VERITAS Software Reports First Quarter Results Revenue of $394 Million, Up 6% Year over Year
Wednesday April 23, 4:09 pm ET
MOUNTAIN VIEW, Calif., April 23 /PRNewswire-FirstCall/ -- VERITAS Software Corporation (Nasdaq: VRTS - News) today announced financial results for the quarter ended March 31, 2003. Revenue for the quarter ended March 31, 2003 was $394 million, compared to revenue of $370 million for the same period a year ago.
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GAAP net income for the quarter ended March 31, 2003 was $43 million, or $0.10 per share, diluted, compared to a GAAP net income of $44 million, or $0.11 per share, diluted, for the same period a year ago. Non-GAAP diluted earnings per share for the quarter ended March 31, 2003 was $0.17, compared to $0.16 for the same period a year ago. Non-GAAP diluted earnings per share exclude the effect of purchase accounting adjustments, such as the amortization of developed technology, amortization of other intangibles, a write-down of in-process research and development, and the effect of other special items, such as the loss on strategic investments and related adjustments to provision for income taxes. A quantitative reconciliation of the differences between GAAP diluted earnings per share and non-GAAP diluted earnings per share is included in this press release.
"VERITAS Software's ability to continuously deliver exceptional results is directly tied to our proven business model, outstanding product quality, and focused commitment to not only meet but also exceed our customers' expectations," said Gary Bloom, chairman, president and CEO, VERITAS Software. "The current market trend of business and IT consolidation, has given us the opportunity to leverage our heterogeneous and interoperable technology. We have delivered solutions that assist our customers in managing the challenges of consolidation and the continued pressure to do more with less."
"We exited the quarter with a record $2.4 billion in cash and, by leveraging the revenue upside, we delivered earnings well ahead of expectations and generated approximately $203 million in cash from operating activities," said Ed Gillis, executive vice president and chief financial officer, VERITAS Software. "Our strong balance sheet and revenue performance are proof that VERITAS Software is gaining strength during this prolonged economic downturn."
"Although our results for Q1 were better than expected, we remain cautious about Q2 due to the continued challenges in the economy, reduced IT spending patterns, and the potential impact of the recent SARS outbreak on our Asia Pacific business," said Bloom. "For the quarter ending June 30, 2003, we expect revenue to be in the range of $370 million to $380 million. We expect GAAP diluted earnings per share to be in the range of $.09 to $.10 and non-GAAP diluted earnings per share to be in the range of $.13 to $.14, which excludes purchase accounting adjustments of $24 million."
VERITAS Software's projected GAAP and non-GAAP diluted earnings per share for the quarter ending June 30, 2003 do not include the effect of VERITAS Software's pending acquisition of Precise Software. A quantitative reconciliation of the differences between projected GAAP diluted earnings per share and projected non-GAAP diluted earnings per share is included in this press release.
The non-GAAP statements of operations are intended to present the Company's operating results excluding purchase accounting adjustments and other special items. These non-GAAP statements of operations are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures used by other companies.
The Company will hold a conference call today at 2:00 p.m. Pacific Time, 5:00 p.m. Eastern Time, to review the results and business outlook. The conference call will be available to all investors. The telephone dial-in number for listen-only access to the live call is 913-981-5581, passcode: 734993. A live web cast will also be available at www.veritas.com, Investor section. In addition, a replay will be available via audio Webcast at www.veritas.com, Investor section, beginning Wednesday, April 23 at 4:00 pm, Pacific Time. A telephonic replay will also be available through Wednesday, April 30, 2003, 10:00 pm, Pacific Time, by dialing 719-457-0820, replay code: 734993.
About VERITAS Software
With revenue of $1.5 billion in 2002, VERITAS Software ranks among the top 10 software companies in the world. VERITAS Software is the world's leading storage software company, providing data protection, storage management, high availability and disaster recovery software to 86 percent of the Fortune 500. VERITAS Software's corporate headquarters is located at 350 Ellis Street, Mountain View, CA, 94043, tel: 650-527-8000, fax: 650-527-8050, e-mail: vx-sales@veritas.com, Web site: www.veritas.com.
