I'm going to begin by reviewing our financial results for 2011 and then I'll provide financial guidance for 2012. Unless otherwise noted, our discussion will be based on continuing operations and will be on a non-GAAP basis for all cost gross margins, operating and net income, as well as EPS when comparing to the same period in the prior year. The primary difference between GAAP and non-GAAP financial information is noncash stock-based compensation. Please refer to the reconciliation of our financial information on the GAAP basis to that on the non-GAAP basis included in the press release published on our website.For the year, recurring revenues grew by 25.1% to $213.8 million. Total revenues grew by 18.2% to $269.2 million. Recurring revenues as a percentage of total revenues increased to 79% from 75% last year. Total gross margin was 57.8% compared with 57.4% for 2010. Operating income increased by 45% to $31.5 million, and the operating margins for 2011 expanded by 210 basis points to 11.7%. Net income grew by 42% to $18.1 million compared with $12.8 million last year. The related net earnings per diluted share grew by 38% to $0.65 compared with $0.47 per diluted share in 2010. For the fourth quarter of 2011, Ultimate's recurring revenues were $57.1 million, representing 24.1% growth over the same quarter last year. The recurring revenue gross margin of 71.4% was in line with our expectations. Service revenues were $14.9 million and the Service's gross margin was 13.6%. The gross margin rate for total revenues was 59.6% in the quarter compared with 57.6% last year, and this was due to a higher contribution from recurring SaaS revenues. Operating expenses were $31.9 million for the quarter and were slightly above our expectations, and as we began making the investments in R&D and marketing that we discussed last quarter. Operating income was $11.4 million and our operating margin was 15.7% for the quarter compared with $7.9 million and 13.1% last year.
Net income was $6.5 million or $0.24 per diluted share, and that compares with $4.6 million or $0.17 per diluted share for the same quarter last year. Our non-GAAP income tax rate for the quarter was 42.5%, bringing our tax rate for 2011 to 41.9%.Now turning to the balance sheet. Total cash and investments in marketable securities were $55.3 million. In 2011, we generated $28.4 million in cash from operations compared with $25.4 million in 2010. Keep in mind that 2011 cash from operations reflects the impact of the elimination of the one-time infrastructure fees in our SaaS contracts as a result of the introduction of the Partners for Life program at the end of 2010. We invested $16.7 million in capital expenditures this year compared to $8.9 million last year. We used $17.3 million to acquire approximately 347,000 shares during 2011. We have approximately 1.1 million shares remaining that are available for repurchase under our repurchase plan. In addition, we used $7.1 million for the quarter and $10.9 million for the year to repurchase shares required for settling employees' tax withholding obligations associated with the restricted stock units invested for the respective periods. Accounts receivable increased to $58.2 million compared with $47.6 million at the end of last year. DSOs were 71 days at the end of 2011 compared to 72 days for the comparable period last year. Current deferred revenues were $83.4 million on December 31 compared to $71.8 million at December 31 last year. And long-term deferred revenues were $3.1 million at the end of this year compared with $6.3 million for the same period of 2010. And again, that reflects the elimination of a one-time infrastructure fees in our SaaS contracts. Read the rest of this transcript for free on seekingalpha.com