Ssa Global (NASDAQ:SSAG)
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CHICAGO, June 6 /PRNewswire-FirstCall/ -- SSA Global (NASDAQ:SSAG), a leading global provider of enterprise business software and services, today announced financial results for the third quarter ended April 30, 2006.
(Logo: http://www.newscom.com/cgi-bin/prnh/20051213/CGTU005LOGO )
"SSA Global continues to deliver strong financial performance by delivering comprehensive solutions that help our customers achieve their critical business needs," said Mike Greenough, chairman, president and CEO of SSA Global.
Third quarter total revenue increased 8% to $194.6 million compared to $180.4 million last year.
License revenue for the quarter was $62.3 million, an increase of 19% from the third quarter last year and represented 32% of total revenue compared to 29% last year. On an organic basis, excluding contribution from recent acquisitions in the quarter and normalizing for foreign exchange equalization, license revenue grew 12%.
The acquisition of E.piphany, which closed on September 29, 2005, contributed $15.1 million to total revenue and $4.3 million to license revenue in the quarter.
During the third quarter, North America contributed 49% of total revenue; Europe, Middle East and Africa (EMEA) contributed 35%; and Asia-Pacific/Japan (APJ) and Latin America contributed 16%. For the quarter, 1,361 contracts were signed, including 57 new customers that represented 9% of total license value associated with software contracts signed in the quarter.
On an adjusted basis for the quarter, total revenue grew 8% to $195.1 million and net income grew 4% to $19.1 million or $0.26 per diluted share up from $18.4 million or $0.25 per diluted share last year. (Adjusted revenue, net income and earnings per diluted share include deferred license revenue associated with the E.piphany acquisition and an assumed 34% tax rate; it excludes amortization of acquired intangibles, stock option-based compensation expense and restructuring charges).
For the quarter, the Company reported GAAP net income of $4.6 million compared to $9.2 million last year, and earnings per diluted share under GAAP was $0.06.
Cash and cash equivalents as of April 30, 2006 totaled $140.6 million and net cash provided by operating activities for the quarter totaled $19.4 million. Days Sales Outstanding (DSO) were 77 and down from 83 days at the end of the third quarter last year.
Due to the Company's definitive agreement to be acquired by Infor, which was announced on Monday, May 15, 2006, the Company will not hold a conference call to discuss its third quarter 2006 results.
Presentation of Non-GAAP Financial Measures
The non-GAAP financial measures presented in the text of this press release and accompanying supplementary financial information (also referred to as "adjusted") represent the financial measures used by the Company's management to evaluate the quarterly operating and cash flows performance of the Company and to conduct its business operations. These non-GAAP financial measures are also used by management to evaluate return on investment, income contribution and future impact to operating results of potential mergers and acquisitions. In addition, these non-GAAP financial measures facilitate management's internal comparisons to competitors' operating results and the software industry in general. This non-GAAP financial information is provided as additional information for investors and is not in accordance with, or an alternative to, GAAP. In addition, the non-GAAP financial information provided may be different than similar measures used by other companies. However, the Company's management believes these non-GAAP measures provide useful information to investors, potential investors, securities analysts and others so each group can evaluate the Company's current and future prospects in the same manner as management if they so choose. A reconciliation of GAAP financial information to adjusted results and EBITDA has been provided in the financial statement tables that accompany this press release.
About SSA Global
SSA Global (NASDAQ:SSAG) is a leading provider of enterprise business software for mid-sized and large organizations, primarily in select manufacturing, consumer and services industries. The company's software solutions include enterprise resource planning, financial management, human capital management, corporate performance management, customer relationship management, product lifecycle management, supply chain management and supplier relationship management. Headquartered in Chicago, SSA Global has over 50 locations worldwide and its product offerings are used by customers in over 90 countries. For additional information, visit the SSA Global web site at http://www.ssaglobal.com/ .
SSA Global is the corporate brand for product lines, and subsidiaries and affiliates of SSA Global Technologies, Inc. Other products mentioned in this document are registered, trademarked or service marked by their respective owners.
SSA, SSA Global, SSA Global Technologies, forward faster and other SSA Global products and services mentioned herein as well as their respective logos are either registered trademarks or trademarks of SSA Global in the United States and/or other countries.
