Accelrys Announces Fourth Quarter and Full Year 2012 Results Non-GAAP Revenue up 16% to $47.5 million in the Fourth Quarter Business Wire SAN DIEGO -- February 26, 2013 Accelrys, Inc. (NASDAQ: ACCL) today reported financial results for the fiscal quarter and year ended December31, 2012, including a 16% year-over-year increase in Non-GAAP revenue in the fourth quarter. Non-GAAP revenue for the quarter ended December31, 2012 increased $6.7 million to $47.5 million from $40.8 million for the same quarter of the previous year, or an increase of 16%. Non-GAAP revenue for the year ended December31, 2012 increased $19.3 million to $174.3 million from $155.0 million for the year ended December 31, 2011, or an increase of 12%. Non-GAAP net income was $4.5 million, or $0.08 per diluted share, for the quarter ended December31, 2012 compared to non-GAAP net income of $4.6 million, or $0.08 per diluted share, for the same quarter of the previous year. Non-GAAP net income was $19.6 million, or $0.35 per diluted share, for the year ended December31, 2012 compared to non-GAAP net income of $19.0 million, or $0.34 per diluted share, for the year ended December 31, 2011. GAAP revenue for the quarter ended December31, 2012 increased $4.4 million to $44.2 million from $39.8 million for the same quarter of the previous year, or an increase of 11%. GAAP revenue for the year ended December31, 2012 increased $18.2 million to $162.5 million from $144.3 million for the year ended December 31, 2011, or an increase of 13%. GAAP net loss was $(8.2) million, or $(0.15) per diluted share, for the quarter ended December31, 2012 compared to GAAP net income of $14.2 million, or $0.25 per diluted share, for the same quarter of the previous year. GAAP net loss was $(10.4) million, or $(0.19) per diluted share, for the year ended December31, 2012 compared to GAAP net income of $1.8 million, or $0.03 per diluted share, for the same period of the previous year. “We are pleased with our performance in both 2012 and against the three-year plan we developed for our business following our 2010 merger with Symyx. We achieved both market momentum and acknowledgment of our position as the leading provider of scientific innovation lifecycle management software,” said Max Carnecchia, President and CEO. “Performance in the fourth quarter of 2012 was strong as our revenues grew 16% over the prior year.In addition, we completed and are integrating three acquisitions key to our strategy of optimizing the lab-to-market value chain. We remain enthusiastic about the market opportunity in front of us and in our ability to continue to grow orders, revenue and profits both organically and inorganically in 2013.” Recent Business Highlights: *Completed three acquisitions that add important domain expertise and technology capabilities that further our strategy to optimize the innovation lifecycle from research through commercialization. *HEOS, a secure Cloud-based information management workspace for scientific collaboration, accelerates and streamlines collaborative drug-discovery. *Aegis Analytical Corporation (Aegis), the leading provider of process management informatics software, further expands the footprint in downstream operation with solutions that help aggregate, contextualize and analyze manufacturing, quality and product development data. *Vialis AG, a leading systems integrator with deep experience implementing and supporting paperless laboratory solutions, further strengthening Accelrys' position in the laboratory informatics software market. *Delivered new product releases in the core product lines and significantly progressed the integration roadmap for the solutions acquired into the portfolio, including: *New Accelrys Enterprise Platform (AEP), the industry's first scientifically aware, service-oriented architecture (SOA) that enables integration and deployment of broad scientific solutions (Platform) *New biology capabilities from screening through pre-clinical development in the Accelrys Electronic Laboratory Notebook (Enterprise Lab Management) *New Process Management and Compliance suite, a unified approach to product development and process management which combines the capabilities of the Accelrys ELN, Accelrys Lab Execution System (LES), Accelrys Electronic Batch Records (EBR) and the Accelrys Enterprise Platform (Enterprise Lab Management) *New integration between Accelrys Materials Studio and AEP, enabling computational scientists to collaborate across the enterprise; deepened biotherapeutics capabilities in Accelrys