union;
|
•
|
difficulty selecting and monitoring channel partners;
|
•
|
differing technology standards and customer requirements;
|
•
|
lower levels of availability or use of the Internet, through which our software is often delivered;
|
•
|
difficulty protecting our intellectual property rights globally due to, among other reasons, the uncertainty of laws and enforcement in certain countries relating to the protection of intellectual property rights;
|
•
|
difficulty in staffing, developing and managing foreign operations as a result of distance and language, legal, cultural and other differences;
|
•
|
different employee/employer relationships and the existence of works councils and labor unions;
|
•
|
difficulty maintaining quality standards consistent with our brands;
|
•
|
export and import laws and regulations that could prevent us from delivering our offerings into and from certain countries;
|
•
|
public health risks and natural disasters, particularly in areas in which we have significant operations;
|
•
|
limitations on the repatriation and investment of funds and foreign currency exchange restrictions; and
|
•
|
changes in import/export duties, quotas or other trade barriers that could affect the competitive pricing of our offerings and reduce our market share in some countries.
|
•
|
competitive products and pricing;
|
•
|
failure to release new or enhanced versions of Red Hat Enterprise Linux on a timely basis, or at all;
|
•
|
maturity of the market for Red Hat Enterprise Linux;
|
•
|
technological change that we are unable to address with Red Hat Enterprise Linux; or
|
•
|
future economic conditions.
|
•
|
our Board of Directors has the right to elect directors to fill a vacancy created by the expansion of the Board of Directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board of Directors;
|
•
|
stockholders must provide advance notice to nominate individuals for election to the Board of Directors or to propose matters that can be acted upon at a stockholders’ meeting; such provisions may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; and
|
•
|
our Board of Directors may issue, without stockholder approval, shares of undesignated preferred stock; the ability to issue undesignated preferred stock makes it possible for our Board of Directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
Total Number
of Shares
Purchased (1)(2)
|
|
Weighted
Average
Price Paid
per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (3)
|
|
Approximate Dollar
Value of Shares that
May Yet Be Purchased Under the Plans or
Programs
|
||||||
March 1, 2019—March 31, 2019
|
200,717
|
|
|
$
|
73.41
|
|
|
—
|
|
|
$
|
737.2
|
million
|
April 1, 2019—April 30, 2019
|
683,305
|
|
|
$
|
144.36
|
|
|
—
|
|
|
$
|
737.2
|
million
|
May 1, 2019—May 31, 2019
|
515,231
|
|
|
$
|
73.41
|
|
|
—
|
|
|
$
|
737.2
|
million
|
Total
|
1,399,253
|
|
|
|
|
—
|
|
|
|
(1)
|
During the three months ended May 31, 2019, the Company withheld an aggregate of 444,522 shares of its common stock (with a weighted average share price of $182.48) from employees to satisfy minimum tax withholding obligations relating to the vesting of restricted share awards. These shares were not withheld pursuant to the programs described in Note (3) below.
|
(2)
|
In connection with the convertible note conversions settled during the three months ended May 31, 2019, the Company exercised a portion of the options that are part of the convertible note hedge transactions and acquired 954,731 shares of its common stock. The counterparties to the convertible note hedge transactions may be deemed to be an “affiliate purchaser” and may have purchased the shares of the Company’s common stock deliverable to the Company upon the exercise of the options.
|
(3)
|
On June 21, 2018, the Company announced that its Board authorized the repurchase of up to $1.0 billion of Red Hat’s common stock from time to time on the open market or in privately negotiated transactions. The program, which replaced a previous repurchase program, commenced on July 1, 2018, and will expire on the earlier of (i) June 30, 2020 or (ii) a determination by the Board, Chief Executive Officer or Chief Financial Officer to discontinue the program. Pursuant to the Merger Agreement, we do not anticipate additional repurchases of the Company’s common stock prior to the consummation of the Merger with IBM.
|
ITEM 6.
|
EXHIBITS
|
|
|
|
|
Incorporated by Reference
|
|||
Exhibit No.
|
|
Exhibit Description
|
Provided Herewith
|
Form
|
File No.