Forward-Looking Statements
These materials may contain "forward-looking statements." Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words "believe," "anticipate," "expect," "estimate," "intend," "project," "plan," "will be," "will likely continue," "will likely result," or words or phrases with similar meaning. All of these forward-looking statements are based on estimates and assumptions made by our management that, although we believe to be reasonable, are inherently uncertain. Forward-looking statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of our control, that may cause our business, strategy or actual results to differ materially from the forward-looking statements. We operate in a changing environment in which new risks can emerge from time to time. It is not possible for management to predict all of these risks, nor can it assess the extent to which any factor, or a combination of factors, may cause our business, strategy or actual results to differ materially from those contained in forward-looking statements. Factors you should consider that could cause these differences include, among other things:
-- General economic and business conditions, including exchange rate
fluctuations;
-- Our ability to identify acquisition opportunities and effectively and
cost-efficiently integrate acquisitions;
-- Our ability to maintain effective internal control over financial
reporting;
-- Our ability to attract and retain personnel, including key personnel;
-- Our success in developing and introducing new services and products;
and
-- Competition in the software industry, as it relates to both our
existing and potential new customers.
SSA GLOBAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP
(in millions, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
April 30, April 30,
Revenue: 2006 2005 2006 2005
License fees $62.3 $52.5 $171.1 $144.9
Support 90.3 86.4 266.2 258.7
Services and other 42.0 41.5 122.7 121.3
Total revenue 194.6 180.4 560.0 524.9
Operating expenses:
Cost of revenues:
Cost of license fees 11.7 7.5 29.1 19.7
Amortization of
acquired technology 4.0 3.6 12.4 11.9
Cost of support,
services and other 51.6 49.4 151.3 145.0
Sales and marketing 49.2 46.4 142.4 135.6
Research and
development 27.3 26.6 82.3 76.3
General and
administrative 22.1 19.5 62.6 62.1
Non-cash stock option
compensation expense 3.9 2.4 10.2 7.3
Amortization of
intangibles 7.2 6.4 21.0 19.2
Restructuring charge
(benefit) 3.1 0.1 8.5 (1.4)
Total operating
expenses 180.1 161.9 519.8 475.7
Operating income 14.5 18.5 40.2 49.2
Interest expense, net 2.9 3.9 7.8 11.8
Loss on early
extinguishment of debt - - 3.3 -
Other expense (income) 1.4 (0.8) 3.5 (2.0)
Income before income
taxes 10.2 15.4 25.6 39.4
Provision for income
taxes 5.6 6.2 13.4 15.8
Net income 4.6 9.2 12.2 23.6
Preferred stock dividends - 7.9 - 23.3
Preferred stock dividends
in excess of stated amount - 11.1 - 32.5
Cash dividend paid to
preferred stockholders - - - 25.0
Distributed earnings -
preferred stockholders - 19.0 - 80.8
Net income (loss) to
common stockholders $4.6 $(9.8) $12.2 $(57.2)
Earnings (loss) per
common share:
Basic $0.07 $(2.05) $0.18 $(11.95)
Diluted 0.06 (2.05) 0.17 (11.95)
Earnings per preferred
share:
Basic and diluted $- $6.33 $- $26.93
Weighted average common
shares:
Basic 69.725 4.785 68.851 4.785
Diluted 72.812 4.785 73.429 4.785
Weighted average
preferred shares:
Basic and diluted - 3.000 - 3.000
SSA GLOBAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - ADJUSTED (NON-GAAP)
(in millions, except per share data)
(Unaudited)
Three Months Ended
April 30,
% of % of %
Revenue: 2006 Revenues 2005 Revenues Inc (Dec)
License fees $62.8 32% $52.5 29% 20%
Support 90.3 46% 86.4 48% 5%
Services and
other 42.0 22% 41.5 23% 1%
Total revenue 195.1 100% 180.4 100% 8%
Operating expenses:
Cost of revenues:
Cost of license
fees 11.7 6% 7.5 4% 56%
