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JDA Software Announces Third Quarter 2012 Results

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SCOTTSDALE, Ariz.--(BUSINESS WIRE)--

JDA® Software Group, Inc. (NASDAQ: JDAS), The Supply Chain Company®, today announced financial results for the third quarter ended Sept. 30, 2012. In a separate announcement made today, JDA reported that it has entered into a definitive merger agreement with entities affiliated with RedPrairie under which JDA shareholders will receive $45.00 per share in an all-cash transaction.

JDA reported third quarter revenue of $164.5 million, compared to $173.1 million of revenue reported in third quarter 2011. Adjusted EBITDA was $44.5 million in third quarter 2012 compared to $52.9 million in the third quarter of 2011, generating an adjusted EBITDA margin of 27 percent in the current quarter compared to 31 percent in the third quarter of 2011.

JDA also reported adjusted non-GAAP earnings per share for third quarter 2012 of $0.53, compared to $0.67 per share reported in the third quarter 2011. Adjusted non-GAAP earnings exclude amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation and costs related to the revenue recognition investigation and restatement in 2012. GAAP net income attributable to common shareholders for third quarter 2012 was $11.1 million or $0.26 per diluted share, compared to $18.3 million or $0.43 per share in the third quarter 2011.

Conference Call Information

In view of the separate announcement made today that JDA has entered into a definitive merger agreement with entities affiliated with RedPrairie, under which JDA shareholders will receive $45.00 per share in an all-cash transaction, JDA has cancelled its third quarter 2012 earnings conference call scheduled for 4:45 EDT on Nov 5, 2012. During the pendency of the transaction, the Company will report quarterly results consistent with its current schedule, but will not host quarterly conference calls.

Software and Subscription

Software and subscription revenue was $31.5 million in the third quarter 2012 compared to $38.5 million in the third quarter 2011. In 2012, the Europe, Middle East and Africa (EMEA) region license sales in Europe and license sales to manufacturing customers in North America were negatively impacted by the overall macro-economic conditions. License sales in the Asia-Pacific region continued to show a recovery as sales in this region increased 88 percent over Q3 2011, to $3.2 million. The Company closed 37 software deals, including six deals in excess of $1 million in the current quarter, compared to 49 deals, including 10 over $1 million in the prior year period. Additionally, the average sales price for the trailing 12 months ended Sept. 30, 2012 was $724,000 compared to $843,000 for the trailing 12 months ended Sept. 30, 2011.

Maintenance and Support Services

Maintenance revenue increased 2 percent to $68.8 million in the third quarter 2012 from $67.6 million in the third quarter 2011. This increase was due to a continued strong retention rate of 95.3 percent, compared to 95.7 percent in the third quarter 2011, and the high level of attachment of maintenance contracts to new license deals. Maintenance gross margins remained solid at 79.5 percent in the third quarter 2012 compared to 79.8 percent in the third quarter 2011.

Consulting Services

Consulting services revenue was $64.3 million in the third quarter 2012 compared to $67.0 million in the third quarter 2011. Consulting revenue was negatively impacted due to a large year-over-year reduction in scope of work from a customer in the Asia-Pacific region. Consulting services gross margins declined to 20.8 percent in the third quarter 2012 compared to 24.6 percent in the third quarter 2011 due to a decrease in billable hours, partially offset by an increase in average billing rates. Sequentially, consulting gross margins decreased slightly from 21.6 percent in the second quarter 2012.

Other Financial Data

  • Product development expenses as a percent of revenue remained constant at 11 percent in the third quarter 2012 compared to the third quarter 2011, reflecting the ongoing commitment to enhancing the Company's technology and solutions. Sales and marketing expenses as a percent of revenue remained at 15 percent in the third quarter 2012 compared to the third quarter 2011. General and administrative expenses as a percent of revenue were 13 percent in the third quarter 2012 compared to 9 percent in the third quarter 2011. The increase in the third quarter 2012 amounts are primarily due to increased personnel and infrastructure systems costs, and also include $1.7 million of costs associated with the revenue recognition investigation and restatement completed in the quarter.
  • Cash flow provided by operations increased to $40.4 million in third quarter 2012 as compared to cash flow provided by operations of $36.9 million in third quarter 2011 driven primarily by strong collections in the current period.
  • Cash and cash equivalents, including restricted cash, sequentially increased by $45.3 million to $411.7 million at Sept. 30, 2012, from $366.4 million at June 30, 2012.

