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Ariba Reports Results For Third Quarter Of Fiscal Year 2012

Our non-GAAP financial measures generally exclude expenses or benefits for (i) amortization of intangible assets related to acquisitions, (ii) stock-based compensation, (iii) tax accrual reversal, (iv) restructuring costs, (v) transaction related costs and (vi) discontinued operations. We exclude these items because we believe they are not closely related to the ongoing operating performance of our business and the performance of our senior management and are generally excluded from our budget and planning process. In addition to these reasons, we believe our non-GAAP financial measures are also helpful to investors by facilitating comparisons of our operating results over different time periods and by facilitating comparisons of our financial performance with that of other companies. In addition, except for certain restructuring costs or benefits, transaction related costs and discontinued operations, these items are non-cash items that do not affect cash flows.

(1) Amortization of acquired intangible assets. In accordance with GAAP, we amortize intangible assets acquired in connection with acquisitions over the estimated useful lives of the assets. We exclude these amortization costs in our non-GAAP financial measures because they (i) result from prior acquisitions, rather than the ongoing operating performance of our business, and (ii) absent additional acquisitions, are expected to decline over time as the remaining carrying amounts of these assets are amortized. We believe excluding these costs helps investors compare our financial performance with that of other companies with different acquisition histories. However, as with impairment charges, we recognize that amortization costs provide a helpful measure of the financial impact and performance of prior acquisitions and consider our non-GAAP financial measures in conjunction with our GAAP financial results that include amortization costs.

(2) Stock-based compensation expenses. We exclude stock-based compensation expense associated with stock granted to employees and non-employee directors in our non-GAAP financial measures. While stock-based compensation is a significant component of our expenses, we believe that investors wish to be able to exclude the effects of stock-based compensation expense in comparing our financial performance with that of other companies.

(3) Tax accrual reversal. We released tax reserves in the nine months ended June 30, 2011. We exclude these from our non-GAAP financial measures because they are unrelated to our ongoing operations. We believe excluding the tax reserve releases helps investors compare our operating performance with that of other companies.

(4) Restructuring cost. We recorded a restructuring cost related to lease abandonment accruals and asset impairment in the three and nine months ended June 30, 2011. We exclude these from our non-GAAP financial measures because they are unrelated to our ongoing operations and are significantly impacted by factors outside our control. We believe excluding restructuring costs helps investors compare our operating performance with that of other companies. We recognize, however, that restructuring costs will impact cash flows and that we and investors should carefully consider the impact of these costs on future cash flows.

(5) Transaction related costs. We recorded transaction related costs in the three and nine months ended June 30, 2012 and nine months ended June 30, 2011. We exclude these from our non-GAAP financial measures because they are unrelated to our ongoing operations. We believe excluding the transaction related costs helps investors compare our operating performance with that of other companies. We recognize, however, that the transaction related costs impact cash flow and that we and investors should carefully consider the impact of this on cash flow.

(6) Discontinued operations. We exclude the results of discontinued operations from our non-GAAP financial measures because they are unrelated to our ongoing operations. We believe excluding the results of discontinued operations helps investors compare our operating performance with that of other companies. We recognize, however, that the discontinued operations impact cash flow and that we and investors should carefully consider the impact of this on cash flow.

 
Ariba, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited; in thousands, except per share data)
           
Three Months Ended Three Months Ended
June 30, June 30,

2012Reported

 

Adj

2012 Non-GAAP

 

2011Reported

 

Adj

2011 Non-GAAP

Revenues:
Subscription and maintenance $ 108,011 $ - $ 108,011 $ 91,017 $ - $ 91,017
Services and other   28,953     -     28,953     30,900     -     30,900
Total revenues   136,964     -     136,964     121,917     -     121,917
 
Cost of revenues:
Subscription and maintenance (2) 21,171 (1,555 ) 19,616 19,507 (927 ) 18,580
Services and other (2) 23,961 (1,759 ) 22,202 22,274 (1,062 ) 21,212
Amortization of acquired technology and customer intangible assets (1)   4,326     (4,326 )   -     3,954     (3,954 )   -
Total cost of revenues   49,458     (7,640 )   41,818     45,735     (5,943 )   39,792
Gross profit   87,506     7,640     95,146     76,182     5,943     82,125
 
Operating expenses:
Sales and marketing (2) 47,515 (8,402 ) 39,113 43,019 (6,911 ) 36,108
Research and development (2) 18,321 (2,758 ) 15,563 16,661 (2,118 ) 14,543
General and administrative (2) (5) 18,604 (6,982 ) 11,622 13,708 (2,981 ) 10,727
Amortization of other intangible assets (1) 394 (394 ) - 331 (331 ) -
Restructuring costs (4)   -     -     -     13,396     (13,396 )   -
Total operating expenses   84,834     (18,536 )   66,298     87,115     (25,737 )   61,378
 