Cost of
support,
services and
other 51.6 27% 49.4 27% 4%
Sales and
marketing 49.2 25% 46.4 26% 6%
Research and
development 27.3 14% 26.6 15% 3%
General and
administrative 22.1 11% 19.5 11% 13%
Total
operating
expenses 161.9 83% 149.4 83% 8%
Operating income 33.2 17% 31.0 17% 7%
Interest expense,
net 2.9 1% 3.9 2% -26%
Other (income)
expense 1.4 1% (0.8) 0% *
Income before
income taxes 28.9 15% 27.9 15% 4%
Provision for
income taxes 9.8 5% 9.5 5% 3%
Net income $19.1 10% $18.4 10% 4%
Earnings per
common share:
Basic $0.27 $0.27
Diluted $0.26 $0.25
Weighted average
common shares:
Basic 69.725 68.017
Diluted 73.423 72.746
* not meaningful
Nine Months Ended
April 30,
% of % of %
Revenue: 2006 Revenues 2005 Revenues Inc (Dec)
License fees $172.7 31% $144.9 28% 19%
Support 266.2 47% 258.7 49% 3%
Services and
other 122.7 22% 121.3 23% 1%
Total revenue 561.6 100% 524.9 100% 7%
Operating expenses:
Cost of revenues:
Cost of license
fees 29.1 5% 19.7 4% 48%
Cost of
support,
services and
other 151.3 27% 145.0 28% 4%
Sales and
marketing 142.4 26% 135.6 26% 5%
Research and
development 80.6 14% 76.3 14% 6%
General and
administrative 62.6 11% 62.1 12% 1%
Total
operating
expenses 466.0 83% 438.7 84% 6%
Operating income 95.6 17% 86.2 16% 11%
Interest expense,
net 7.8 1% 11.8 1% -34%
Other (income)
expense 3.5 1% (2.0) 0% *
Income before
income taxes 84.3 15% 76.4 15% 10%
Provision for
income taxes 28.7 5% 26.0 5% 10%
Net income $55.6 10% $50.4 10% 10%
Earnings per
common share:
Basic $0.81 $0.74
Diluted $0.75 $0.69
Weighted average
common shares:
Basic 68.851 68.017
Diluted 74.040 72.834
* not meaningful
SSA GLOBAL TECHNOLOGIES, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO ADJUSTED (NON-GAAP) CONSOLIDATED STATEMENTS OF
OPERATIONS
(in millions, except per share data)
(Unaudited)
Three Months Ended
April 30,
2006 2006 2005 2005
Revenue: GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
License
fees (1) $62.3 $0.5 $62.8 $52.5 $- $52.5
Support 90.3 - 90.3 86.4 - 86.4
Services
and
other 42.0 - 42.0 41.5 - 41.5
Total
revenue 194.6 0.5 195.1 180.4 - 180.4
Operating
expenses:
Cost of
revenues:
Cost of
license
fees 11.7 - 11.7 7.5 - 7.5
Amortization
of acquired
technology
(2) 4.0 (4.0) - 3.6 (3.6) -
Cost of
support,
services
and
other 51.6 - 51.6 49.4 - 49.4
Sales and
marketing 49.2 - 49.2 46.4 - 46.4
Research
and
develop-
ment 27.3 - 27.3 26.6 - 26.6
General
and
administra-
tive 22.1 - 22.1 19.5 - 19.5
Non-cash
stock
option
compensation
expense
(3) 3.9 (3.9) - 2.4 (2.4) -
Amortization
of
intangibles
(2) 7.2 (7.2) - 6.4 (6.4) -
Restructuring
charges
(benefits)
(4) 3.1 (3.1) - 0.1 (0.1) -
Total
operating
expens-
es 180.1 (18.2) 161.9 161.9 (12.5) 149.4
Operating
income 14.5 18.7 33.2 18.5 12.5 31.0
Interest
expense,
net 2.9 - 2.9 3.9 - 3.9
Other (income)
expense 1.4 - 1.4 (0.8) - (0.8)
Income before
income
taxes 10.2 18.7 28.9 15.4 12.5 27.9
Provision for
income
taxes (6) 5.6 4.2 9.8 6.2 3.3 9.5
Net income 4.6 14.5 19.1 9.2 9.2 18.4
Preferred
stock
dividends (7) - - - 7.9 (7.9) -
Preferred stock
dividends in
excess of
stated
amount (7) - - - 11.1 (11.1) -
Distributed
earnings -
preferred
stockholders - - - 19.0 (19.0) -
Net income
(loss) to
common
stock-
holders $4.6 $14.5 $19.1 $(9.8) $28.2 $18.4
Earnings
(loss)
per common
share (7):
Basic $0.07 $0.27 $(2.05) $0.27
Diluted $0.06 $0.26 $(2.05) $0.25
Earnings per
preferred
share (7):
Basic and
diluted $- $- $6.33 $-
Weighted
average
common
shares (7):
Basic 69.725 - 69.725 4.785 63.232 68.017
Diluted 72.812 0.611 73.423 4.785 67.961 72.746
Weighted
average
preferred
shares (7):
Basic and
diluted - 3.000 (3.000) -
Nine Months Ended
April 30,
2006 2006 2005 2005
Revenue: GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
License
fees
(1) $171.1 $1.6 $172.7 $144.9 $- $144.9
Support 266.2 - 266.2 258.7 - 258.7
Services
and
other 122.7 - 122.7 121.3 - 121.3
Total
