SOURCE: TIBCO Software Inc.

December 22, 2008 16:10 ET

TIBCO Software Delivers Record Profits in Q4

Company Also Reports Record Levels of Revenue and Operating Cash Flow for Fiscal 2008

PALO ALTO, CA--(Marketwire - December 22, 2008) - TIBCO Software Inc. (NASDAQ: TIBX) today announced results for its fourth quarter, which ended on November 30, 2008.

Total revenue for the fourth quarter of fiscal 2008 was $185.5 million and net income was $32.3 million, or $0.18 per diluted share. This compares to total revenue of $186.1 million and net income of $27.6 million, or $0.14 per diluted share, as reported for the fourth quarter of fiscal 2007.

On a non-GAAP basis, net income for the fourth quarter of fiscal 2008 was $39.9 million or $0.23 per diluted share, compared with $34.2 million or $0.18 per diluted share for the fourth quarter of fiscal 2007. Non-GAAP operating income for the fourth quarter of fiscal 2008 was $54.0 million, resulting in non-GAAP operating margins of 29%. This compares to non-GAAP operating income of $50.2 million, or 27% non-GAAP operating margins in the fourth quarter of fiscal 2007. Non-GAAP results exclude stock-based compensation expense, amortization of acquired intangible assets, restructuring charges and gains on sales of certain equity investments, and assume a non-GAAP effective tax rate of 30% for fiscal 2008 and 35% for fiscal 2007.

"In spite of a difficult environment, we delivered record operating profits and earnings per share this quarter," said Vivek Ranadivé, TIBCO's chairman and chief executive officer. "As we turn to 2009, I expect a continuing shift away from database oriented solutions to event-based solutions built on 'in-memory' data management systems, as businesses look to more proactively service and acquire customers. TIBCO, with its event-driven infrastructure platform, is well positioned to benefit from this trend."

Fourth Quarter Fiscal 2008 Highlights

--  Total revenue was $185.5 million;
    
--  License revenue was $90.4 million;
    
--  Repurchased 6.9 million shares;
    
--  Strong mix of business across major industries including Financial
    Services, Telecommunications, Energy, Life Sciences and Government;
    
--  TIBCO closed 135 deals over $100k and had 20 deals over $1 million;
    
--  TIBCO expanded its business with leading companies in Q4 such as BNP
    Paribas, CIBC World Markets, CareFirst BlueCross BlueShield, Grupo
    Santander, Harvard Pilgrim Healthcare, Merck, Microsoft, Northrop Grumman,
    Scripps Networks, Swisscom, UNUM and Vodafone Group.
    

Full Year Fiscal 2008 Highlights

--  Record total revenue of $644.5 million, an increase of 12% over fiscal
    2007;
    
--  Record cash flow from operations of $152.5 million, an increase of 49%
    over fiscal 2007;
    
--  Record non-GAAP EPS of $0.47, vs. $0.38 for fiscal 2007; and
    
--  Repurchased over 21 million shares.
    

Conference Call Details

TIBCO has scheduled a conference call for 4:30 pm ET / 1:30 pm PT today to discuss its fourth quarter results. The conference call will be hosted by Thomson Financial and may be accessed over the Internet at www.tibco.com or via dial-in at (877) 856-1956 or (719) 325-4756. Please join the conference call at least 10 minutes early to register. A replay of the conference call will be available until midnight on January 22, 2009 at www.tibco.com or via dial-in at (888) 203-1112 or (719) 457-0820. The pass code for both the call and the replay is 4604945.

About TIBCO

TIBCO's technology digitized Wall Street in the '80s with event-driven "Information Bus" software, which helped make real-time business a strategic differentiator in the '90s. Today, TIBCO's infrastructure software gives customers the ability to constantly innovate by connecting applications and data in a service-oriented architecture, streamlining activities through business process management, and giving people the information and intelligence tools they need to make faster and smarter decisions, what we call The Power of Now®. TIBCO serves more than 3,000 customers around the world with offices in more than 20 countries and an ecosystem of over 200 partners. Learn more at www.tibco.com.

TIBCO, The Power of Now and TIBCO Software are trademarks or registered trademarks of TIBCO Software Inc. in the United States and/or other countries. All other product and company names and marks mentioned in this document are the property of their respective owners and are mentioned for identification purposes only.

About Non-GAAP Financial Information

This press release includes non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP), please see the section entitled "About Non-GAAP Financial Measures" and the accompanying table entitled "Reconciliation of GAAP to Non-GAAP Measures."

