UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
______________
Date of Report (Date of earliest event reported):
June 15, 2015
______________
QUALITY SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA
(State or other jurisdiction of
incorporation)
001-12537
(Commission File Number)
95-2888568
(IRS Employer
Identification Number)

18111 Von Karman, Suite 700
Irvine, California 92612
(Address of Principal Executive Offices)
(949) 255-2600
(Registrant’s Telephone Number, Including Area Code)
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




1


Item 8.01    Other Events

As previously announced during the conference call held on May 21, 2015, beginning in the first quarter of fiscal 2016, Quality Systems, Inc. (the “Company”) will begin to present certain components of revenue within the consolidated statements of comprehensive income in an improved format that is intended to group like-kind products and services and disaggregate the other services category of revenue, which has continued to comprise a larger percentage of total revenue. More specifically, the following is a summary of the primary changes to the presentation of revenue:

•
Revenue from software-as-a-service (SaaS), hosting services, and other software related subscriptions are now aggregated into a new software related subscription services category of revenue. Previously, revenue from software related subscriptions services was reported within the other services category of revenue.
•
Revenue from annual software licenses that was also previously reported within the other services category of revenue is now reported within the software license and hardware category of revenue.
•
Revenue from all other services, including implementation, training, and consulting, are now aggregated into a single professional services category of revenue that excludes software related subscription services and annual software licenses, as noted above.

Each of the corresponding components of cost of revenue has also been revised in a manner that is consistent with the new presentation of revenue described above.

For informational and comparability purposes, the Company has recast its previously reported consolidated statements of comprehensive income to provide historical information on a basis consistent with the new reporting format of revenue and cost of revenue. The recast consolidated statements of comprehensive income for fiscal years ended March 31, 2014 and 2015 and each of the respective quarterly reporting periods therein are attached as Exhibit 99.1 to this Form 8-K, and are incorporated herein by reference.

The reclassification of revenue and cost of revenue within the consolidated statements of comprehensive income has no impact on the Company’s previously reported net income or earnings per share and no impact on the previously reported consolidated balance sheets, statements of stockholders' equity, and statements of cash flow.

The information in this Item 8.01 of this Form 8-K, as well as Exhibit 99.1 attached hereto, is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01    Financial Statements and Exhibits

(d) Exhibits
Exhibit No.
 
Description
99.1
 
Recast consolidated statements of comprehensive income for the fiscal years ended March 31, 2014 and 2015 and each of the respective quarterly reporting periods therein


2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: June 15, 2015
 
 
 
 
 
QUALITY SYSTEMS, INC.
 
 
By:  
/s/ John Stumpf
 
 
John Stumpf
 
 
Interim Chief Financial Officer 



3


EXHIBITS ATTACHED TO THIS REPORT ON FORM 8-K
Exhibit No.
 
Description
99.1
 
Recast consolidated statements of comprehensive income for the fiscal years ended March 31, 2014 and 2015 and each of the respective quarterly reporting periods therein


4




Exhibit 99.1
QUALITY SYSTEMS, INC.
CONSOLIDATED STATMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended March 31,
 
Fiscal Year Ended March 31,
 
2015
 
2014
 
2015
 
2014
Revenues:
 
 
 
 
 
 
 
Software license and hardware
$
21,144

 
$
19,787

 
$
81,649

 
$
79,366

Software related subscription services
13,326

 
8,912

 
44,592

 
27,335

Total software, hardware and related
34,470

 
28,699

 
126,241

 
106,701

Support and maintenance
43,234

 
41,376

 
169,219

 
160,060

Revenue cycle management and related services
19,720

 
15,316

 
74,237

 
62,976

Electronic data interchange and data services
20,082

 
17,421

 
76,358

 
67,295

Professional Services
10,882

 
12,391

 
44,170

 
47,635

Total revenues
128,388

 
115,203

 
490,225

 
444,667

Cost of revenue:
 
 
 
 
 
 
 
Software license and hardware
6,477

 
7,871

 
28,803

 
49,272

Software related subscription services
5,643

 
3,355

 
20,672

 
12,374

Total software, hardware and related
12,120

 
11,226

 
49,475

 
61,646

Support and maintenance
7,802

 
6,384

 
28,866

 
22,590

Revenue cycle management and related services
14,252

 
12,059

 
54,406

 
46,203

Electronic data interchange and data services
12,274

 
10,845

 
48,244

 
42,567

Professional Services
9,393

 
12,840

 
42,173

 
47,157

Total cost of revenue
55,841

 
53,354

 
223,164

 
220,163

Gross profit
72,547

 
61,849

 
267,061

 
224,504

Operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
41,279

 
38,676

 
158,172

 
149,214

Research and development costs
17,638

 
15,120

 
69,240

 
41,524

Amortization of acquired intangible assets
898

 
1,132

 
3,693

 
4,805

Impairment of goodwill and other assets
—

 
—

 
—

 
5,873

Total operating expenses
59,815

 
54,928

 
231,105

 
201,416

Income from operations
12,732

 
6,921

 
35,956

 
23,088

Interest income (expense), net
(271
)
 