revenue 560.0 1.6 561.6 524.9 - 524.9
Operating expenses:
Cost of revenues:
Cost of
license
fees 29.1 - 29.1 19.7 - 19.7
Amortization
of acquired
technology
(2) 12.4 (12.4) - 11.9 (11.9) -
Cost of
support,
services
and
other 151.3 - 151.3 145.0 - 145.0
Sales and
marketing 142.4 - 142.4 135.6 - 135.6
Research and
develop-
ment (2) 82.3 (1.7) 80.6 76.3 - 76.3
General and
administra-
tive 62.6 - 62.6 62.1 - 62.1
Non-cash
stock option
compensation
expense
(3) 10.2 (10.2) - 7.3 (7.3) -
Amortization
of
intangib-
les (2) 21.0 (21.0) - 19.2 (19.2) -
Restructuring
charges
(benefits)
(4) 8.5 (8.5) - (1.4) 1.4 -
Total
operating
expen-
ses 519.8 (53.8) 466.0 475.7 (37.0) 438.7
Operating
income 40.2 55.4 95.6 49.2 37.0 86.2
Interest
expense,
net 7.8 - 7.8 11.8 - 11.8
Loss on early
extinguishment
of debt (5) 3.3 (3.3) - - - -
Other (income)
expense 3.5 - 3.5 (2.0) - (2.0)
Income before
income taxes 25.6 58.7 84.3 39.4 37.0 76.4
Provision for
income
taxes (6) 13.4 15.3 28.7 15.8 10.2 26.0
Net income 12.2 43.4 55.6 23.6 26.8 50.4
Preferred stock
dividends (7) - - - 23.3 (23.3) -
Preferred stock
dividends in
excess of
stated
amount (7) - - - 32.5 (32.5) -
Cash dividend
paid to
preferred
stockholders
(7) - - - 25.0 (25.0) -
Distributed
earnings -
preferred
stockholders - - - 80.8 (80.8) -
Net income
(loss)
to common
stock-
holders $12.2 $43.4 $55.6 $(57.2) $107.6 $50.4
Earnings (loss)
per common
share (7):
Basic $0.18 $0.81 $(11.95) $0.74
Diluted $0.17 $0.75 $(11.95) $0.69
Earnings per
preferred
share (7):
Basic and
diluted $- $- $26.93 $-
Weighted average
common
shares (7):
Basic 68.851 - 68.851 4.785 63.232 68.017
Diluted 73.429 0.611 74.040 4.785 68.049 72.834
Weighted
average
preferred
shares (7):
Basic and
diluted - 3.000 (3.000) -
Footnotes - Adjustments:
(1) In connection with the Epiphany acquisition, we were required to
eliminate deferred license revenue for purchase accounting purposes.
The adjustment amount represents license fees that would have been
otherwise recorded by Epiphany that were not recognized for GAAP
purposes.
(2) Represents the amortization of intangible assets and charges
associated with acquisitions, which includes acquired technology,
customer lists, patents and in-process research and development
charges.
(3) Represents non-cash stock-based compensation expense associated with
stock options granted to certain employees on July 31, 2003 and the
adoption of SFAS 123R effective August 1, 2005.
(4) Restructuring charges (benefits) include costs associated with SSA
employee severance and facilities termination costs and adjustments
to restructuring liabilities assumed in connection with acquisitions
that occur more than twelve months subsequent to the consummation of
the related acquisition.
(5) Represents a non-cash charge for the write-off of unamortized
deferred financing fees associated with early repayment of long-term
debt.
(6) Provision for income taxes is adjusted to 34% for all periods as this
represents the Company's estimated long-term effective cash income
tax rate. The Company's cash income tax rate was approximately 10%
for fiscal 2005.
(7) For the three and nine months ended April 30, 2005, the adjustments
give effect to the issuance of common stock associated with the
initial public offering of common stock as if it occurred November 1,
2004 and August 1, 2004, respectively, including (a) conversion of
preferred stock into 52.755 million shares of common stock, (b)
issuance of 10.350 million shares in the initial public offering and
(c) inclusion of potentially dilutive securities in diluted earnings
per common share that were anti-dilutive for historical reporting
purposes. For the three and nine months ended April 30, 2006, the
adjustment gives effect to the inclusion of potentially dilutive
securities in diluted earnings per common share that were
anti-dilutive for GAAP reporting purposes.