|
Exhibit
|
Filing Date
|
|
|
|
|
|
|
|
|
10.1*
|
|
|
8-K
|
001-33162
|
99.1
|
5-21-19
|
|
|
|
|
|
|
|
|
|
10.2*
|
|
|
8-K
|
001-33162
|
99.2
|
5-21-19
|
|
|
|
|
|
|
|
|
|
10.3*
|
|
|
8-K
|
001-33162
|
99.3
|
5-21-19
|
|
10.4*
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
X
|
|
|
|
|
*
|
Indicates a management contract or compensatory plan, contract or arrangement.
|
|
|
|
|
|
|
|
|
|
|
RED HAT, INC.
|
|
|
|
|
|
|
Date:
|
June 28, 2019
|
|
By:
|
/S/ JAMES M. WHITEHURST
|
|
|
|
|
James M. Whitehurst
President and Chief Executive Officer
(Duly Authorized Officer on Behalf of the Registrant)
|
|
|
|
|
|
|
|
|
RED HAT, INC.
|
|
|
|
|
|
|
Date:
|
June 28, 2019
|
|
By:
|
/S/ ERIC R. SHANDER
|
|
|
|
|
Eric R. Shander
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
|
1.
|
Retention Payment
|
(a)
|
As an incentive to remain employed by Red Hat or an Affiliate, you are entitled to receive the Retention Payment, which shall vest in two (2) installments. The first installment of seventy-five percent (75%) of the total Retention Payment shall vest on the Closing Date and the second installment of the remaining twenty-five percent (25%) of the total Retention Payment shall begin to vest on the Closing Date and shall vest on the six-month anniversary of the Closing Date (each installment individually, a “Retention Payment Installment”). Red Hat will pay you the applicable Retention Payment Installment on the first administratively feasible payroll date following each applicable vesting date. Subject to 1(b) below, in order to receive a Retention Payment Installment, you must remain continuously employed by Red Hat or an Affiliate through the applicable vesting date.
|
(a)
|
As an incentive to remain employed by Red Hat or an Affiliate, you are entitled to receive the Retention Payment, which shall begin to vest on the Closing Date and shall vest in two (2) installments. The first installment of fifty percent (50%) of the total Retention Payment shall vest on the six-month anniversary of the Closing Date and the second installment of the remaining fifty percent (50%) of the total Retention Payment shall vest on the one-year anniversary of the Closing Date (each installment individually, a “Retention Payment Installment”). Red Hat will pay you the applicable Retention Payment Installment on the first administratively feasible payroll date following each applicable vesting date. Subject to 1(b) below, in order to receive a Retention Payment Installment, you must remain continuously employed by Red Hat or an Affiliate through the applicable vesting date.]
|
(b)
|
Involuntary Termination Without Cause. If, after the Closing Date and prior to payment in full of the Retention Payment, your employment with Red Hat or an Affiliate is involuntarily terminated by Red Hat or an Affiliate without Cause (as defined below), Red Hat will pay you the unpaid portion of the Retention Payment on the first administratively feasible payroll date following the date of employment termination.
|
(c)
|
Cause. For purposes of this agreement only, “Cause” means conduct involving one or more of the following:
|
|
(i) your conviction of, or plea of guilty or nolo contendere to, a felony;
|
|
(ii) your willful misconduct resulting in material harm to Red Hat;
|
|
(iii) fraud, embezzlement, theft or dishonesty by you against Red Hat or any Affiliate resulting in material harm to Red Hat;
|
|
(iv) your repeated and continuing failure to follow the proper and lawful directions of Red Hat or the officer to whom you report after a written demand is delivered to you that specifically identifies the manner in which Red Hat or the officer to whom you report believes that you have failed to follow such instructions;
|
|
(v) your current alcohol or prescription drug abuse affecting work performance, or current illegal use of drugs regardless of the effect on work performance;
|
|
(vi) a material violation of Red Hat’s Code of Conduct by you that causes harm to Red Hat; or
|
|
(vii) your material breach of any term of this Letter Agreement or any other confidentiality and/or non-competition agreements.
|
2.