Non-GAAP Financial Measures
The non-GAAP financial measures used in this press release exclude the impact of purchase accounting adjustments, such as the amortization of developed technology, amortization of other intangibles, and write-down of in-process research and development, and the impact of other special items, such as the loss on strategic investments and related adjustments to provision for income taxes, on our operating results. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The Company's management refers to these non-GAAP financial measures, such as non-GAAP gross profit margins, operating margins and net income, in making operating decisions because they provide meaningful supplemental information regarding the Company's operational performance, including the Company's ability to provide cash flows to invest in research and development and fund acquisitions and capital expenditures. In addition, these non-GAAP financial measures facilitate management's internal comparisons to the Company's historical operating results and comparisons to competitors' operating results. We include these non-GAAP financial measures in our earnings announcement because we believe they are useful to investors in allowing for greater transparency to supplemental information used by management in its financial and operational decision-making. In addition, we have historically reported similar non-GAAP financial measures to our investors and believe that the inclusion of comparative numbers provides consistency in our financial reporting at this time. Investors are encouraged to review the reconciliation of the non-GAAP financial measures used in this press release to their most directly comparable GAAP financial measure as provided with the financial statements attached to this press release.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, including statements relating to projections of future revenue and earnings, the growth and performance of our business and market demand for VERITAS Software products and services. These forward-looking statements involve a number of risks and uncertainties, including: the risk that a continuing or worsening decline in economic conditions generally and in IT spending specifically might reduce customer demand for our products and services; the risk that we will not gain market acceptance of our products and services; the risk that the recent SARS outbreak will adversely affect our business; the risk that we may lose market share to existing or new competitors; and the risk that we may not be able to manage our business adequately in response to changing market conditions. These and other factors could cause our actual results to differ materially from what we project in our forward-looking statements. For more information regarding potential risks, see the "Factors That May Affect Future Results" section of our most recent periodic report on Form 10-K for the year ended December 31, 2002, which is on file with the SEC. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date hereof.
NOTE: VERITAS, the VERITAS Logo and all other VERITAS product names and slogans are trademarks or registered trademarks of VERITAS Software Corporation. VERITAS and the VERITAS Logo Reg. U.S. Pat. & Tm. Off. Other product names and/or slogans mentioned herein may be trademarks or registered trademarks of their respective companies.
VERITAS SOFTWARE CORPORATION
NON-GAAP STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
2003 2002
Net revenue:
User license fees $254,564 $259,711
Services 139,822 110,738
Total net revenue 394,386 370,449
Cost of revenue:
User license fees 11,418 9,194
Services 47,789 41,155
Total cost of revenue 59,207 50,349
Gross profit 335,179 320,100
Operating expenses:
Selling and marketing 122,047 126,963
Research and development 70,934 65,184
General and administrative 38,153 33,113
Total operating expenses 231,134 225,260
Income from operations 104,045 94,840
Interest and other income, net 8,395 13,153
Interest expense (7,738) (7,921)
Income before income taxes 104,702 100,072
Provision for income taxes 34,552 34,024
Non-GAAP net income $70,150 $66,048
Non-GAAP net income per share _ basic $0.17 $0.16
Non-GAAP net income per share _
diluted $0.17 $0.16
Shares used in per share calculation
_ basic 412,916 406,086
Shares used in per share calculation
_ diluted 419,380 421,709
The non-GAAP statement of operations are intended to present the
Company's operating results excluding special items and related
adjustments on provisions for income taxes. These non-GAAP statements of
operations are not in accordance with, or an alternative for, generally
accepted accounting principles ("GAAP") and may be different from
non-GAAP measures used by other companies. The non-GAAP statements of
operations are prepared using income tax rates of 33% and 34% for the
quarters ended March 31, 2003 and 2002, respectively. Please see
attached reconciliation of the Company's financial statements prepared
under GAAP to these non-GAAP financial statements.