Legal Notice Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws. The final financial results for fourth quarter of fiscal year 2008 may differ materially from the preliminary results presented in this release due to factors that include, but are not limited to, risks associated with the final review of the results and preparation of financial statements. In addition, forward-looking statements such as statements regarding the anticipated shift to event-based solutions built on 'in-memory' data management systems and away from old database technologies and TIBCO's ability to benefit from that shift are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These risks include but are not limited to: our ability to adapt to new technologies and evolving industry trends; and competitive factors, including but not limited to competition from alternative business models, industry consolidation and new product introductions. Additional information regarding potential risks is provided in TIBCO's filings with the SEC, including its most recent Annual Report on Form 10-K for the year ended November 30, 2007 and Quarterly Report on Form 10-Q for the quarter ended August 30, 2008. TIBCO assumes no obligation to update the forward-looking statements included in this release.


                            TIBCO Software Inc.
                  Condensed Consolidated Balance Sheets
                                (unaudited)
                              (in thousands)

                                                         November 30,
                                                    -----------------------
                                                       2008        2007
                                                    ----------- -----------

                      ASSETS

Current assets:
  Cash and cash equivalents                         $   254,400 $   170,237
  Short-term investments                                 13,073      95,534
  Accounts receivable, net                              133,191     161,730
  Prepaid expenses and other current assets              46,495      53,540
                                                    ----------- -----------
    Total current assets                                447,159     481,041

Property and equipment, net                             103,531     111,390
Goodwill                                                343,942     412,256
Acquired intangible assets, net                          80,437     110,930
Long-term deferred income tax assets                     73,634      35,307
Other assets                                             39,865      47,535
                                                    ----------- -----------
    Total assets                                    $ 1,088,568 $ 1,198,459
                                                    =========== ===========

       LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                  $    15,030 $    12,076
  Accrued liabilities                                    91,397      95,526
  Accrued excess facilities costs                         6,572       5,421
  Deferred revenue                                      140,221     127,200
  Current portion of long-term debt                       2,033       1,924
                                                    ----------- -----------
    Total current liabilities                           255,253     242,147

Accrued excess facilities costs, less current
 portion                                                  5,594      10,811
Long-term deferred revenue                               12,007      14,319
Long-term deferred income tax liabilities                14,912      25,821
Long-term income tax liabilities                         12,439           -
Long-term debt, less current portion                     42,525      44,558
Other long-term liabilities                               3,837       5,006
                                                    ----------- -----------
    Total long-term liabilities                          91,314     100,515
                                                    ----------- -----------
    Total liabilities                                   346,567     342,662
                                                    ----------- -----------

Minority interest                                           358         401

Total stockholders' equity                              741,643     855,396
                                                    ----------- -----------
    Total liabilities and stockholders' equity      $ 1,088,568 $ 1,198,459
                                                    =========== ===========




                            TIBCO Software Inc.
              Condensed Consolidated Statements of Operations
                                (unaudited)
                (in thousands, except net income per share)



                                 Three Months Ended        Year Ended
                                --------------------  --------------------
                                November   November    November   November
                                   30,        30,         30,        30,
                                  2008       2007        2008       2007
                                ---------  ---------  ---------  ---------
Revenue:
  License revenue               $  90,424  $  99,609  $ 273,415  $ 259,313
  Service and maintenance
   revenue:
    Service and maintenance        92,716     84,211    361,880    310,444
    Reimbursable expenses           2,384      2,281      9,176      7,629
                                ---------  ---------  ---------  ---------
      Total service and
       maintenance revenue         95,100     86,492    371,056    318,073
                                ---------  ---------  ---------  ---------
        Total revenue             185,524    186,101    644,471    577,386
                                ---------  ---------  ---------  ---------

Cost of revenue:
    License                         8,319      8,591     30,276     24,024
    Service and maintenance        35,681     37,522    147,622    134,877
                                ---------  ---------  ---------  ---------
        Total cost of revenue      44,000     46,113    177,898    158,901
                                ---------  ---------  ---------  ---------
Gross profit                      141,524    139,988    466,573    418,485
                                ---------  ---------  ---------  ---------