|
Withholding; Other Tax Matters. The Retention Payment(s) payable hereunder are subject to income tax and other required tax withholding. Amounts payable under this Letter Agreement are intended to be treated as a separate “payment” for purposes of Section 409A of the Internal Revenue Code and the guidance issued thereunder (“Section 409A”). Red Hat makes no representation that such payment(s) will be exempt from or comply with Section 409A and makes no undertaking to preclude Section 409A from applying to any such payment(s). Amounts payable hereunder are intended to be exempt from Section 409A but to the extent subject thereto are intended to comply with Section 409A and accordingly, to the maximum extent permitted, shall be interpreted and administered to be in compliance therewith. To the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, amounts that would otherwise be payable during the six-month period immediately following your separation from service shall instead be paid on the first business day after the date that is six months following such separation from service (or upon your death, if earlier).
|
3.
|
Confidentiality. Unless required by law, you agree to keep the existence and terms of this Letter Agreement, including the amount of the Retention Payment(s), the timing of the Retention Payment(s), and the vesting date(s) confidential. You further agree that you will not disclose the existence or terms of this Letter Agreement to any third party other than your spouse, significant other, or tax planning professional and only then with the instruction that the excepted individual meet the confidentiality and disclosure requirements described in this Paragraph. Nothing in this Letter Agreement or elsewhere prohibits you from communicating with government agencies about possible violations of federal, state, or local laws or otherwise providing information to government agencies, filing a complaint with government agencies, or participating in government agency investigations or proceedings. You are not required to notify Red Hat or an Affiliate of any such communications; provided, however, that nothing herein authorizes you to disclose information you obtained through a communication that was subject to the attorney-client privilege.
|
4.
|
No Right to Employment or Other Status; Non-Alienation. Nothing in this Letter Agreement shall be construed as giving you the right to continued employment or any other relationship with Red Hat or an Affiliate. The Retention Payment(s) will not be funded, set aside, or otherwise segregated prior to payment and shall only be earned by you upon a good faith determination by Red Hat or an Affiliate that all eligibility requirements have been successfully met. The obligation to pay the Retention Payment shall at all times be an unfunded and unsecured obligation of Red Hat.
|
5.
|
Entire Agreement; Amendment. This Letter Agreement constitutes the entire agreement between the Parties regarding any retention payment associated with your ongoing employment with Red Hat or an Affiliate, and supersedes all proposals, written or oral, and all other communications between the Parties relating to the Retention Payment(s). Nothing in this Letter Agreement alters the at-will nature of your employment.
|
6.
|
Governing Law. This agreement shall be governed by and construed in accordance with the laws of the State of North Carolina (without reference to the conflicts of laws provisions thereof).
|
7.
|
Definitions.
|
(a)
|
“Affiliate” means any person or entity that directly, or through one or more intermediaries, controls, or is controlled by, or is under common control with, Red Hat.
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(b)
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“Closing Date” refers to the date of the closing of the merger transaction agreed to by and among Red Hat, International Business Machines Corporation and Socrates Acquisition Corp. pursuant to the Agreement and Plan of Merger dated October 28, 2018 (the “Merger Transaction”). All payments hereunder are subject to the occurrence of the Closing Date.
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8.
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Miscellaneous.
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(a)
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The Retention Payment is in addition to and not in lieu of any salary, bonus, benefits, or severance to which you may otherwise be entitled. You may not assign your rights under this Letter Agreement. This Agreement may be executed in two or more counterparts, and by the different parties in separate counterparts, each of which
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(b)
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Retention payments to be paid in currencies other than U.S. dollars will be converted using the applicable foreign exchange rate on the Closing Date as determined by Red Hat.
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(c)
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Nothing in this Letter Agreement limits, or is intended to limit, any right to concerted activity you have under the National Labor Relations Act.
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9.
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Headings. The headings of the sections of this agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this agreement.
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EMPLOYEE
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Red Hat, Inc.
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Signature: ______________________
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By:____________________________
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Date:______________________
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Date:__________________________
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By:
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/S/ JAMES M. WHITEHURST
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James M. Whitehurst
President and Chief Executive Officer
(Principal Executive Officer)
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By:
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/S/ ERIC R. SHANDER
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Eric R. Shander
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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By:
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/S/ JAMES M. WHITEHURST
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James M. Whitehurst
President and Chief Executive Officer
(Principal Executive Officer)
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By:
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/S/ ERIC R. SHANDER
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Eric R. Shander
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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