Third Quarter 2012 Regional License Deals

The following presents a high-level summary of JDA's regional software sales performance:

  • JDA reported $23.3 million in software license and subscription revenues in its Americas region during third quarter 2012, compared to $29.4 million in third quarter 2011. Companies signing new software licenses in third quarter 2012 include: Colombia Sportswear Company, Coppel S.A. de C.V., CVS Corporation, DIN S.A. (Abcdin), Federated Co-operative Ltd., IPSCO Tubulars, Inc., L.L. Bean, Inc., Ollie's Bargain Outlet, and Via Rail Canada.
  • Software license and subscription revenues in the EMEA region were $4.9 million in third quarter 2012 compared to $7.4 million in third quarter 2011. New software deals in the EMEA region include: Cape Union Mart International (PTY) Ltd., Massmart (PTY) Ltd., and Shoprite Checkers (PTY) Ltd.
  • JDA's Asia-Pacific region software license and subscription revenues increased 88 percent to $3.2 million in third quarter 2012 compared to $1.7 million in third quarter 2011. New software deals in the Asia-Pacific region include: Pernod Ricard China, and Shoppers Stop Ltd.

Nine Months Ended Sept. 30, 2012 Results

  • Revenue for the nine months ended Sept. 30, 2012 decreased two percent to $495.5 million from $506.1 million for the nine months ended Sept. 30, 2011. The overall revenue decrease was driven by a decrease in software and subscription revenue, partially offset by increases in maintenance and services revenue.
  • Adjusted EBITDA was $127.6 million, or 26 percent of revenue, for the nine months ended Sept. 30, 2012 compared to $137.1 million, or 27 percent of revenue, in the first nine months of 2011.
  • Adjusted non-GAAP earnings per share for the nine months ended Sept. 30, 2012 was $1.51 compared to $1.68 per share for the nine months ended Sept. 30, 2011. Adjusted non-GAAP earnings exclude amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation, costs related to the revenue recognition investigation and restatement in 2012 and a credit associated with the favorable settlement of the patent infringement case in 2011.
  • The GAAP net income applicable to common shareholders for the nine months ended Sept. 30, 2012 was $26.4 million or $0.61 per share, compared to net income of $79.1 million or $1.85 per share for the nine months ended Sept. 30, 2011. Results for the nine months ended Sept. 2012 include $12.5 million of costs related to the revenue recognition investigation and restatement in 2012. Results for the nine months ended Sept. 30, 2011 include a $37.5 million pre-tax credit associated with the favorable settlement of the patent infringement case.
  • Cash flow from operations was $118.2 million for the nine months ended Sept. 30, 2012 compared to cash flow from operations of $130.0 million for the nine months ended Sept. 30, 2011. The decrease in operating cash flow from the prior period was primarily due to $37.5 million received in 2011 from the favorable patent litigation settlement and 2012 improvements in working capital from favorable changes in payables and receivables.

About JDA Software Group

JDA® Software Group, Inc. (NASDAQ: JDAS), The Supply Chain Company®, is the leading provider of innovative supply chain management, merchandising and pricing excellence solutions worldwide. JDA empowers more than 6,000 companies of all sizes to make optimal decisions that improve profitability and achieve real results in the manufacturing, wholesale distribution, transportation, retail and services industries. With an integrated solutions offering that spans the entire supply chain from materials to the consumer, JDA leverages the powerful heritage and knowledge capital of acquired market leaders including i2 Technologies®, Manugistics®, E3®, Intactix® and Arthur®. JDA's robust services offering, including complete solution lifecycle management via JDA Cloud Services, provides customers with leading-edge industry practices and supply chain expertise, lower total cost of ownership, long-term business value, and 24/7 functional and technical support. To learn more, visit jda.com or email info@jda.com.

 
JDA SOFTWARE GROUP, INC.
Q3 2012 FINANCIAL RESULTS
CONSOLIDATED STATEMENT OF OPERATIONS
($ in thousands, except per share data, unaudited)
                           
    Three Months Ended September 30,    

 

2012  

% of
Revenues

    2011  

% of
Revenues

   

% Increase
(Decrease)

       
REVENUES:
Software licenses $ 27,544 17 % $ 34,726 20 % -21 %
Subscriptions and other recurring revenues 3,909 2 % 3,738 2 % 5 %
Maintenance services   68,784     42 %       67,632     39 % 2 %
Product revenues 100,237 61 % 106,096 61 % -6 %
 
Consulting services 59,090 36 % 60,970 35 % -3 %
Reimbursed expenses   5,193     3 %       6,033     3 % -14 %
Services revenue 64,283 39 % 67,003 39 % -4 %
               
Total Revenues 164,520 100 % 173,099 100 % -5 %
 
COST OF REVENUES:
Cost of software licenses 1,034 1 % 1,009 1 % 2 %
Amortization of acquired software technology 1,702 1 % 1,726 1 % -1 %
Cost of maintenance services   14,101     9 %       13,654     8 % 3 %
Cost of product revenues 16,837 10 % 16,389 9 % 3 %
 
Cost of consulting services 45,733 28 % 44,505 26 % 3 %
Reimbursed expenses   5,193     3 %       6,033     3 % -14 %
Cost of service revenue 50,926 31 % 50,538 29 % 1 %
               