Discovery Studio (Modeling and Simulation) Non-GAAP results for the quarter and year ended December31, 2012 exclude the impact of business combination activities associated with the acquisitions of Aegis on October 23, 2012 and Contur Industry Holding AB and Contur Software AB (collectively, “Contur”) and VelQuest Corporation (“VelQuest”), both in 2011, and the merger with Symyx Technologies, Inc. (“Symyx”) in 2010, and other nonrecurring items. Non-GAAP revenue, non-GAAP operating income, and non-GAAP net income for the quarter and year ended December31, 2012 include fair value adjustments to deferred revenue ($3.3 million and $11.8 million, respectively). Non-GAAP operating income for such three and twelve-month periods also excludes stock-based compensation expense ($2.5 million and $8.1 million, respectively), business consolidation, transaction and restructuring costs ($6.6 million and $7.8 million, respectively) and purchased intangible asset amortization ($5.2 million and $17.8 million, respectively), offset by an adjustment to include acquisition-related cost of revenue related to VelQuest non-GAAP revenue recognized during such periods ($0.8 million and $1.9 million, respectively). Non-GAAP net income for the quarter and year ended December31, 2012 also excludes additional purchased intangible asset amortization ($0.4 million and $1.7 million, respectively) offset by removing the impact of the amortization of note receivable discount related to our promissory note receivable from Intermolecular, Inc. (“Intermolecular”) ($0.3 million and $0.9 million, respectively). In addition to the aforementioned items, non-GAAP net income for the year ended December 31, 2012 includes fair value adjustments to deferred royalty income of $0.6 million and excludes $2.1 million in other non-operating income resulting from our real estate related activities. Calendar Year 2013 Outlook For the year ending December 31, 2013, the Company expects non-GAAP revenue to be between $185 and $190 million, and non-GAAP diluted earnings per share to be between $0.36 and $0.39 per diluted share on fully diluted weighted average shares outstanding of 56.6 million and using an effective tax rate of 40%. Non-GAAP Financial Measures: This press release describes financial measures for revenue, operating income, net income, net income per diluted share and free cash flow that exclude deferred revenue fair value adjustments, acquisition-related cost of revenue, business consolidation, transaction and restructuring costs, stock-based compensation expense, purchased intangible asset amortization, royalty income fair value adjustments, amortization of note receivable discount, gain on sale of real estate, gain on sale of equity investments, sale of intangible assets, other non-operating expense and income tax adjustments. These financial measures are not calculated in accordance with generally accepted accounting principles (GAAP) and are not based on any comprehensive set of accounting rules or principles. Management believes these non-GAAP financial measures provide a useful measure of the Company's operating results, a meaningful comparison with historical results and with the results of other companies, and insight into the Company's ongoing operating performance. Further, management and the Board of Directors utilize these measures, in addition to GAAP measures, when evaluating and comparing the Company's operating performance against internal financial forecasts and budgets. These non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. For additional information on the items excluded by the Company from its non-GAAP financial measures please refer to the Form8-K regarding this release that was furnished today to the Securities and Exchange Commission. The following table contains a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures (unaudited, amounts in thousands, except per share amounts, including footnotes): Three Months Ended Year Ended December 31, December 31, 2012 2011 2012 2011 GAAP revenue $ 44,194 $ 39,762 $ 162,526 $ 144,339 Deferred revenue fair 3,332 1,081 11,758 10,652 value adjustment^1 Non-GAAP revenue $ 47,526 $ 40,843 $ 174,284 $ 154,991 GAAP operating loss (11,203 ) (2,926 ) (19,054 ) (19,701 ) Deferred revenue fair 3,332 1,081 11,758 10,652 value adjustment^1 Acquisition-related cost (762 ) — (1,921 ) — of revenue^2 Business consolidation, transaction and 6,583 1,538 7,845 7,772 restructuring costs^3 Stock-based compensation 2,505 1,424 8,115 5,572 expense^4 Purchased intangible 