Forward-Looking Statements
Management of Epicor Software believes certain statements in this press release may constitute forward-looking statements with respect to the financial condition, results of operations, continued profitability and activities of Epicor. These forward-looking statements include statements regarding expected revenues, earnings and earnings per share, and other statements that are not historical fact. These forward-looking statements are based on currently available competitive, financial and economic data together with management's views and assumptions regarding future events and business performance as of the time the statements are made and are subject to risks and uncertainties. Actual results may differ materially from those expressed or implied in the forward-looking statements.
Such risks and uncertainties include but are not limited to changes in the demand for enterprise resource planning products, particularly in light of competitive offerings; the timely availability and market acceptance of new products and upgrades; the impact of competitive products and pricing; the discovery of undetected software errors; changes in the financial condition of Epicor's major commercial customers and Epicor's future ability to continue to develop and expand its product and service offerings to address emerging business demand and technological trends and other factors discussed in Epicor's annual report on Form 10K and 10K/A for the year ended December 31, 2005 at pages 17-25 and quarterly report on Form 10Q for the quarter ended March 31, 2006 at pages 36-44. As a result of these factors the business or prospects expected by the Company as part of this announcement may not occur. Epicor undertakes no obligation to revise or update publicly any forward-looking statements.
This press release includes certain non-GAAP financial measures, including organic revenue growth, which excludes the revenue contribution of CRS, and non-GAAP net income, fully taxed non-GAAP net income, non-GAAP net income per diluted share amounts and fully taxed non-GAAP net income per diluted share amounts, which exclude the amortization of intangible assets, stock-based compensation expense, each net of tax and the non-cash income tax benefit. 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 measures of financial performance prepared in accordance with GAAP. The Company's management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the performance of the Company's business operations. These measures also facilitate management's internal comparisons to our historical operating results and to our competitors' operating results, operational forecasting and budgeting. Investors and potential investors are encouraged to review the reconciliation of the non-GAAP financial measures contained within this press release with their most directly comparable GAAP financial results.
EPICOR SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
June 30, December 31,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $64,459 $49,768
Short-term investments -- 3,271
Accounts receivable, net 68,261 67,728
Deferred income taxes 20,823 20,726
Inventory 8,725 4,572
Prepaid expenses and other current assets 9,165 6,759
Total current assets 171,433 152,824
Property and equipment, net 10,963 11,347
Deferred income taxes 22,449 22,449
Intangible assets, net 64,492 73,539
Goodwill 165,712 164,451
Other assets 5,674 4,341
Total assets $440,723 $428,951
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $20,988 $12,150
Accrued expenses 49,689 56,709
Current portion of accrued restructuring costs 2,613 2,812
Current portion of long-term debt 1,103 100
Current portion of deferred revenue 60,092 57,183
Total current liabilities 134,485 128,954
Long-term debt, less current portion 115,863 124,639
Long-term portion of accrued restructuring costs 1,067 1,460
Long-term portion of deferred revenue 1,726 2,284
Long-term deferred income taxes 1,165 1,164
Total long-term liabilities 119,821 129,547
Stockholders' equity:
Common stock 58 56
Additional paid-in capital 340,701 336,139
Less: treasury stock at cost (10,679) (10,679)
Accumulated other comprehensive loss (1,297) (1,053)
Accumulated deficit (142,366) (154,013)
Total stockholders' equity 186,417 170,450
Total liabilities and stockholders' equity $440,723 $428,951
EPICOR SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
(as (as
Restated) Restated)
Revenues:
License fees $23,995 $18,369 $43,306 $34,042
Consulting 27,270 18,358 52,228 35,282
Maintenance 37,533 33,488 73,702 66,734
Hardware and other 10,744 808 14,784 1,749
Total revenues 99,542 71,023 184,020 137,807
Cost of revenues 44,034 25,440 79,795 50,154
Amortization of intangible assets 4,249 2,811 8,494 5,594
Total cost of revenues 48,283 28,251 88,289 55,748
Gross profit 51,259 42,772 95,731 82,059
Operating expenses:
Sales and marketing 16,422 13,661 31,423 27,762
Software development 8,844 7,035 17,176 14,425
General and administrative 13,080 11,093 25,322 22,249
Total operating expenses 38,346 31,789 73,921 64,436
Income from operations 12,913 10,983 21,810 17,623
Interest expense (2,327) (295) (4,211) (574)
Other income (expense), net 910 (29) 1,196 (183)
Income before income taxes 11,496 10,659 18,795 16,866
Minority interest in income of
consolidated subsidiary -- 59 -- 90
Provision for income taxes 4,411 (18,954) 7,148 (18,515)
Net income $7,085 $29,554 $11,647 $35,291
Net income per share:
Basic $0.13 $0.54 $0.21 $0.65
Diluted $0.12 $0.52 $0.21 $0.63
Weighted average common shares
outstanding:
Basic 55,763 54,486 55,683 54,231
Diluted 56,950 56,592 56,795 56,419
EPICOR SOFTWARE CORPORATION
NON-GAAP EARNINGS RECONCILIATION
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
(as (as
Restated) Restated)
Net income $7,085 $29,554 $11,647 $35,291
Add back, net of tax:
Amortization of intangible assets 2,795 2,680 5,629 5,383
Stock-based compensation expense 1,308 591 1,899 1,197
Non-cash income tax benefit -- (19,917) -- (19,917)
Non-GAAP earnings $11,188 $12,908 $19,175 $21,954
Non-GAAP earnings per diluted share $0.20 $0.23 $0.34 $0.39
Weighted average common shares
outstanding:
Diluted 56,950 56,592 56,795 56,419
EPICOR SOFTWARE CORPORATION
2005 FULLY TAXED NON-GAAP EARNINGS RECONCILIATION
(in thousands, except per share amounts)
(Unaudited)
Three Months
Ended
June 30,
2005
Income before income taxes $10,659
Minority interest in income of consolidated subsidiary 59
Provision for income taxes at statutory tax rates 4,157
Fully taxed net income $6,443
Add back, net of tax:
Amortization of intangible assets 1,798
Stock-based compensation expense 591
Fully taxed non-GAAP earnings $8,832
Fully non-GAAP earnings per diluted share $0.16
Weighted average common shares outstanding:
Diluted 56,592
Web site: http://www.epicor.com/