Operating expenses:
    Research and development       25,888     26,069    106,594     92,924
    Sales and marketing            58,116     59,260    224,641    197,397
    General and administrative     12,789     13,009     53,046     51,538
    Restructuring adjustment            -          -          -     (1,095)
    Amortization of acquired
     intangible assets              4,026      4,164     16,557     13,164
    Acquired in-process research
     and development                    -          -          -      1,600
                                ---------  ---------  ---------  ---------
        Total operating
         expenses                 100,819    102,502    400,838    355,528
                                ---------  ---------  ---------  ---------
Income from operations             40,705     37,486     65,735     62,957

  Interest income                   1,688      3,499      9,115     18,447
  Interest expense                   (710)    (1,170)    (3,238)    (2,824)
  Other income (expense), net        (495)        56       (782)    (1,181)
                                ---------  ---------  ---------  ---------
Income before provision for
 income taxes and minority
 interest                          41,188     39,871     70,830     77,399

Provision for income taxes          8,923     12,186     18,314     25,401

Minority interest, net of tax         (26)        40        105        110
                                ---------  ---------  ---------  ---------
Net income                      $  32,291  $  27,645  $  52,411  $  51,888
                                =========  =========  =========  =========

Net income per share:

 Basic                          $    0.18  $    0.15  $    0.29  $    0.26
                                =========  =========  =========  =========
 Diluted                        $    0.18  $    0.14  $    0.29  $    0.25
                                =========  =========  =========  =========

Shares used to compute net
 income per share:
 Basic                            174,612    188,748    180,525    198,885
                                =========  =========  =========  =========
 Diluted                          175,758    192,940    183,742    205,316
                                =========  =========  =========  =========




                            TIBCO Software Inc.

              Condensed Consolidated Statements of Cash Flows
                                (unaudited)
                              (in thousands)


                                                Year Ended
                                           --------------------
                                            November   November
                                              30,        30,
                                             2008       2007
                                           ---------  ---------

Cash flows from operating activities:
  Net income                               $  52,411  $  51,888
  Adjustments to reconcile net income to
   net cash provided by operating
   activities:
      Depreciation of property and
       equipment                              15,814     16,167
      Amortization of acquired intangible
       assets                                 32,302     23,490
      Stock-based compensation                20,972     17,563
      Acquired in-process research and
       development                                 -      1,600
      Deferred income tax                    (26,667)    (6,077)
      Tax benefits related to stock benefit
       plans                                  27,025     19,456
      Excess tax benefits from stock-based
       compensation                          (24,713)   (17,980)
      Minority interest, net of tax              105        110
      Other non-cash adjustments, net            991     (1,506)
  Changes in assets and liabilities:
      Accounts receivable                     20,683     (5,459)
      Prepaid expenses and other assets        9,060     (4,778)
      Accounts payable                         3,531       (885)
      Accrued liabilities and excess
       facilities costs                       13,001     (8,613)
      Deferred revenue                         7,977     17,304
                                           ---------  ---------
        Net cash provided by operating
         activities                          152,492    102,280
                                           ---------  ---------

Cash flows from investing activities:
    Purchases of short-term investments      (37,047)  (140,928)
    Maturities and sales of short-term
     investments                             124,032    450,311
    Acquisitions, net of cash acquired       (20,098)  (182,912)
    Purchases of private equity investments      (38)       (63)
    Proceeds from private equity
     investments                                 347        803
    Purchases of property and equipment       (8,937)   (12,599)
    Restricted cash pledged as security          652        368
                                           ---------  ---------
        Net cash provided by investing
         activities                           58,911    114,980
                                           ---------  ---------

Cash flows from financing activities:
    Proceeds from issuance of common stock    10,630     25,043
    Repurchases of the Company's common
     stock                                  (148,989)  (226,932)
    Excess tax benefits from stock-based
     compensation                             24,713     17,980
    Principal payments on long-term debt      (1,924)    (6,277)
    Proceeds from minority investors               -        189
                                           ---------  ---------
        Net cash used for financing
         activities                         (115,570)  (189,997)
                                           ---------  ---------

Effect of foreign exchange rate changes
 on cash and cash equivalents                (11,670)     4,062
                                           ---------  ---------

Net change in cash and cash equivalents       84,163     31,325

Cash and cash equivalents at beginning of
 period                                      170,237    138,912

                                           ---------  ---------
Cash and cash equivalents at end of
 period                                    $ 254,400  $ 170,237
                                           =========  =========