5,199 4,638 17,782 18,239 asset amortization^5 Non-GAAP operating $ 5,654 $ 5,755 $ 24,525 $ 22,534 income Depreciation expense 872 923 3,325 3,800 Cash received for interest and royalty 2,002 2,269 9,265 9,574 income Cash (paid) for income taxes, net of refunds (198 ) (153 ) (2,690 ) 1,182 received Capital expenditures (3,043 ) (934 ) (6,332 ) (3,908 ) Non-GAAP free cash flow 5,287 7,860 28,093 33,182 GAAP net income (loss) $ (8,229 ) $ 14,205 $ (10,402 ) $ 1,765 Deferred revenue fair 3,332 1,081 11,758 10,652 value adjustment^1 Acquisition-related cost (762 ) — (1,921 ) — of revenue^2 Business consolidation, transaction and 6,583 1,538 7,845 7,772 restructuring costs ^3 Stock-based compensation 2,505 1,424 8,115 5,572 expense^4 Purchased intangible 5,623 5,230 19,477 20,604 asset amortization^5 Royalty income fair — 200 600 803 value adjustment^6 Amortization of note (270 ) — (932 ) — receivable discount^7 Gain on sale of real — — (2,744 ) — estate^8 Gain on sale of equity — (18,970 ) — (18,970 ) method investment^9 Sale of intangible — 4,303 — 4,303 assets^10 Other non-operating — — 670 — expense^11 Income tax^12 (4,239 ) (4,456 ) (12,855 ) (13,454 ) Non-GAAP net income $ 4,543 $ 4,555 $ 19,611 $ 19,047 GAAP diluted net income $ (0.15 ) $ 0.25 $ (0.19 ) $ 0.03 (loss) per share Deferred revenue fair 0.06 0.02 0.21 0.19 value adjustment^1 Acquisition-related cost (0.01 ) — (0.03 ) — of revenue^2 Business consolidation, transaction and 0.12 0.03 0.14 0.14 restructuring costs^3 Stock-based compensation 0.04 0.03 0.14 0.10 expense^4 Purchased intangible 0.10 0.09 0.34 0.37 asset amortization^5 Royalty income fair — — 0.01 0.01 value adjustment^6 Amortization of note — — (0.02 ) — receivable discount^7 Gain on sale of real — — (0.05 ) — estate^8 Gain on sale of equity — (0.34 ) — (0.34 ) method investment^9 Sale of intangible — 0.08 — 0.08 assets^10 Other non-operating — — 0.01 — expense^11 Income tax^12 (0.07 ) (0.08 ) (0.23 ) (0.24 ) Non-GAAP diluted net $ 0.08 $ 0.08 $ 0.35 $ 0.34 income per share^13 Weighted average shares used to compute net income per share: Basic 55,713 55,587 55,696 55,489 Diluted 56,848 55,933 56,563 56,037 ^1Deferred revenue fair value adjustment relates to our acquisitions of Aegis, VelQuest and Contur and our merger with Symyx, and adds back the impact of writing down the acquired historical deferred revenue to fair value as required by purchase accounting guidance. ^2Acquisition-related cost of revenue relates to our acquisition of VelQuest, and adds back the impact of writing down the acquired deferred cost of revenue as required by purchase accounting guidance. ^3Business consolidation, transaction and restructuring costs are included in the business consolidation, transaction and restructuring costs line in our consolidated statements of operations and consist of accounting, legal, litigation and other costs incurred in connection with our acquisition activities, including our merger with Symyx and acquisitions of Contur, VelQuest and Aegis, as well as integration costs incurred in connection with such transactions, including consultant and employee related costs incurred during integration and transition periods. Also included are contingent compensation costs relating to the Contur acquisition as well as lease obligation exit costs, facility closure costs and severance and other related costs incurred in connection with the various restructuring activities commenced by the Company. ^4Stock-based compensation expense is included in our consolidated statements of operations as follows: Three Months Ended Year Ended December 31, December 31, 2012 2011 2012 2011 Cost of revenue $ 262 $ 117 $ 755 $ 333 Product development 517 313 1,763 1,136 Sales and marketing 853 362 2,545 1,672 General and administrative 867 620 3,093 2,428 Business consolidation, transaction and restructuring 6 12 (41 ) 3 costs Total stock-based compensation $ 2,505 $ 1,424 $ 8,115 $ 5,572 expense ^5Purchased intangible asset amortization is included in our consolidated statements of operations as follows: Three Months Ended Year Ended December 31, December 31, 2012 2011 2012 2011 Amortization of completed $ 2,580 $ 2,135 $ 8,843 $ 8,393 technology Purchased intangible asset 2,619 2,503 8,939 9,846 amortization Royalty and other income, net 424 592 1,695 2,365 Total purchased intangible $ 5,623 $ 5,230 $ 19,477 $ 20,604 amortization expense ^6Royalty income fair value adjustment relates to our merger with Symyx, and adds back the impact of writing down deferred royalty income to fair