322

 
(230
)
 
269

Other income (expense), net
(45
)
 
35

 
(62
)
 
(356
)
Income before provision for income taxes
12,416

 
7,278

 
35,664

 
23,001

Provision for income taxes
1,673

 
2,077

 
8,332

 
7,321

Net income
$
10,743

 
$
5,201

 
$
27,332

 
$
15,680

Net income per share:
 
 
 
 
 
 
 
Basic
$
0.18

 
$
0.09

 
$
0.45

 
$
0.26

Diluted
$
0.18

 
$
0.09

 
$
0.45

 
$
0.26

Weighted-average shares outstanding:
 
 
 
 
 
 
 
Basic
60,288

 
60,208

 
60,259

 
59,918

Diluted
60,956

 
60,592

 
60,849

 
60,134

Dividends declared per common share
$
0.175

 
$
0.175

 
$
0.70

 
$
0.70


1


QUALITY SYSTEMS, INC.
CONSOLIDATED STATMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended December 31,
 
Nine Months Ended December 31,
 
2014
 
2013
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
Software license and hardware
$
21,428

 
$
18,213

 
$
60,505

 
$
59,579

Software related subscription services
11,864

 
7,636

 
31,266

 
18,423

Total software, hardware and related
33,292

 
25,849

 
91,771

 
78,002

Support and maintenance
43,045

 
39,763

 
125,985

 
118,684

Revenue cycle management and related services
20,392

 
16,178

 
54,517

 
47,660

Electronic data interchange and data services
19,051

 
16,637

 
56,276

 
49,874

Professional Services
7,644

 
10,427

 
33,288

 
35,244

Total revenues
123,424

 
108,854

 
361,837

 
329,464

Cost of revenue:
 
 
 
 
 
 
 
Software license and hardware
7,295

 
28,094

 
22,326

 
41,401

Software related subscription services
5,194

 
3,116

 
15,029

 
9,019

Total software, hardware and related
12,489

 
31,210

 
37,355

 
50,420

Support and maintenance
7,365

 
5,642

 
21,064

 
16,206

Revenue cycle management and related services
14,246

 
11,736

 
40,154

 
34,144

Electronic data interchange and data services
11,956

 
10,276

 
35,970

 
31,722

Professional Services
8,304

 
12,191

 
32,780

 
34,317

Total cost of revenue
54,360

 
71,055

 
167,323

 
166,809

Gross profit
69,064

 
37,799

 
194,514

 
162,655

Operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
41,482

 
36,864

 
116,893

 
110,538

Research and development costs
18,468

 
13,175

 
51,602

 
26,404

Amortization of acquired intangible assets
904

 
1,219

 
2,795

 
3,673

Impairment of goodwill and other assets
—

 
5,873

 
—

 
5,873

Total operating expenses
60,854

 
57,131

 
171,290

 
146,488

Income (loss) from operations
8,210

 
(19,332
)
 
23,224

 
16,167

Interest income (expense), net
(82
)
 
121

 
41

 
(53
)
Other income (expense), net
—

 
18

 
(17
)
 
(391
)
Income (loss) before provision for (benefit of) income taxes
8,128

 
(19,193
)
 
23,248

 
15,723

Provision for (benefit of) income taxes
1,452

 
(6,606
)
 
6,659

 
5,244

Net income (loss)
$
6,676

 
$
(12,587
)
 
$
16,589

 
$
10,479

Net income (loss) per share:
 
 
 
 
 
 
 
Basic
$
0.11

 
$
(0.21
)
 
$
0.28

 
$
0.18

Diluted
$
0.11

 
$
(0.21
)
 
$
0.27

 
$
0.17

Weighted-average shares outstanding:
 
 
 
 
 
 
 
Basic
60,272

 
60,173

 
60,250

 
59,823

Diluted
60,855

 
60,173

 
60,813

 
59,984

Dividends declared per common share
$
0.175

 
$
0.175

 
$
0.525

 
$
0.525


2


QUALITY SYSTEMS, INC.
CONSOLIDATED STATMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended September 30,
 