VERITAS SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
2003 2002
Net revenue:
User license fees $254,564 $259,711
Services 139,822 110,738
Total net revenue 394,386 370,449
Cost of revenue:
User license fees 11,418 9,194
Services 47,789 41,155
Amortization of developed
technology 14,782 16,903
Total cost of revenue 73,989 67,252
Gross profit 320,397 303,197
Operating expenses:
Selling and marketing 122,047 126,963
Research and development 71,383 65,184
General and administrative 38,153 33,113
Amortization of other intangibles 18,191 18,016
In-process research and development 4,100 --
Total operating expenses 253,874 243,276
Income from operations 66,523 59,921
Interest and other income, net 8,395 13,153
Interest expense (7,738) (7,921)
Loss on strategic investments (3,518) --
Income before income taxes 63,662 65,153
Provision for income taxes 21,136 20,687
Net income $42,526 $44,466
Net income per share _ basic $0.10 $0.11
Net income per share _ diluted $0.10 $0.11
Shares used in per share calculation
_ basic 412,916 406,086
Shares used in per share calculation
_ diluted 419,380 421,709
VERITAS SOFTWARE CORPORATION
RECONCILIATION OF CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
TO THE NON-GAAP STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31, 2003
Under GAAP Adjustments Non-GAAP
Net revenue:
User license fees $254,564 $254,564
Services 139,822 139,822
Total net revenue 394,386 -- 394,386
Cost of revenue:
User license fees 11,418 11,418
Services 47,789 47,789
Amortization of developed
technology 14,782 (14,782)A --
Total cost of revenue 73,989 (14,782) 59,207
Gross profit 320,397 14,782 335,179
Gross profit % 81.2% 3.8% 85.0%
Operating expenses:
Selling and marketing 122,047 122,047
Research and development 71,383 (449)A 70,934
General and administrative 38,153 38,153
Amortization of other intangibles 18,191 (18,191)A --
In-process research and development 4,100 (4,100)A --
Total operating expenses 253,874 (22,740) 231,134
Income from operations 66,523 37,522 104,045
Operating margin % 16.9% 9.5% 26.4%
Interest and other income, net 8,395 8,395
Interest expense (7,738) (7,738)
Loss on strategic investments (3,518) 3,518 B --
Income before income taxes 63,662 41,040 104,702
Provision for income taxes 21,136 13,416 C 34,552
Net income $42,526 $27,624 $70,150
Net income per share _ basic $0.10 $0.07 $0.17
Net income per share _ diluted $0.10 $0.07 $0.17
Shares used in per share calculation
_ basic 412,916 412,916
Shares used in per share calculation
_ diluted 419,380 419,380
Footnotes:
A To exclude non-cash charges related to acquisitions.
B To exclude non-cash losses resulting from write-downs
of strategic investments.
C To adjust the provision for income taxes to the non-
GAAP rates of 33% and 34% for the three months ended
March 31, 2003 and March 31, 2002, respectively.
VERITAS SOFTWARE CORPORATION
RECONCILIATION OF CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
TO THE NON-GAAP STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31, 2002
Under GAAP Adjustments Non-GAAP
Net revenue:
User license fees $259,711 $259,711
Services 110,738 110,738
Total net revenue 370,449 -- 370,449
Cost of revenue:
User license fees 9,194 9,194
Services 41,155 41,155
Amortization of developed
technology 16,903 (16,903)A --
Total cost of revenue 67,252 (16,903) 50,349
Gross profit 303,197 16,903 320,100
Gross profit % 81.8% 4.6% 86.4%
Operating expenses:
Selling and marketing 126,963 126,963
Research and development 65,184 65,184
General and administrative 33,113 33,113
Amortization of other intangibles 18,016 (18,016)A --
In-process research and development -- --
Total operating expenses 243,276 (18,016) 225,260
Income from operations 59,921 34,919 94,840
Operating margin % 16.2% 9.4% 25.6%
Interest and other income, net 13,153 13,153
Interest expense (7,921) (7,921)
Loss on strategic investments -- --
Income before income taxes 65,153 34,919 100,072
Provision for income taxes 20,687 13,337 C 34,024
Net income $44,466 $21,582 $66,048
Net income per share _ basic $0.11 $0.05 $0.16
Net income per share _ diluted $0.11 $0.05 $0.16
Shares used in per share calculation
_ basic 406,086 406,086
Shares used in per share calculation
_ diluted 421,709 421,709
Footnotes:
A To exclude non-cash charges related to acquisitions.
B To exclude non-cash losses resulting from write-downs
of strategic investments.
C To adjust the provision for income taxes to the non-
GAAP rates of 33% and 34% for the three months ended
March 31, 2003 and March 31, 2002, respectively.