value as required by purchase accounting guidance. ^7Amortization of note receivable discount adjusts the amortization of the discount on our promissory note receivable from Intermolecular in connection with the sale of intellectual property in November 2011. ^8Gain on sale of real estate relates to the sale of real property, comprised of land and an office building located in Santa Clara, California, which we sold in June 2012. This property was acquired as a result of our merger with Symyx and was not utilized in our ongoing operations. ^9Gain on sale of equity investment reflects the gain recognized upon the sale of our investment in Intermolecular in November 2011. ^10Sale of intangible asset reflects the write off of our cost basis in the intellectual property sold to Intermolecular in November 2011. ^11Other non-operating expense relates to the write off in June 2012 of certain assets in connection with exiting the lease of a restructured facility net of other non-operating income. ^12Income tax adjustments relate to adjusting our non-GAAP operating results to reflect an effective tax rate of 40% that would be applied if the Company was in a taxable income position and was not able to utilize its net operating loss carryforwards. The income tax adjustment also excludes any impact of a release of our valuation allowance against deferred tax assets. ^13Earnings per share amounts for the three months and year ended December 31, 2012 do not add due to rounding. Conference Call Details: At 5:00 p.m. ET, February 26, 2013, Accelrys will conduct a conference call to discuss its financial results. To participate, please dial (866) 309-0459 (+ (937) 999-3232 outside the United States) and enter the access code, 88646167, approximately 15 minutes before the scheduled start of the call. The conference call will also be accessible live on the Investor Relations section of the Accelrys website at www.accelrys.com. A replay of the conference call will be available online at www.accelrys.com and via telephone by dialing (855) 859-2056 (+1 (404) 537-3406 outside the United States) and entering access code, 88646167, beginning 8:00 p.m. ET on February 26, 2013, through 11:59 p.m. ET on April 26, 2013. About Accelrys: Accelrys, Inc. (NASDAQ: ACCL), a leading provider of scientific innovation lifecycle management software, supports industries and organizations that rely on scientific innovation to differentiate themselves. The industry-leading Accelrys Enterprise Platform provides a broad and flexible scientific solution optimized to integrate the diversity of science, experimental processes and information requirements across the research, development, process scale-up and early manufacturing phases of product development. By incorporating capabilities in applications for modeling and simulation, enterprise lab management, workflow and automation, and data management and informatics, Accelrys enables scientific innovators to access, organize, analyze and share data in unprecedented ways, ultimately enhancing innovation, improving productivity and compliance, reducing costs and speeding time from lab to market. Accelrys solutions are used by more than 1,300 companies in the pharmaceutical, biotechnology, energy, chemicals, aerospace, consumer packaged goods and industrial products industries. Headquartered in San Diego, California, USA, Accelrys employs more than 200 full-time PhD scientists. For more information about Accelrys, visit www.accelrys.com. Forward-Looking Statements: Statements contained in this press release relating to the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future, including, but not limited to, statements relating to the Company's expected non-GAAP revenue and diluted earnings per share for the year ending December 31, 2013 and statements relating to the Company's long-term prospects and execution of its strategic growth and acquisition-related initiatives, are forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties, including, but not limited to, risks that the Company will not achieve its expected non-GAAP revenue or diluted earnings per share for the year ending December 31, 2013 and/or that the Company will not successfully execute its strategic growth and acquisition-related initiatives, in each case due to, among other possibilities, an inability to withstand negative conditions in the global economy or a lack of demand for or market acceptance of the Company's products. Additional risks and uncertainties faced by the Company are contained from time to