Total Cost of Revenues 67,763 41 % 66,927 39 % 1 %
               
GROSS PROFIT 96,757 59 % 106,172 61 % -9 %
 
OPERATING EXPENSES:
Product development 18,297 11 % 18,747 11 % -2 %
Sales and marketing 24,265 15 % 25,756 15 % -6 %
General and administrative 21,009 13 % 15,815 9 % 33 %
Amortization of intangibles 9,530 6 % 9,562 6 % 0 %
Restructuring charges (163 ) 0 % 768 0 % -121 %
               
Total Operating Expenses 72,938 44 % 70,648 41 % 3 %
               
OPERATING INCOME 23,819 14 % 35,524 21 % -33 %
Interest expense and amortization of loan fees 6,608 4 % 6,435 4 % 3 %
Interest income and other, net (1,253 ) -1 % (641 ) 0 % NM
               
INCOME BEFORE INCOME TAXES 18,464 11 % 29,730 17 % -38 %
Income tax provision 7,413 5 % 11,443 7 % -35 %
               
NET INCOME $ 11,051     7 %     $ 18,287     11 % -40 %
 
EARNINGS PER SHARE:
Basic $ 0.26 $ 0.43 -40 %
Diluted $ 0.26 $ 0.43 -40 %
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 42,969 42,511 1 %
Diluted 43,191 42,795 1 %
                           
Note: Subtotals may not add due to rounding.
 
 
JDA SOFTWARE GROUP, INC.
YTD Q3 2012 FINANCIAL RESULTS
CONSOLIDATED STATEMENT OF OPERATIONS
($ in thousands, except per share data, unaudited)
                           
    Nine Months Ended September 30,    

 

2012  

% of
Revenues

  2011  

% of
Revenues

   

% Increase
(Decrease)

     
REVENUES:
Software licenses $ 84,977 17 % $ 100,591 20 % -16 %
Subscriptions and other recurring revenues 11,695 2 % 12,582 2 % -7 %
Maintenance services   202,312     41 %       198,545     39 % 2 %
Product revenues 298,984 60 % 311,718 62 % -4 %
 
Consulting services 179,852 36 % 177,156 35 % 2 %
Reimbursed expenses   16,627     3 %       17,265     3 % -4 %
Services revenue 196,479 40 % 194,421 38 % 1 %
               
Total Revenues 495,463 100 % 506,139 100 % -2 %
 
COST OF REVENUES:
Cost of software licenses 3,469 1 % 3,139 1 % 11 %
Amortization of acquired software technology 5,107 1 % 5,393 1 % -5 %
Cost of maintenance services   42,435     9 %       42,376     8 % 0 %
Cost of product revenues 51,011 10 % 50,908 10 % 0 %
 
Cost of consulting services 137,638 28 % 138,015 27 % 0 %
Reimbursed expenses   16,627     3 %       17,265     3 % -4 %
Cost of service revenue 154,265 31 % 155,280 31 % -1 %
               
Total Cost of Revenues 205,276 41 % 206,188 41 % 0 %
               
GROSS PROFIT 290,187 59 % 299,951 59 % -3 %
 
OPERATING EXPENSES:
Product development 56,101 11 % 58,601 12 % -4 %
Sales and marketing 73,632 15 % 77,360 15 % -5 %
General and administrative 70,354 14 % 54,488 11 % 29 %
Amortization of intangibles 28,590 6 % 28,872 6 % -1 %
Restructuring charges 2,280 0 % 1,279 0 % 78 %
Litigation settlement - 0 % (37,500 ) -7 % NM
               
Total Operating Expenses 230,957 47 % 183,100 36 % 26 %
               
OPERATING INCOME 59,230 12 % 116,851 23 % -49 %
Interest expense and amortization of loan fees 19,562 4 % 19,085 4 % 2 %
Interest income and other, net (3,192 ) -1 % (2,641 ) -1 % NM
               
INCOME BEFORE INCOME TAXES 42,860 9 % 100,407 20 % -57 %
Income tax provision 16,505 3 % 21,294 4 % -22 %
           
NET INCOME $ 26,355     5 %     $ 79,113     16 % -67 %
 
EARNINGS PER SHARE:
Basic $ 0.62 $ 1.87 -67 %
Diluted $ 0.61 $ 1.85 -67 %
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 42,852 42,334 1 %
Diluted 42,992 42,715 1 %
                           
Note: Subtotals may not add due to rounding.
 
 
JDA SOFTWARE GROUP, INC.
Q3 2012 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in thousands, except per share data, unaudited)
     

 

                           
                   
Three Months Ended September 30,      

2012
GAAP

  Adj.  

2012
Non-GAAP

   

2011
GAAP

  Adj.  