About Non-GAAP Financial Measures

TIBCO provides non-GAAP measures for operating income, net income and net income per share data as supplemental information regarding TIBCO's business performance. TIBCO believes that these non-GAAP financial measures are useful to investors because they exclude non-operating charges. TIBCO's management excludes these non-operating charges when it internally evaluates the performance of TIBCO's business and makes operating decisions, including internal budgeting, performance measurement and the calculation of bonuses and discretionary compensation, because these measures provide a consistent method of comparison to historical periods. Moreover, management believes these non-GAAP measures reflect the essential revenue generation activities of TIBCO. Accordingly, management excludes stock-based compensation related to employee stock options, amortization of acquired intangible assets, charges for acquired in-process research and development, costs related to formal restructuring activities, gains and losses on equity investments, and the income tax effects of the foregoing, as well as adjustments for the impact of changes in the valuation allowance recorded against TIBCO's deferred tax assets when making operational decisions.

TIBCO believes that providing the non-GAAP measures that management uses to its investors is useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand TIBCO's financial performance on a trended basis across historical periods. In addition, it allows investors to evaluate TIBCO's performance using the same methodology and information as that used by TIBCO's management.

Non-GAAP measures are subject to material limitations as these measures are not in accordance with, or a substitute for, GAAP and thus TIBCO's definition may be different from similar non-GAAP measures used by other companies and/or analysts. However, TIBCO's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. In addition, some items such as restructuring charges that are excluded from non-GAAP net income and non-GAAP earnings per share can have a material impact on cash flows and stock compensation charges can have a significant impact on earnings. Management compensates for these limitations by evaluating the non-GAAP measure together with the most directly comparable GAAP measure. TIBCO has historically provided non-GAAP measures to the investment community as a supplement to its GAAP results, to enable investors to evaluate TIBCO's business performance in the way that management does.

The non-GAAP adjustments, and the basis for excluding them, are outlined below:

Stock-based Compensation

TIBCO incurs stock-based compensation expense under SFAS 123(R). TIBCO excludes this item for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share because it is a non-cash expense that TIBCO believes is not reflective of its business performance. The nature of the stock-based compensation expense also makes it very difficult to estimate prospectively, since the expense will vary with changes in the stock price and market conditions at the time of new grants, varying valuation methodologies, subjective assumptions and different award types, making the comparison of current results with forward-looking guidance potentially difficult for investors to interpret. The tax effects of stock-based compensation expenses may also vary significantly from period to period, without any change in underlying operational performance, thereby obscuring the underlying profitability of operations relative to prior periods (including prior periods following the adoption of SFAS 123(R)). The exclusion of stock-based compensation from the non-GAAP measures also allows a consistent comparison of TIBCO's relative historical financial performance, since the method for accounting for stock-based compensation changed at the beginning of fiscal 2006 when TIBCO adopted SFAS 123(R). Finally, TIBCO believes that non-GAAP measures of profitability that exclude stock-based compensation are widely used by analysts and investors in the software industry.

Amortization of Acquired Intangible Assets

TIBCO has incurred amortization of intangible assets, included in its GAAP financial statements, related to various acquisitions TIBCO has made. Management excludes these items, for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share. TIBCO believes that eliminating this expense from its non-GAAP measures is useful to investors, because the amortization of intangible assets can be inconsistent in amount and frequency and is significantly impacted by the timing and magnitude of TIBCO's acquisition transactions, which also vary substantially in frequency from period to period.

Acquired In-Process Research and Development

TIBCO recorded charges for acquired in-process research and development ("IPR&D"), included in its GAAP presentation of operating expense, in connection with its acquisitions. These amounts were expensed on the acquisition dates as the acquired technology had not yet reached technological feasibility and had no future alternative uses. There can be no assurance that acquisition of businesses, products or technologies in the future will not result in substantial charges for acquired IPR&D. Accordingly, acquired IPR&D are non-recurring and generally unpredictable. TIBCO believes that eliminating this expense, for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share, is useful to investors.

Formal Restructuring Activities

TIBCO has incurred restructuring expenses, included in its GAAP presentation of operating expense, primarily due to workforce related charges such as payments for severance and benefits and estimated costs of exiting and terminating facility lease commitments related to a formal restructuring plan. TIBCO excludes these items, for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share, when it evaluates the continuing business performance of TIBCO. TIBCO believes that these items are not consistently recurring and do not necessarily reflect expected future operating expense, nor does TIBCO believe that they provide a meaningful evaluation of current versus past business results or the expense levels required to support TIBCO's operating plan.