time in the Company's filings with the U.S. Securities and Exchange Commission, including, but not limited to, the Company's Annual Report on Form 10-K for the year ended December 31, 2011, quarterly reports on Form 10-Q and current reports on Form 8-K. Collectively, these risks and uncertainties could cause the Company's actual results to differ materially from those projected in its forward-looking statements, and the Company disclaims any intention or obligation to revise any forward-looking statements whether as a result of new information, future events or otherwise. ACCELRYS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (unaudited) Three Months Ended Year Ended December 31, December 31, 2012 2011 2012 2011 Revenue: License and subscription 23,149 $ 21,231 $ 89,440 $ 79,425 revenue Maintenance on perpetual 10,035 9,301 38,254 34,862 licenses Content 2,991 4,270 12,485 16,838 Professional services and 8,019 4,960 22,347 13,214 other Total revenue 44,194 39,762 162,526 144,339 Cost of revenue: Cost of revenue 11,961 9,501 41,695 36,065 Amortization of completed 2,580 2,135 8,843 8,393 technology Total cost of revenue 14,541 11,636 50,538 44,458 Gross profit 29,653 28,126 111,988 99,881 Operating expenses: Product development 9,892 8,779 38,849 33,977 Sales and marketing 17,528 14,173 57,971 51,517 General and 4,229 4,047 17,480 16,467 administrative Business consolidation, transaction and 6,588 1,550 7,803 7,775 restructuring costs Purchased intangible 2,619 2,503 8,939 9,846 asset amortization Total operating expenses 40,856 31,052 131,042 119,582 Operating loss (11,203 ) (2,926 ) (19,054 ) (19,701 ) Net gain on sale of cost — 18,970 — 18,970 method investment Royalty and other income, including gain on sale of 1,763 (3,259 ) 8,870 1,740 real estate, net Income (loss) before (9,440 ) 12,785 (10,184 ) 1,009 income taxes Income tax expense (1,211 ) (1,420 ) 218 (756 ) (benefit) Net income (loss) $ (8,229 ) $ 14,205 $ (10,402 ) $ 1,765 Net income (loss) per share amounts: Basic $ (0.15 ) $ 0.26 $ (0.19 ) $ 0.03 Diluted $ (0.15 ) $ 0.25 $ (0.19 ) $ 0.03 Weighted average shares used to compute net income (loss) per share: Basic 55,713 55,587 55,696 55,489 Diluted 55,713 55,933 55,696 56,037 ACCELRYS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) December 31, December 31, 2012 2011 (unaudited) (audited) Assets Cash, cash equivalents, and marketable $ 115,646 $ 143,624 securities^1 Trade receivables, net 47,196 40,706 Notes receivable 34,796 34,720 Other assets, net^2 208,204 188,836 Total assets $ 405,842 $ 407,886 Liabilities and stockholders’ equity Current liabilities, excluding deferred revenue 37,877 36,582 Deferred revenue, including current portion^3 89,151 86,012 Deferred gain, including current portion^4 25,895 25,974 Non-current liabilities, excluding deferred 10,098 10,634 revenue and deferred gain^5 Total stockholders’ equity 242,821 248,684 Total liabilities and stockholders’ equity $ 405,842 $ 407,886 ^1Cash, cash equivalents, and marketable securities consist of the following line items in our consolidated balance sheet: Cash and cash equivalents; Restricted cash; Marketable securities; Marketable securities, net of current portion; and Restricted cash, net of current portion. ^2Other assets, net, consists of the following line items in our consolidated balance sheet: Prepaid expenses, deferred tax assets and other current assets; Property and equipment, net; Goodwill; Purchased intangible assets, net; and Other assets. ^3Total deferred revenue consists of the following line items in our consolidated balance sheet: Current portion of deferred revenue; and Deferred revenue, net of current portion. ^4Total deferred gain consists of the following line items in our consolidated balance sheet: Current portion of deferred gain on sale of intellectual property; and Deferred gain on sale of intellectual property, net of current portion. ^5Noncurrent liabilities, excluding deferred revenue and deferred gain consists of the following line items in our consolidated balance sheet: Accrued income tax; Accrued restructuring charges, net of current portion and Lease-related liabilities, net of current portion. Contact: Accelrys, Inc. Michael A. Piraino Executive Vice President & Chief Financial Officer 858-799-5200 or Investor Relations MKR Group Charles Messman or Todd Kehrli 323-468-2300 email@example.com
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Accelrys Announces Fourth Quarter and Full Year 2012 Results
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