2011
Non-GAAP

    Non-GAAP
 
TOTAL COST OF REVENUES $ 67,763 $ (2,450) $ 65,313 $ 66,927 $ (2,250) $ 64,677 1%
Stock-based compensation:
Cost of maintenance services 14,101 (210) 13,891 13,654 (117) 13,537
Cost of consulting services 45,733 (538) 45,195 44,505 (407) 44,098
 
Amortization:
Amortization of acquired software technology 1,702 (1,702) - 1,726 (1,726) -
 
TOTAL OPERATING EXPENSES $ 72,938 $ (14,493) $ 58,445 $ 70,648 $ (11,912) $ 58,736 0%
Stock-based compensation:
Product development 18,297 (556) 17,741 18,747 (284) 18,463
Sales and marketing 24,265 (906) 23,359 25,756 (223) 25,533
General and administrative 21,009 (1,942) 19,067 15,815 (1,075) 14,740
 
Amortization of intangibles 9,530 (9,530) - 9,562 (9,562) -
Restructuring charges (163) 163 - 768 (768) -
Investigation and restatement costs (2) 1,722 (1,722) - - - -
Litigation settlement - - - - - -
 
OPERATING INCOME $ 23,819 $ 16,943 $ 40,762 $ 35,524 $ 14,162 $ 49,686 -18%
 
OPERATING MARGIN % 14% 25% 21% 29% -4%
 
INCOME TAX EFFECTS (3) $ 7,413 $ 4,979 $ 12,392 $ 11,443 $ 3,919 $ 15,362 -19%
 
NET INCOME $ 11,051 $ 23,015 $ 18,287 $ 28,530 -19%
 
DILUTED EARNINGS PER SHARE $ 0.26 $ 0.53 $ 0.43 $ 0.67 -21%
 
DILUTED WEIGHTED AVERAGE COMMON

SHARES OUTSTANDING

43,191 43,191 42,795 42,795 1%
                                   
                       

2012
Non-Adjusted

  Adj.  

2012
Adjusted

   

2011
Non-Adjust

  Adj.  

2011
Adjusted

 
Net income $ 11,051 $ 18,287
Income tax provision 7,413 11,443
Interest expense and amortization of loan fees 6,608 6,435
Amortization of acquired software technology 1,702 1,726
Amortization of intangibles 9,530 9,562
Depreciation 3,774 3,227
 
EBITDA $ 40,078 $ 50,680
 
Restructuring charges $ (163) $ 768
Stock-based compensation 4,152 2,106
Interest income and other, net (1,253) (641)
Investigation and restatement costs 1,722 -
Litigation settlement - -
 
EBITDA $ 40,078 $ 4,458 $ 44,536 $ 50,680 $ 2,233 $ 52,913 -16%
 
EBITDA MARGIN % 24% 27% 29% 31%
                                   
 
(1) This presentation includes Non-GAAP measures. In evaluating the Company's performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under GAAP. Management's presentation of non-GAAP financial measures is intended to be supplemental in nature and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures.
 
(2) Investigation and restatement costs are included in the General and administrative line on the Consolidated Statement of Operations
 
(3) Non-GAAP income tax effect calculated by using the Federal statutory rate of 35%.
 
 
JDA SOFTWARE GROUP, INC.
YTD Q3 2012 FINANCIAL RESULTS
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)
($ in thousands, except per share data, unaudited)
                                   
                   
Nine Months Ended September 30,    

% Increase
(Decrease)

2012
GAAP

  Adj.  

2012
Non-GAAP

   

2011
GAAP

  Adj.  

2011
Non-GAAP

    Non-GAAP
 
TOTAL COST OF REVENUES $ 205,276 $ (6,812 ) $ 198,464 $ 206,188 $ (7,441 ) $ 198,747 0 %
Stock-based compensation:
Cost of maintenance services 42,435 (492 ) 41,943 42,376 (458 ) 41,918
Cost of consulting services 137,638 (1,213 ) 136,425 138,015 (1,590 ) 136,425
 
Amortization:
Amortization of acquired software technology 5,107 (5,107 ) - 5,393 (5,393 ) -
 
TOTAL OPERATING EXPENSES $ 230,957 $ (50,338 ) $ 180,619 $ 183,100 $ (2,764 ) $ 180,336 0 %
Stock-based compensation:
Product development 56,101 (1,087 ) 55,014 58,601 (1,520 ) 57,081
Sales and marketing 73,632 (2,004 ) 71,628 77,360 (3,083 ) 74,277
General and administrative 70,354 (3,920 ) 66,434 54,488 (5,510 ) 48,978
 
Amortization of intangibles 28,590 (28,590 ) - 28,872 (28,872 ) -
Restructuring charges 2,280 (2,280 ) - 1,279 (1,279 ) -
Investigation and restatement costs (2) 12,457 (12,457 ) - - - -
Litigation settlement - - - (37,500 ) 37,500 -
 
