PeopleSoft Reports Third Quarter Results
Thursday October 23, 7:12 am ET
Record Revenue of $624 Million, EPS Exceeds Guidance by 7 Cents
PLEASANTON, Calif.--(BUSINESS WIRE)--Oct. 23, 2003--PeopleSoft, Inc. (Nasdaq:PSFT - News) today announced its third quarter 2003 financial results. Total revenue for the quarter was a record $624 million, significantly above the Company's guidance of $575-$590 million. License revenue was $160 million, exceeding the Company's guidance of $135 - $150 million. Professional services revenue was $229 million and maintenance revenue was $235 million. Excluding the impact of purchase accounting adjustments, PeopleSoft reported Q3 pro forma earnings per share of $0.17, exceeding the Company's guidance of $0.10 - $0.11 per share.
The third quarter GAAP results include purchase accounting adjustments relating to the acquisition of J.D. Edwards & Company, including the revenue impact of the deferred maintenance write-down, amortization of capitalized software and intangible assets, the write-off of purchased in process research and development, and restructuring charges. Including these charges, the Company reported a GAAP loss per share of ($0.02), significantly better than the Company's guidance of a loss of ($0.09) - ($0.10) per share.
At September 30, 2003, the Company's cash and investment balances were $1.6 billion. The Company's cash flow from operations in the third quarter was $119 million. Days Sales Outstanding (DSO) for the quarter ended September 30, 2003 was 61 days.
Management Commentary
"Our financial results really speak for themselves," said Craig A. Conway, PeopleSoft president and CEO. "What you see in our financial performance is just the beginning of the benefits of the combination of PeopleSoft and J.D. Edwards."
Customer Wins
Leading organizations around the world continue to choose PeopleSoft applications to move their business processes on line and operate in real time. During the quarter, organizations that purchased PeopleSoft's industry leading applications included: Aerospace Testing Alliance, BPB UK Limited, Cargill, Department of Human Services Australia, Dolby Laboratories, D.R. Horton, Electrolux Home Products, Florida Dept. of Financial Services, Hobby Lobby Stores, Kaiser Permanente, Koninklijke KPN N.V., London Health Sciences Centre, Manpower, Memec, Merck, Metro-North Commuter Railroad, New Zealand Milk, Papa John's International, Pfizer, Republic of Trinidad and Tobago, Siemens, SmithKline Beecham, Transocean Offshore Deepwater Drilling, Tredegar, University of Cambridge, U.S. Department of Housing and Urban Development, Wackenhut, and Wells Fargo Bank.
Non-GAAP Financial Measures
The Company has used non-GAAP pro forma financial measures, excluding adjustments related to purchase accounting and restructuring costs, in analyzing financial results because they provide meaningful information regarding the Company's operational performance and facilitate management's internal comparisons to the Company's historical operating results and comparisons to competitors' operating results.
The Company believes that these non-GAAP financial measures are useful to investors because they allow for greater transparency. Wherever non-GAAP financial measures have been included in this press release, the Company has reconciled them in the table below to their GAAP counterparts.
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 following table reconciles the non-GAAP financial measure used with GAAP:
Reconciliation of Q3 Pro Forma EPS to Q3 GAAP EPS
Actual Guidance
------ -------------
Q3 Pro Forma EPS $.17 $.10 - $.11
Revenue impact of deferred maintenance
write-down ($.09) ($.09)
Amortization of capitalized software
and intangible assets ($.04) ($.04 - $.05)
In process research and development
write-off ($.04) ($.04)
Restructuring charges ($.02) ($.02 - $.03)
------ -------------
Q3 GAAP EPS ($0.2) ($.09 - $.10)
====== =============
Company to Host Conference Call
PeopleSoft will host a conference call today, October 23, 2003, at 5:00 a.m. PT/8:00 a.m. ET to discuss the quarterly results. A live audio-only web cast of the call will be made available in the Investor Relations section of the Company's web site at www.peoplesoft.com. A replay of the call will be made available for seven days following the call and will be accessible on the company's web site.