Equity Investment Activities

TIBCO records gains or losses on its equity investments based on its pro-rata share of gains or the net losses of the investment. These gains or net losses are included in TIBCO's GAAP presentation of operating income, net income and net income per share. TIBCO's business is not to invest in third parties, and such investments do not constitute a material portion of TIBCO's assets. The timing and magnitude of gains and losses are unpredictable, as they are inherently based on the performance of the third party subject to a particular investment. TIBCO excludes these items, for the purposes of calculating non-GAAP operating income, non-GAAP net income and non-GAAP net income per share, when it evaluates the continuing business performance of TIBCO. TIBCO believes that these items do not necessarily reflect expected future operating expense or income, nor does TIBCO believe that they provide a meaningful evaluation of current versus past business results or the expense levels required to support TIBCO's operating plan.

                            TIBCO Software Inc.
                Reconciliation of GAAP to Non-GAAP Measures
                                (unaudited)
                (in thousands, except net income per share)



                                            Three Months Ended
                                -------------------------------------------
                                  November 30, 2008     November 30, 2007
                                --------------------- ---------------------
                                Operating     Net     Operating     Net
                                  Income     Income     Income     Income
                                ---------- ---------  ---------- ---------


GAAP                            $   40,705 $  32,291  $   37,486 $  27,645

  Amortization of intangible
   assets - cost of revenue          3,957     3,957       3,829     3,829
  Amortization of intangible
   assets - operating expense        4,026     4,026       4,164     4,164
  Stock-based compensation -
   cost of revenue                     640       640         647       647
  Stock-based compensation -
   R&D expense                       1,128     1,128         897       897
  Stock-based compensation -
   S&M expense                       1,874     1,874       1,593     1,593
  Stock-based compensation -
   G&A expense                       1,712     1,712       1,601     1,601
  Acquired in-process research
   and development                       -         -           -         -
  Restructuring adjustment               -         -           -         -
  Realized gain on sales of
   private equity investment             -         -           -         -
  Income tax adjustment for
   non-GAAP (1)                          -    (5,690)          -    (6,225)

                                ---------- ---------  ---------- ---------
Non-GAAP                        $   54,042 $  39,938  $   50,217 $  34,151
                                ========== =========  ========== =========

Diluted net income per share:
  GAAP                                     $    0.18             $    0.14
                                           =========             =========
  Non-GAAP                                 $    0.23             $    0.18
                                           =========             =========

Shares used to compute diluted
 net income per share                        175,758               192,940
                                           =========             =========


                                                Year Ended
                                -------------------------------------------
                                  November 30, 2008     November 30, 2007
                                --------------------- --------------------
                                Operating     Net     Operating     Net
                                  Income     Income     Income     Income
                                ---------- ---------  ---------  ---------


GAAP                            $   65,735 $  52,411  $  62,957  $  51,888

  Amortization of intangible
   assets - cost of revenue         15,745    15,745     10,326     10,326
  Amortization of intangible
   assets - operating expense       16,557    16,557     13,164     13,164
  Stock-based compensation -
   cost of revenue                   2,612     2,612      2,465      2,465
  Stock-based compensation -
   R&D expense                       4,584     4,584      3,712      3,712
  Stock-based compensation -
   S&M expense                       6,963     6,963      5,695      5,695
  Stock-based compensation -
   G&A expense                       6,813     6,813      5,691      5,691
  Acquired in-process research
   and development                       -         -      1,600      1,600
  Restructuring adjustment               -         -     (1,095)    (1,095)
  Realized gain on sales of
   private equity investment             -      (125)         -        (64)
  Income tax adjustment for
   non-GAAP (1)                          -   (19,434)         -    (16,212)

                                ---------- ---------  ---------  ---------
Non-GAAP                        $  119,009 $  86,126  $ 104,515  $  77,170
                                ========== =========  =========  =========

Diluted net income per share:
  GAAP                                     $    0.29             $    0.25
                                           =========             =========
  Non-GAAP                                 $    0.47             $    0.38
                                           =========             =========

Shares used to compute diluted
 net income per share                        183,742               205,316
                                           =========             =========


(1) The estimated non-GAAP effective tax rate was approximately at 30%
    and 35% for fiscal 2008 and 2007, respectively, and has been used to
    adjust the provision for income taxes for non-GAAP purposes.

Contact Information

  • Media Relations Contact:
    Phillip Tree
    TIBCO Software Inc.
    (650) 846-8529
    Email Contact

    Investor Relations Contact:
    Matthew Langdon
    TIBCO Software Inc.
    (650) 846-5747
    Email Contact