OPERATING INCOME $ 59,230 $ 57,150 $ 116,380 $ 116,851 $ 10,205 $ 127,056 -8 %
 
OPERATING MARGIN % 12 % 23 % 23 % 25 % -2 %
 
INCOME TAX EFFECTS (3) $ 16,505 $ 18,499 $ 35,004 $ 21,294 $ 17,420 $ 38,714 -10 %
 
NET INCOME $ 26,355 $ 65,006 $ 79,113 $ 71,898 -10 %
 
DILUTED EARNINGS PER SHARE $ 0.61 $ 1.51 $ 1.85 $ 1.68 -10 %
 
DILUTED WEIGHTED AVERAGE COMMON

SHARES OUTSTANDING

42,992 42,992 42,715 42,715 1 %
                                   
                       

2012
Non-Adjusted

  Adj.  

2012
Adjusted

   

2011
Non-Adjusted

  Adj.  

2011
Adjusted

 
Net income $ 26,355 $ 79,113
Income tax provision 16,505 21,294
Interest expense and amortization of loan fees 19,562 19,085
Amortization of acquired software technology 5,107 5,393
Amortization of intangibles 28,590 28,872
Depreciation   11,235     9,996  
 
EBITDA $ 107,354 $ 163,753
 
Restructuring charges $ 2,280 $ 1,279
Stock-based compensation 8,716 12,161
Interest income and other, net (3,192 ) (2,641 )
Investigation and restatement costs 12,457 -
Litigation settlement   -     (37,500 )
 
EBITDA $ 107,354 $ 20,261 $ 127,615 $ 163,753 $ (26,701 ) $ 137,052 -7 %
 
EBITDA MARGIN % 22 % 26 % 32 % 27 %
                                   
                                   
(1) This presentation includes Non-GAAP measures. In evaluating the Company's performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under GAAP. Management's presentation of non-GAAP financial measures is intended to be supplemental in nature and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures.
 
(2) Investigation and restatement costs are included in the General and administrative line on the Consolidated Statement of Operations
 
(3) Non-GAAP income tax effect calculated by using the Federal statutory rate of 35%.
 
 
JDA SOFTWARE GROUP, INC.
Q3 2012 FINANCIAL RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands, unaudited)
             
   

September 30,
2012

   

December 31,
2011

   
ASSETS
 
Current Assets:
Cash and cash equivalents $ 408,284 $ 285,512
Restricted cash 3,004 8,733
Accounts receivable, net 96,814 114,778
Deferred tax assets—current portion

36,660

32,063
Prepaid expenses and other current assets   26,723         24,584  
Total Current Assets   571,485         465,670  
 
Non-Current Assets:
Restricted cash 410 652
Property and equipment, net 52,655 52,541
Goodwill 231,377 231,377
Other intangibles, net 108,185 141,882
Deferred tax assets—long-term portion 244,072 258,271
Other non-current assets   18,911         20,565  
Total Non-Current Assets 655,610 705,288
       
TOTAL ASSETS $ 1,227,095       $ 1,170,958  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current Liabilities:
Accounts payable $ 8,342 $ 7,740
Accrued expenses and other liabilities 80,760 73,111
Deferred revenue—current portion   116,372         108,217  
Total Current Liabilities   205,474         189,068  
 
Non-Current Liabilities:
Long-term debt 273,626 273,210
Accrued exit and disposal obligations 2,773 3,926
Liability for uncertain tax positions 3,194 4,098
Deferred revenue—long-term portion 5,252 8,115
Other non-current liabilities   5,247         1,368  
Total Non-Current Liabilities 290,092 290,717
       
TOTAL LIABILITIES $ 495,566       $ 479,785  
 
Stockholders' Equity:
Common stock 453 449
Additional paid-in capital 582,704 571,593
Retained earnings 180,906 154,551
Accumulated other comprehensive income 3,702 (2,454 )
Treasury stock   (36,236 )       (32,966 )
Total Stockholders' Equity 731,529 691,173
       
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,227,095       $ 1,170,958  
 
 
JDA SOFTWARE GROUP, INC.
Q3 2012 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
($ in thousands, unaudited)
             
    Three Months Ended September 30,
2012     2011
   
Cash Flows From Operating Activities:
 
Net income $ 11,051 $ 18,287
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 15,006 14,515
Provision for doubtful accounts 202 -
Amortization of loan fees 620 631
Net loss (gain) on disposal of property and equipment (35 ) 4
Stock-based compensation 4,152 2,106
Deferred income taxes 4,606 11,601
Changes in assets and liabilities, net of effects from business acquisition:
Accounts receivable 30,300 5,116
Prepaid expenses and other assets (2,053 ) 1,804
Accounts payable (1,289 ) (3,056 )
Accrued expenses and other liabilities 2,135 7,619
Deferred revenue   (24,265 )       (21,700 )
Net cash provided by operating activities $ 40,430       $ 36,927  
 