About PeopleSoft
PeopleSoft (Nasdaq: PSFT - News) is the world's second largest provider of enterprise application software with 12,000 customers in more than 25 industries and 150 countries. For more information, visit us at www.peoplesoft.com.
PeopleSoft and the PeopleSoft logo are registered trademarks of PeopleSoft, Inc. All other company and product names may be trademarks of their respective owners. Copyright (C) 2003 PeopleSoft, Inc. All rights reserved.
Forward-Looking Statements
Statements made in this press release that state the Company's or management's intentions, beliefs, expectations, or predictions for the future are forward-looking statements. Readers are cautioned that these statements are only predictions and may differ materially from actual future events or results. All forward looking-statements are only as of the date they are made and PeopleSoft undertakes no obligation to update or revise them. The specific forward-looking statements relate to such matters as the impact of the Company's combination with J.D. Edwards and the combined Company's projected financial performance. Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the Company's actual results to differ materially from those projected in such forward-looking statements. These risks, assumptions and uncertainties include: our ability to successfully complete the integration of J.D. Edwards into PeopleSoft and to achieve anticipated synergies, economic and political conditions in the U.S. and abroad; the ability to complete and deliver products and services within currently estimated time frames and budgets; the ability to manage expenses effectively; the ability to achieve revenues from products and services that are under development; competitive and pricing pressures; and other risks referenced from time to time in the Company's filings with the Securities and Exchange Commission. Please refer to the Company's current annual report on Form 10-K and quarterly report on Form 10-Q for more information on the risk factors that could cause actual results to differ.
Additional Information
PeopleSoft has filed a Solicitation/Recommendation Statement on Schedule 14D-9. Stockholders should read this document and any amendments thereto because they contain important information. These filings can be obtained without charge at www.sec.gov and at www.peoplesoft.com.
PEOPLESOFT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- ---------------------
2003 2002 2003 2002
--------- --------- ---------- ----------
Revenues:
License fees $160,459 $121,616 $353,026 $386,835
Maintenance revenue 234,582 176,874 640,066 512,774
Professional services
revenue 229,053 172,723 588,700 529,553
--------- --------- ---------- ----------
Service revenue 463,635 349,597 1,228,766 1,042,327
Development and other
services - - - 7,530
--------- --------- ---------- ----------
Total revenues 624,094 471,213 1,581,792 1,436,692
Costs and expenses:
Cost of license fees 21,941 11,484 40,230 33,103
Cost of services 230,189 159,369 560,356 495,058
Cost of development
and other services - - - 6,755
Sales and marketing
expense 168,554 127,641 419,604 378,373
Product development
expense 127,711 83,002 296,062 252,882
General and
administrative
expense 61,879 27,209 135,918 84,851
Restructuring,
acquisition and other
charges 23,273 - 37,072 11,479
--------- --------- ---------- ----------
Total costs and
expenses 633,547 408,705 1,489,242 1,262,501
--------- --------- ---------- ----------
Operating income (loss) (9,453) 62,508 92,550 174,191
Other income, net 7,556 5,607 19,234 21,324
--------- --------- ---------- ----------
Income (loss) before
provision for income taxes (1,897) 68,115 111,784 195,515
Provision for income taxes 4,243 23,500 42,911 70,336
--------- --------- ---------- ----------
Income (loss) before
minority interest (6,140) 44,615 68,873 125,179
Minority interest 1,205 - 1,205 -
--------- --------- ---------- ----------
Net income (loss) $(7,345) $44,615 $67,668 $125,179
========= ========= ========== ==========
Basic income (loss) per
share $(0.02) $0.14 $0.21 $0.40
========= ========= ========== ==========