Operating income (loss) 2,672 26,176 28,848 (10,933 ) 31,680 20,747
Interest and other (expense) income, net   (351 )   -     (351 )   671     -     671
Income (loss) from continuing operations before income taxes 2,321 26,176 28,497 (10,262 ) 31,680 21,418
Provision for income taxes   3,411     -     3,411     2,021     -     2,021
Income (loss) from continuing operations (1,090 ) 26,176 25,086 (12,283 ) 31,680 19,397
Discontinued operations, net of tax:
Income from discontinued operations (6)   330     (330 )   -     349     (349 )   -
Total discontinued operations   330     (330 )   -     349     (349 )   -
 
Net (loss) income $ (760 ) $ 25,846   $ 25,086   $ (11,934 ) $ 31,331   $ 19,397
 
Basic (loss) earnings per share:
(Loss) income from continuing operations $ (0.01 ) $ 0.26 $ (0.13 ) $ 0.21
Discontinued operations, net of tax   0.00     0.00     0.00     0.00
Net (loss) income per basic common share $ (0.01 ) $ 0.26   $ (0.13 ) $ 0.21
 
Diluted (loss) earnings per share:
(Loss) income from continuing operations $ (0.01 ) $ 0.25 $ (0.13 ) $ 0.20
Discontinued operations, net of tax   0.00     0.00     0.00     0.00
Net (loss) income per diluted common share $ (0.01 ) $ 0.25   $ (0.13 ) $ 0.20
 
Weighted average shares - basic 96,244 96,244 93,101 93,101
Weighted average shares - diluted 96,244 100,196 93,101 96,721
 
 
Ariba, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited; in thousands, except per share data)
           
Nine Months Ended Nine Months Ended
June 30, June 30,

2012Reported

  Adj

2012 Non-GAAP

 

2011Reported

  Adj

2011 Non-GAAP

Revenues:
Subscription and maintenance $ 307,283 $ - $ 307,283 $ 239,724 $ - $ 239,724
Services and other   86,805     -     86,805     81,378     -     81,378
Total revenues   394,088     -     394,088     321,102     -     321,102
 
Cost of revenues:
Subscription and maintenance (2) 64,068 (4,828 ) 59,240 51,477 (2,612 ) 48,865
Services and other (2) 69,775 (5,248 ) 64,527 56,798 (3,055 ) 53,743
Amortization of acquired technology and customer intangible assets (1)   12,942     (12,942 )   -     8,054     (8,054 )   -
Total cost of revenues   146,785     (23,018 )   123,767     116,329     (13,721 )   102,608
Gross profit   247,303     23,018     270,321     204,773     13,721     218,494
 
Operating expenses:
Sales and marketing (2) 138,095 (24,614 ) 113,481 118,566 (20,372 ) 98,194
Research and development (2) 52,605 (8,440 ) 44,165 44,157 (6,199 ) 37,958
General and administrative (2) (5) 47,941 (14,622 ) 33,319 38,859 (11,277 ) 27,582
Amortization of other intangible assets (1) 1,175 (1,175 ) - 573 (573 ) -

Restructuring costs (4)

  -     -     -     10,704     (10,704 )   -
Total operating expenses   239,816     (48,851 )   190,965     212,859     (49,125 )   163,734
 
Operating income 7,487 71,869 79,356 (8,086 ) 62,846 54,760
Interest and other (expense) income, net   (437 )   -     (437 )   1,766     -     1,766
Income (loss) from continuing operations before income taxes 7,050 71,869 78,919 (6,320 ) 62,846 56,526
Provision for (benefit from) income taxes (3)   7,018     -     7,018     (930 )   3,942     3,012

Income (loss) from continuing operations

32 71,869 71,901 (5,390 ) 58,904 53,514
Discontinued operations, net of tax:
Income (loss) from discontinued operations (6) 1,702 (1,702 ) - (3,608 ) 3,608 -
Gain on sale of discontinued operations (6)   -     -     -     39,164     (39,164 )   -
Total discontinued operations   1,702     (1,702 )   -     35,556     (35,556 )   -
 
Net income $ 1,734   $ 70,167   $ 71,901   $ 30,166   $ 23,348   $ 53,514
 
Basic earnings (loss) per share:
Income (loss) from continuing operations $ 0.00 $ 0.75 $ (0.06 ) $ 0.59
Discontinued operations, net of tax   0.02     0.00     0.39     0.00
Net income per basic common share $ 0.02   $ 0.75   $ 0.33   $ 0.59
 
Diluted earnings (loss) per share:
Income (loss) from continuing operations $ 0.00 $ 0.73 $ (0.06 ) $ 0.57
Discontinued operations, net of tax   0.02     0.00     0.39     0.00
Net income per diluted common share $ 0.02   $ 0.73   $ 0.33   $ 0.57
 
Weighted average shares - basic 95,284 95,284 91,193 91,193
Weighted average shares - diluted 98,694 98,694 91,193 94,697




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