Cash Flow From Investing Activities:
 
Change in restricted cash 562 (37 )
Purchase of property and equipment (4,039 ) (2,810 )
Proceeds from disposal of property and equipment   42         1  
Net cash used in investing activities $ (3,435 )     $ (2,846 )
 
Cash Flow From Financing Activities:
Issuance of common stock—equity plans 619 1,763
Purchase of treasury stock and other, net (2,657 ) (639 )
Conversion of warrants - -
Proceeds from bank advances 7,090 -
Debt issuance costs   -         (26 )
Net cash (used in) provided by financing activities $ 5,052       $ 1,098  
 
Effect of exchange rates on cash and cash equivalents   3,807         (2,279 )
Net increase in cash and cash equivalents $ 45,854       $ 32,900  
Cash and Cash Equivalents, Beginning of Period $ 362,430       $ 256,758  
Cash and Cash Equivalents, End of Period $ 408,284       $ 289,658  
 
 
JDA SOFTWARE GROUP, INC.
YTD Q3 2012 FINANCIAL RESULTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
($ in thousands, unaudited)
             
    Nine Months Ended September 30,
2012     2011
 
Cash Flows From Operating Activities:
 
Net income $ 26,355 $ 79,113
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 44,932 44,261
Provision for doubtful accounts 204 -
Amortization of loan fees 1,853 1,739
Net loss (gain) on disposal of property and equipment 74 24
Stock-based compensation 8,716 12,161
Deferred income taxes 9,603 18,566
Changes in assets and liabilities, net of effects from business acquisition:
Accounts receivable 18,927 (16,796 )
Income tax receivable
Prepaid expenses and other assets (1,967 ) (2,974 )
Accounts payable 488 (14,957 )
Accrued expenses and other liabilities 3,329 659
Income tax payable
Deferred revenue   5,640         8,245  
Net cash provided by operating activities $ 118,154       $ 130,041  
 
Cash Flow From Investing Activities:
 
Change in restricted cash 5,971 (2,293 )
Purchase of property and equipment (8,875 ) (7,625 )
Proceeds from disposal of property and equipment   397         51  
Net cash provided by (used in) investing activities $ (2,507 )     $ (9,867 )
 
Cash Flow From Financing Activities:
Issuance of common stock—equity plans 2,399 5,261
Purchase of treasury stock and other, net (3,270 ) (5,166 )
Conversion of warrants - 671
Proceeds from bank advances 7,090 -
Debt issuance costs   -         (1,727 )
Net cash provided by (used in) financing activities $ 6,219       $ (961 )
 
Effect of exchange rates on cash and cash equivalents   906         (1,173 )
Net increase in cash and cash equivalents $ 122,772       $ 118,040  
Cash and Cash Equivalents, Beginning of Period $ 285,512       $ 171,618  
Cash and Cash Equivalents, End of Period $ 408,284       $ 289,658  
 
 
JDA SOFTWARE GROUP, INC.
Q3 2012 FINANCIAL RESULTS
SUPPLEMENTAL DATA
($ in thousands, unaudited)
                                         
    2011       2012  
      Q1   Q2   Q3   Q4   TOTAL     Q1   Q2   Q3   YTD TOTAL
             
REVENUES:
Software licenses $ 35,644 $ 30,221 $ 34,726 $ 39,626 $ 140,217 $ 25,393 $ 32,040 $ 27,544 $ 84,977
Subscriptions and other recurring revenues 4,994 3,850 3,738 4,181 16,763 4,032 3,754 3,909 11,695
Maintenance services   64,782       66,131       67,632       67,240       265,785         66,713       66,815       68,784       202,312  
Product revenues 105,420 100,202 106,096 111,047 422,765 96,138 102,609 100,237 298,984
 
Consulting services 57,378 58,808 60,970 67,890 245,046 60,489 60,273 59,090 179,852
Reimbursed expenses   4,720       6,512       6,033       6,167       23,432         5,559       5,875       5,193       16,627  
Services revenue   62,098     65,320     67,003     74,057     268,478     66,048     66,148     64,283     196,479  
Total Revenues $ 167,518     $ 165,522     $ 173,099     $ 185,104     $ 691,243       $ 162,186     $ 168,757     $ 164,520     $ 495,463  
 
AS REPORTED REVENUE GROWTH RATES:
Software licenses 89 % 27 % 100 % 26 % 53 % -29 % 6 % -21 % -16 %
Subscriptions and other recurring revenues 16 % -34 % -35 % -21 % -21 % -19 % -2 % 5 % -7 %
Maintenance services 13 % 9 % 6 % 4 % 8 % 3 % 1 % 2 % 2 %
Product revenues 31 % 11 % 22 % 10 % 18 % -9 % 2 % -6 % -4 %
 