Shares used in basic per
share computation 357,289 312,214 329,511 310,231
========= ========= ========== ==========
Diluted income (loss) per
share $(0.02) $0.14 $0.20 $0.39
========= ========= ========== ==========
Shares used in diluted per
share computation 357,289 315,367 333,673 321,060
========= ========= ========== ==========
PEOPLESOFT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except employee count)
(unaudited)
SEPTEMBER 30, DECEMBER 31,
2003 2002
----------- -----------
Assets:
Current assets:
Cash and cash equivalents $595,317 $319,344
Short-term investments 971,955 1,588,172
Accounts receivable, net 421,548 357,353
Deferred tax assets 26,164 40,559
Prepaid expenses and other current
assets 76,368 45,448
----------- -----------
Total current assets 2,091,352 2,350,876
Property and equipment, net 454,636 222,800
Investments 81,323 21,946
Deferred tax assets 53,335 172,255
Capitalized software, net 249,515 44,101
Goodwill 991,015 54,294
Intangible assets and other 469,493 5,359
----------- -----------
Total assets $4,390,669 $2,871,631
=========== ===========
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable and accrued liabilities $315,276 $132,687
Accrued compensation and related
expenses 193,507 172,566
Income taxes payable 102,154 71,163
Short-term deferred revenues 531,123 422,657
----------- -----------
Total current liabilities 1,142,060 799,073
Long-term deferred revenues 117,459 95,460
Other liabilities 36,552 21,486
----------- -----------
Total liabilities 1,296,071 916,019
Stockholders' equity:
Common stock 3,745 3,150
Additional paid-in capital 2,428,669 1,382,442
Retained earnings 667,471 599,803
Treasury stock (36,620) (35,563)
Accumulated other comprehensive income 31,333 5,780
----------- -----------
Total stockholders' equity 3,094,598 1,955,612
----------- -----------
Total liabilities and stockholders'
equity $4,390,669 $2,871,631
=========== ===========
Worldwide employee count 12,740 8,293
Certain prior period amounts have been reclassified to conform to the
current period presentation.
PEOPLESOFT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
2003 2002
----------- -----------
Operating activities:
Net income $67,668 $125,179
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 113,827 71,966
Provision for doubtful accounts 7,151 5,914
Tax benefits from employee stock
transactions 6,235 23,263
Benefit for deferred income taxes (12,101) (4,085)
Gain on sales of investments and
disposition of property and
equipment, net (3,535) (3,251)
Non-cash stock compensation 7,359 5,831
Restructuring, acquisition and other
charges 17,519 11,479
Changes in operating assets and liabilities,
net of effects of acquisitions:
Accounts receivable 106,963 53,219
Accounts payable and accrued
liabilities (18,433) (33,461)
Accrued compensation and related
expenses (28,074) (31,675)
Income taxes, net (8,831) 27,401
Deferred revenues 41,607 (24,080)
Other 14,576 10,454
----------- -----------
Net cash provided by operating
activities 311,931 238,154
Investing activities:
Purchase of investments (8,540,083) (7,022,567)
Proceeds from sales and maturities of
investments 9,159,986 6,810,089
Purchases of property and equipment (231,365) (72,206)
Acquisitions, net of cash acquired (519,934) (120,894)
----------- -----------
Net cash used in investing activities (131,396) (405,578)
Financing activities:
Retirement of convertible debt - (57,000)
Repurchase of restricted stock (1,057) -
Proceeds from employee stock transactions 78,439 96,600
----------- -----------
Net cash provided by financing
activities 77,382 39,600
Effect of foreign exchange rate changes on
cash and cash equivalents 18,056 5,775
----------- -----------
Net increase (decrease) in cash and cash
equivalents 275,973 (122,049)
Cash and cash equivalents at beginning of
period 319,344 433,700
----------- -----------
Cash and cash equivalents at end of period $595,317 $311,651
=========== ===========
Contact:
PeopleSoft, Inc.
Lori Varlas, 877-528-7413 (Investor Relations)
lori_varlas@peoplesoft.com
Steve Swasey, 925-694-5230 (Public Relations)
steve_swasey@peoplesoft.com
Source: PeopleSoft, Inc. |