VERITAS SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2003 2002
(Unaudited)
ASSETS
Current assets:
Cash and short-term investments $2,394,107 $2,241,321
Accounts receivable, net 78,277 170,204
Other current assets 75,230 74,178
Deferred income taxes 60,070 59,995
Total current assets 2,607,684 2,545,698
Property and equipment, net 222,844 230,261
Other intangibles, net 49,766 72,594
Goodwill, net 1,239,909 1,196,593
Other non-current assets 14,311 26,624
Deferred income taxes 136,891 127,863
Total assets $4,271,405 $4,199,633
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $32,738 $33,823
Accrued compensation and
benefits 66,957 97,233
Accrued acquisition and
restructuring costs 38,843 37,742
Other accrued liabilities 79,856 92,431
Income taxes payable 155,285 123,569
Deferred revenue 298,117 280,314
Total current liabilities 671,796 665,112
Non-current liabilities:
Convertible subordinated notes 464,497 460,252
Accrued acquisition and
restructuring costs 74,433 77,402
Other income taxes 113,100 113,100
Total non-current liabilities 652,030 650,754
Stockholders' equity 2,947,579 2,883,767
Total liabilities and
stockholders' equity $4,271,405 $4,199,633
VERITAS SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2003 2002
Cash flows from operating activities:
Net income $42,526 $44,466
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 24,611 24,809
Amortization of other intangibles 18,191 18,016
Amortization of developed
technology 14,782 16,903
Amortization of original issue
discount on convertible notes 4,245 3,970
In-process research and development 4,100 --
Provision for doubtful accounts 724 988
Stock-based compensation 449 --
Tax benefits from stock plans 1,642 15,920
Loss on strategic investments 3,518
Deferred income taxes (13,396) (13,120)
Changes in operating assets and
liabilities, net of effects of
business acquisitions:
Accounts receivable 91,202 50,673
Other assets 8,373 3,510
Accounts payable (1,295) 982
Accrued compensation and benefits (30,381) (27,632)
Accrued acquisition and
restructuring costs (4,945) (35)
Other accrued liabilities (10,611) 2,280
Income taxes payable 31,716 17,146
Deferred revenue 17,803 34,845
Net cash provided by operating
activities 203,254 193,721
Cash flows from investing activities:
Purchases of investments (414,876) (299,369)
Sales and maturities of investments 528,653 435,659
Purchases of property and equipment (16,336) (15,297)
Purchased businesses, net of cash
acquired (54,579) --
Payments made for prior year
business and technology
acquisitions (2,106) (7,267)
Net cash provided by investing
activities 40,756 113,726
Cash flows from financing activities:
Proceeds from issuance of common
stock 19,950 51,299
Net cash provided by financing
activities 19,950 51,299
Effect of exchange rate changes 3,382 2,224
Net increase in cash and cash
equivalents 267,342 360,970
Cash and cash equivalents at the
beginning of the period 764,062 538,419
Cash and cash equivalents at the end
of the period $1,031,404 $899,389
VERITAS SOFTWARE CORPORATION
RECONCILIATION OF PROJECTED EARNINGS PER SHARE
TO NON-GAAP EARNINGS PER SHARE
FOR THE THREE MONTHS ENDING JUNE 30, 2003
(In thousands, except per share data)
(Unaudited)
Projected Revenue range $370,000 to $380,000
Projected GAAP Earnings per share $0.09 to $0.10
Projected Add back: Impact of
amortization of
intangibles and stock based
compensation 0.04 0.04
Projected Non-GAAP earnings
per share $0.13 to $0.14
The projected GAAP and non-GAAP financial information set forth above
does not include the potential impact of the Company's pending
acquisition of Precise Software Solutions, Ltd.
The projected GAAP and non-GAAP financial information set forth in this
reconciliation represent forward-looking statements within the meaning of
the Securities Act of 1933 and the Securities Exchange Act of 1934.
These forward-looking statements involve a number of risks and
uncertainties as identified in the Safe Harbor Statement of the press
release.
The projected non-GAAP financial information set forth above is not
prepared in accordance with, or an alternative for, generally accepted
accounting principles ("GAAP") and may be different from non-GAAP
measures used by other companies. |