Consulting services 33 % 9 % -3 % 22 % 14 % 5 % 2 % -3 % 2 %
Reimbursed expenses 66 % 43 % -4 % 0 % 18 % 18 % -10 % -14 % -4 %
Services revenue 35 % 12 % -3 % 20 % 14 % 6 % 1 % -4 % 1 %
Total Revenues 33 % 11 % 11 % 14 % 16 % -3 % 2 % -5 % -2 %
                                         
 
SOFTWARE LICENSE AND SUBSCRIPTION REVENUES:
Americas $ 24,214 $ 22,371 $ 29,387 $ 24,782 $ 100,754 $ 17,816 $ 25,971 $ 23,293 $ 67,080
EMEA 11,927 8,619 7,358 14,414 42,318 9,603 4,536 4,922 19,061
ASPAC   4,497       3,081       1,719       4,611       13,908         2,006       5,287       3,238       10,531  
Total Software Revenues $ 40,638     $ 34,071     $ 38,464     $ 43,807     $ 156,980       $ 29,425     $ 35,794     $ 31,453     $ 96,672  
 
New sales $ 6,096 $ 9,540 $ 7,693 $ 8,323 $ 31,652 $ 11,476 $ 3,221 $ 3,460 $ 18,157
Install-base sales   34,542       24,531       30,771       35,484       125,328         17,949       32,573       27,993       78,515  
Total Software Revenues $ 40,638     $ 34,071     $ 38,464     $ 43,807     $ 156,980       $ 29,425     $ 35,794     $ 31,453     $ 96,672  
 
As % of Total
New sales 15 % 28 % 20 % 19 % 20 % 39 % 9 % 11 % 19 %
Install-base sales   85 %     72 %     80 %     81 %     80 %       61 %     91 %     89 %     81 %
Total Software Revenues 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 %
                                         
 
GROSS PROFIT MARGINS BY LINE OF BUSINESS (1)
Software 93.2 % 91.2 % 92.9 % 93.8 % 92.8 % 91.1 % 91.0 % 91.3 % 91.1 %
Maintenance 78.4 % 77.7 % 79.8 % 79.9 % 79.0 % 79.1 % 78.4 % 79.5 % 79.0 %
Services 17.8 % 17.8 % 24.6 % 33.7 % 23.9 % 22.1 % 21.6 % 20.8 % 21.5 %
Overall Gross Profit Margin 59.5 % 56.8 % 61.3 % 64.7 % 60.7 % 58.1 % 58.8 % 58.8 % 58.6 %
 
MISCELLANEOUS
Average sales price (ASP) (2) - TTM $ 708 $ 691 $ 843 $ 802 $ 741 $ 775 $ 724
Large deal count (greater than $1M) (2) - TTM 24 27 34 37 35 36 32
Maintenance Retention 98.5 % 96.7 % 95.7 % 95.5 % 97.2 % 95.9 % 95.3 %
                                         
 
FREE CASH FLOW (3)
GAAP Operating Cash Flow $ 59,216 $ 33,898 $ 36,927 $ (20,210 ) $ 109,831 $ 48,866 $ 28,858 $ 40,430 $ 118,154
Capital Expenditures   (2,997 )     (1,818 )     (2,810 )     (11,819 )     (19,444 )       (3,000 )     (1,836 )     (4,039 )     (8,875 )
Free Cash Flow (4) $ 56,219     $ 32,080     $ 34,117     $ (32,029 )   $ 90,387       $ 45,866     $ 27,022     $ 36,391     $ 109,279  
 
% Growth over prior year -18 % -16 % 7 % -11 %
 
Free Cash Flow $ 56,219 $ 32,080 $ 34,117 $ (32,029 ) $ 90,387 $ 45,866 $ 27,022 $ 36,391 $ 109,279
Litigation settlements (37,500 ) - - 54,000 16,500 - - - -
Investigation and restatement costs   -       -       -       -       -         5,236       5,499       1,722       12,457  
Adjusted Free Cash Flow $ 18,719     $ 32,080     $ 34,117     $ 21,971     $ 106,887       $ 51,102     $ 32,521     $ 38,113     $ 121,736  
 
 
                                         
 
(1) Gross Profit Margins are calculated using line of business Revenue, less line of business Cost of Revenue, divided by line of business Revenue.
 
(2) Trailing twelve months
 
(3) This presentation includes Non-GAAP measures. In evaluating the Company's performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under GAAP. Management's presentation of non-GAAP financial measures is intended to be supplemental in nature and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures.
 
(4)Q1 2011 results included $37.5 million from favorable patent litigation settlement. Q4 2011 includes $54.0 million, net cash paid for the settlement with Dillard's. Q1, Q2 and Q3 2012 results include, $5.2 million, $5.5 million and $1.7 million, respectively, of investigation and restatement costs.
 