SSA GLOBAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
April 30, January 31, July 31,
2006 2006 2005
Assets (Unaudited) (Unaudited) (Unaudited)
Current assets:
Cash and cash equivalents $140.6 $136.0 $165.4
Restricted cash 0.6 3.1 4.9
Investments - 0.5 -
Accounts receivable, net 170.2 181.3 144.1
Deferred tax assets 19.5 19.9 19.9
Prepaid and other current
assets 28.9 26.9 25.7
Total current assets 359.8 367.7 360.0
Non-current assets:
Restricted cash 3.3 4.2 -
Property and equipment, net 19.3 19.7 18.3
Intangible assets, net 169.7 170.7 143.1
Goodwill 400.8 391.4 296.3
Deferred tax assets - - 6.4
Other 9.1 6.8 6.6
Total non-current assets 602.2 592.8 470.7
Total Assets $962.0 $960.5 $830.7
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term
debt $4.0 $4.0 $1.6
Accounts payable and accrued
liabilities 115.2 115.8 106.0
Accrued compensation and
related benefits 62.1 61.2 56.5
Deferred revenue 219.9 228.5 183.8
Income taxes payable 3.0 1.8 1.8
Total current liabilities 404.2 411.3 349.7
Non-current liabilities:
Long-term debt 208.4 209.2 161.0
Accrued restructuring 11.4 10.4 -
Deferred tax liabilities 0.5 3.2 -
Other long term obligations 7.7 7.4 7.1
Deferred revenue 33.7 34.9 38.5
Total liabilities 665.9 676.4 556.3
Stockholders' equity 296.1 284.1 274.4
Total Liabilities and
Stockholders' Equity $962.0 $960.5 $830.7
SSA GLOBAL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Three Months Ended Nine Months Ended
April 30, April 30,
2006 2005 2006 2005
Net income $4.6 $9.2 $12.2 $23.6
Non-cash expenses 23.7 24.1 70.4 68.6
Changes in working
capital, net of
acquisitions:
Accounts receivable 15.8 17.5 (9.1) (9.8)
Deferred revenue (18.4) (3.4) 5.3 3.4
Other (6.3) (4.3) (18.4) (22.5)
Net cash provided by
operating activities 19.4 43.1 60.4 63.3
Cash flows from investing
activities:
Acquisitions, net of
cash acquired (20.0) - (129.6) 1.0
Purchase of property
and equipment (1.6) (5.9) (4.4) (9.3)
Capitalized software
costs and acquired
technology (1.2) (1.1) (5.1) (2.4)
Other 0.5 - 0.5 -
Net cash used in
investing activities (22.3) (7.0) (138.6) (10.7)
Cash flows from financing
activities:
Borrowings - - 200.0 -
Payments of debt (1.0) (0.6) (157.2) (2.3)
Cash dividend paid to
preferred stockholders - - - (25.0)
Proceeds from stock option
exercises 1.8 - 5.1 -
Other 3.1 (3.6) 0.1 (3.6)
Net cash provided by
(used in) financing
activities 3.9 (4.2) 48.0 (30.9)
Effect of exchange rate
changes on cash and
cash equivalents 3.6 (0.6) 5.4 1.1
Net increase (decrease)
in cash and cash
equivalents 4.6 31.3 (24.8) 22.8
Cash and cash
equivalents at
beginning of period 136.0 97.6 165.4 106.1
Cash and cash
equivalents at end
of period $140.6 $128.9 $140.6 $128.9
SSA GLOBAL TECHNOLOGIES, INC. AND SUBSIDIARIES
RECONCILIATION OF EBITDA TO NET CASH PROVIDED BY OPERATIONS
(in millions)
(Unaudited)
Three Months Ended Nine Months Ended
April 30, April 30,
2006 2005 2006 2005
EBITDA (1) $35.1 $34.2 $100.5 $94.8
Interest paid (3.8) (2.3) (10.3) (6.9)
Income taxes paid (0.4) (0.6) (1.2) (1.7)
Other changes in working
capital (11.5) 11.8 (28.6) (22.9)
Net cash provided by
operations $19.4 $43.1 $60.4 $63.3
(1) Represents net income before interest, income taxes, options
amortization, depreciation and amortization related to customer
lists, patents, acquired technology, capitalized software development
and in-process research and development and restructuring charges
(benefits).
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DATASOURCE: SSA Global
CONTACT: Investor, Dawn Drella, +1-312-474-7694,
, or Press, Maria Diecidue, +1-312-258-6000,
, both of SSA Global
Web site: http://www.ssaglobal.com/