Six Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
Software license and hardware
$
19,316

 
$
20,614

 
$
39,077

 
$
41,366

Software related subscription services
9,687

 
5,530

 
19,402

 
10,787

Total software, hardware and related
29,003

 
26,144

 
58,479

 
52,153

Support and maintenance
42,135

 
40,313

 
82,940

 
78,921

Revenue cycle management and related services
17,432

 
15,467

 
34,125

 
31,482

Electronic data interchange and data services
18,906

 
16,545

 
37,225

 
33,237

Professional Services
13,043

 
12,612

 
25,644

 
24,817

Total revenues
120,519

 
111,081

 
238,413

 
220,610

Cost of revenue:
 
 
 
 
 
 
 
Software license and hardware
7,475

 
6,636

 
15,031

 
13,307

Software related subscription services
5,384

 
2,915

 
9,835

 
5,903

Total software, hardware and related
12,859

 
9,551

 
24,866

 
19,210

Support and maintenance
6,785

 
5,262

 
13,699

 
10,564

Revenue cycle management and related services
13,202

 
11,007

 
25,908

 
22,408

Electronic data interchange and data services
12,015

 
10,650

 
24,014

 
21,446

Professional Services
11,912

 
11,212

 
24,476

 
22,126

Total cost of revenue
56,773

 
47,682

 
112,963

 
95,754

Gross profit
63,746

 
63,399

 
125,450

 
124,856

Operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
38,681

 
38,578

 
75,411

 
73,674

Research and development costs
16,898

 
7,615

 
33,134

 
13,229

Amortization of acquired intangible assets
908

 
1,260

 
1,891

 
2,454

Total operating expenses
56,487

 
47,453

 
110,436

 
89,357

Income from operations
7,259

 
15,946

 
15,014

 
35,499

Interest income (expense), net
69

 
(205
)
 
123

 
(174
)
Other expense, net
(26
)
 
(155
)
 
(17
)
 
(409
)
Income before provision for income taxes
7,302

 
15,586

 
15,120

 
34,916

Provision for income taxes
2,552

 
5,465

 
5,207

 
11,850

Net income
$
4,750

 
$
10,121

 
$
9,913

 
$
23,066

Net income per share:
 
 
 
 
 
 
 
Basic
$
0.08

 
$
0.17

 
$
0.16

 
$
0.39

Diluted
$
0.08

 
$
0.17

 
$
0.16

 
$
0.39

Weighted-average shares outstanding:
 
 
 
 
 
 
 
Basic
60,247

 
59,734

 
60,238

 
59,647

Diluted
60,788

 
59,751

 
60,782

 
59,663

Dividends declared per common share
$
0.175

 
$
0.175

 
$
0.35

 
$
0.35



3


QUALITY SYSTEMS, INC.
CONSOLIDATED STATMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
 
Three Months Ended June 30,
 
2014
 
2013
Revenues:
 
 
 
Software license and hardware
$
19,761

 
$
20,752

Software related subscription services
9,715

 
5,257

Total software, hardware and related
29,476

 
26,009

Support and maintenance
40,805

 
38,608

Revenue cycle management and related services
16,693

 
16,015

Electronic data interchange and data services
18,319

 
16,692

Professional Services
12,601

 
12,205

Total revenues
117,894

 
109,529

Cost of revenue:
 
 
 
Software license and hardware
7,556

 
6,671

Software related subscription services
4,451

 
2,988

Total software, hardware and related
12,007

 
9,659

Support and maintenance
6,914

 
5,302

Revenue cycle management and related services
12,706

 
11,401

Electronic data interchange and data services
11,999

 
10,796

Professional Services
12,564

 
10,914

Total cost of revenue
56,190

 
48,072

Gross profit
61,704

 
61,457

Operating expenses:
 
 
 
Selling, general and administrative
36,730

 
35,096

Research and development costs
16,236

 
5,614

Amortization of acquired intangible assets
983

 
1,194

Total operating expenses
53,949

 
41,904

Income from operations
7,755

 
19,553

Interest income, net
54

 
31

Other income (expense), net
9

 
(254
)
Income before provision for income taxes
7,818

 
19,330

Provision for income taxes
2,655

 
6,385

Net income
$
5,163

 
$
12,945

Net income per share:
 
 
 
Basic
$
0.09

 
$
0.22

Diluted
$
0.08

 
$
0.22

Weighted-average shares outstanding:
 
 
 
Basic
60,230

 
59,559

Diluted
60,770

 
59,572

Dividends declared per common share
$
0.175

 
$
0.175



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