 

“Safe Harbor” Statement under the U.S. Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally accompanied by words such as “believe,” “should,” “would,” “project,” “estimate,” “anticipate,” “intend,” “plan,” “will,” “can,” “may,” and “expect” and other words with forward-looking connotations. All forward-looking statements are subject to a number of important factors, risks, uncertainties and assumptions that could cause actual results to differ materially from those described in, or predicted by, any forward-looking statements. These factors and risks include, but are not limited to, financial, operational and legal risks and uncertainties detailed from time to time in the Company's filings with the SEC. JDA is not under any obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Information

This press release and the related conference call contain non-GAAP financial measures. In evaluating the Company's performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under GAAP. Management's presentation of non-GAAP financial measures is intended to be supplemental in nature and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures.

Use and Economic Substance of Non-GAAP Financial Measures Used by JDA

The Company uses non-GAAP measures of performance, including adjusted net income, EBITDA (earnings before interest, taxes, depreciation and amortization) and earnings per share, in its public statements. Management uses, and chooses to disclose, these non-GAAP financial measures because (i) such measures provide an additional analytical tool to clarify the Company's results from operations and help the Company to identify underlying trends in its results of operations; (ii) the Company uses non-GAAP earnings measures, including EBITDA, as a measure of profitability because such measures help the Company compare its performance on a consistent basis across time periods; and (iii) these non-GAAP measures are employed by the Company's management in its own evaluation of performance and are utilized in financial and operational decision making processes, such as budget planning and forecasting. The Company also internally uses adjusted EBITDA measures for determining (a) compliance with certain financial covenants in its credit agreement and (b) executive and employee compensation. Set forth below are additional reasons why specific items are excluded from the Company's non-GAAP financial measures:

  • Amortization charges for acquired software technology are excluded because they result from prior acquisitions, rather than ongoing operations, and absent additional acquisitions, are expected to decline over time.
  • Amortization charges for other intangibles are excluded because they are non-cash expenses, and while tangible and intangible assets support our business, we do not believe the related amortization costs are directly attributable to the operating performance of our business.
  • Restructuring charges are significant non-routine expenses that cannot be predicted and typically relate to a change in our business model or to a change in our estimate of the costs to complete a plan to exit an activity of an acquired company. The exclusion of these charges promotes period-to-period comparisons and transparency. Such charges are primarily related to severance costs and/or the disposition of excess facilities driven by the changes to our business model.
  • Stock-based compensation is not an expense that typically requires or will require cash settlement by the Company.
  • Litigation settlement costs related to inherited i2 litigation and the investigation and restatement costs are significant non-routine expenses. Exclusion of these costs promotes period-to-period comparisons and transparency as we do not believe these costs are directly attributable to the operating performance of our business.

Material Limitations (and Compensation thereof) Associated with the Use of Non-GAAP Financial Measures

Non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for the Company's GAAP results. In the future, the Company expects to continue reporting non-GAAP financial measures excluding items described above and the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above. Accordingly, exclusion of these and other similar items in our non-GAAP presentation should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

Some of the limitations in relying on non-GAAP financial measures are:

  • Amortization of acquired technology and intangibles, though not directly affecting our current cash position, represent the loss in value as the technology in our industry evolves, is advanced or is replaced over time. The expense associated with this loss in value is not included in the non-GAAP net income presentation and therefore does not reflect the full economic effect of the ongoing cost of maintaining our current technological position in our competitive industry which is addressed through our research and development program.
  • The Company may engage in acquisition transactions in the future. In addition, we incur other restructuring charges from time to time when necessary to adjust our business model. Restructuring related charges may therefore continue to be incurred and should not be viewed as non-recurring.
  • Stock-based compensation is an important component of our incentive compensation arrangements and will be reflected as expenses in our GAAP results for the foreseeable future.
  • Other companies, including other companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting their usefulness as a comparative measure.

We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP financial measures only supplementally. We also provide reconciliations of each non-GAAP financial measure to our most directly comparable GAAP measure, and we encourage investors to review carefully those reconciliations.

Usefulness of Non-GAAP Financial Measures to Investors

The Company believes that the presentation of these non-GAAP financial measures is warranted for several reasons. First, such non-GAAP financial measures provide investors and management an additional analytical tool for understanding the Company's financial performance by excluding the impact of items which may obscure trends in the core operating performance of the business. Second, since the Company has historically reported non-GAAP results to the investment community, the Company believes the inclusion of non-GAAP numbers provides consistency and enhances investors' ability to compare the Company's performance across financial reporting periods.

JDA Software Group, Inc.
JDA Investor Relations Contact:
Mike Burnett, GVP, Treasury and Investor Relations
480-308-3392
mike.burnett@jda.com
or
JDA Corporate Communications Contact:
Beth Elkin, Vice President, Marketing and Corporate Communications
469-357-4225
beth.elkin@jda.com

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