SSAG Ssa Global Technologies (MM)

CHICAGO, June 6 /PRNewswire-FirstCall/ -- SSA Global (NASDAQ:SSAG), a leading global provider of enterprise business software and services, today announced financial results for the third quarter ended April 30, 2006. (Logo: http://www.newscom.com/cgi-bin/prnh/20051213/CGTU005LOGO ) "SSA Global continues to deliver strong financial performance by delivering comprehensive solutions that help our customers achieve their critical business needs," said Mike Greenough, chairman, president and CEO of SSA Global. Third quarter total revenue increased 8% to $194.6 million compared to $180.4 million last year. License revenue for the quarter was $62.3 million, an increase of 19% from the third quarter last year and represented 32% of total revenue compared to 29% last year. On an organic basis, excluding contribution from recent acquisitions in the quarter and normalizing for foreign exchange equalization, license revenue grew 12%. The acquisition of E.piphany, which closed on September 29, 2005, contributed $15.1 million to total revenue and $4.3 million to license revenue in the quarter. During the third quarter, North America contributed 49% of total revenue; Europe, Middle East and Africa (EMEA) contributed 35%; and Asia-Pacific/Japan (APJ) and Latin America contributed 16%. For the quarter, 1,361 contracts were signed, including 57 new customers that represented 9% of total license value associated with software contracts signed in the quarter. On an adjusted basis for the quarter, total revenue grew 8% to $195.1 million and net income grew 4% to $19.1 million or $0.26 per diluted share up from $18.4 million or $0.25 per diluted share last year. (Adjusted revenue, net income and earnings per diluted share include deferred license revenue associated with the E.piphany acquisition and an assumed 34% tax rate; it excludes amortization of acquired intangibles, stock option-based compensation expense and restructuring charges). For the quarter, the Company reported GAAP net income of $4.6 million compared to $9.2 million last year, and earnings per diluted share under GAAP was $0.06. Cash and cash equivalents as of April 30, 2006 totaled $140.6 million and net cash provided by operating activities for the quarter totaled $19.4 million. Days Sales Outstanding (DSO) were 77 and down from 83 days at the end of the third quarter last year. Due to the Company's definitive agreement to be acquired by Infor, which was announced on Monday, May 15, 2006, the Company will not hold a conference call to discuss its third quarter 2006 results. Presentation of Non-GAAP Financial Measures The non-GAAP financial measures presented in the text of this press release and accompanying supplementary financial information (also referred to as "adjusted") represent the financial measures used by the Company's management to evaluate the quarterly operating and cash flows performance of the Company and to conduct its business operations. These non-GAAP financial measures are also used by management to evaluate return on investment, income contribution and future impact to operating results of potential mergers and acquisitions. In addition, these non-GAAP financial measures facilitate management's internal comparisons to competitors' operating results and the software industry in general. This non-GAAP financial information is provided as additional information for investors and is not in accordance with, or an alternative to, GAAP. In addition, the non-GAAP financial information provided may be different than similar measures used by other companies. However, the Company's management believes these non-GAAP measures provide useful information to investors, potential investors, securities analysts and others so each group can evaluate the Company's current and future prospects in the same manner as management if they so choose. A reconciliation of GAAP financial information to adjusted results and EBITDA has been provided in the financial statement tables that accompany this press release. About SSA Global SSA Global (NASDAQ:SSAG) is a leading provider of enterprise business software for mid-sized and large organizations, primarily in select manufacturing, consumer and services industries. The company's software solutions include enterprise resource planning, financial management, human capital management, corporate performance management, customer relationship management, product lifecycle management, supply chain management and supplier relationship management. Headquartered in Chicago, SSA Global has over 50 locations worldwide and its product offerings are used by customers in over 90 countries. For additional information, visit the SSA Global web site at http://www.ssaglobal.com/ . SSA Global is the corporate brand for product lines, and subsidiaries and affiliates of SSA Global Technologies, Inc. Other products mentioned in this document are registered, trademarked or service marked by their respective owners. SSA, SSA Global, SSA Global Technologies, forward faster and other SSA Global products and services mentioned herein as well as their respective logos are either registered trademarks or trademarks of SSA Global in the United States and/or other countries. Forward-Looking Statements These materials may contain "forward-looking statements." Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words "believe," "anticipate," "expect," "estimate," "intend," "project," "plan," "will be," "will likely continue," "will likely result," or words or phrases with similar meaning. All of these forward-looking statements are based on estimates and assumptions made by our management that, although we believe to be reasonable, are inherently uncertain. Forward-looking statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of our control, that may cause our business, strategy or actual results to differ materially from the forward-looking statements. We operate in a changing environment in which new risks can emerge from time to time. It is not possible for management to predict all of these risks, nor can it assess the extent to which any factor, or a combination of factors, may cause our business, strategy or actual results to differ materially from those contained in forward-looking statements. Factors you should consider that could cause these differences include, among other things: -- General economic and business conditions, including exchange rate fluctuations; -- Our ability to identify acquisition opportunities and effectively and cost-efficiently integrate acquisitions; -- Our ability to maintain effective internal control over financial reporting; -- Our ability to attract and retain personnel, including key personnel; -- Our success in developing and introducing new services and products; and -- Competition in the software industry, as it relates to both our existing and potential new customers. SSA GLOBAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP (in millions, except per share data) (Unaudited) Three Months Ended Nine Months Ended April 30, April 30, Revenue: 2006 2005 2006 2005 License fees $62.3 $52.5 $171.1 $144.9 Support 90.3 86.4 266.2 258.7 Services and other 42.0 41.5 122.7 121.3 Total revenue 194.6 180.4 560.0 524.9 Operating expenses: Cost of revenues: Cost of license fees 11.7 7.5 29.1 19.7 Amortization of acquired technology 4.0 3.6 12.4 11.9 Cost of support, services and other 51.6 49.4 151.3 145.0 Sales and marketing 49.2 46.4 142.4 135.6 Research and development 27.3 26.6 82.3 76.3 General and administrative 22.1 19.5 62.6 62.1 Non-cash stock option compensation expense 3.9 2.4 10.2 7.3 Amortization of intangibles 7.2 6.4 21.0 19.2 Restructuring charge (benefit) 3.1 0.1 8.5 (1.4) Total operating expenses 180.1 161.9 519.8 475.7 Operating income 14.5 18.5 40.2 49.2 Interest expense, net 2.9 3.9 7.8 11.8 Loss on early extinguishment of debt - - 3.3 - Other expense (income) 1.4 (0.8) 3.5 (2.0) Income before income taxes 10.2 15.4 25.6 39.4 Provision for income taxes 5.6 6.2 13.4 15.8 Net income 4.6 9.2 12.2 23.6 Preferred stock dividends - 7.9 - 23.3 Preferred stock dividends in excess of stated amount - 11.1 - 32.5 Cash dividend paid to preferred stockholders - - - 25.0 Distributed earnings - preferred stockholders - 19.0 - 80.8 Net income (loss) to common stockholders $4.6 $(9.8) $12.2 $(57.2) Earnings (loss) per common share: Basic $0.07 $(2.05) $0.18 $(11.95) Diluted 0.06 (2.05) 0.17 (11.95) Earnings per preferred share: Basic and diluted $- $6.33 $- $26.93 Weighted average common shares: Basic 69.725 4.785 68.851 4.785 Diluted 72.812 4.785 73.429 4.785 Weighted average preferred shares: Basic and diluted - 3.000 - 3.000 SSA GLOBAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS - ADJUSTED (NON-GAAP) (in millions, except per share data) (Unaudited) Three Months Ended April 30, % of % of % Revenue: 2006 Revenues 2005 Revenues Inc (Dec) License fees $62.8 32% $52.5 29% 20% Support 90.3 46% 86.4 48% 5% Services and other 42.0 22% 41.5 23% 1% Total revenue 195.1 100% 180.4 100% 8% Operating expenses: Cost of revenues: Cost of license fees 11.7 6% 7.5 4% 56% Cost of support, services and other 51.6 27% 49.4 27% 4% Sales and marketing 49.2 25% 46.4 26% 6% Research and development 27.3 14% 26.6 15% 3% General and administrative 22.1 11% 19.5 11% 13% Total operating expenses 161.9 83% 149.4 83% 8% Operating income 33.2 17% 31.0 17% 7% Interest expense, net 2.9 1% 3.9 2% -26% Other (income) expense 1.4 1% (0.8) 0% * Income before income taxes 28.9 15% 27.9 15% 4% Provision for income taxes 9.8 5% 9.5 5% 3% Net income $19.1 10% $18.4 10% 4% Earnings per common share: Basic $0.27 $0.27 Diluted $0.26 $0.25 Weighted average common shares: Basic 69.725 68.017 Diluted 73.423 72.746 * not meaningful Nine Months Ended April 30, % of % of % Revenue: 2006 Revenues 2005 Revenues Inc (Dec) License fees $172.7 31% $144.9 28% 19% Support 266.2 47% 258.7 49% 3% Services and other 122.7 22% 121.3 23% 1% Total revenue 561.6 100% 524.9 100% 7% Operating expenses: Cost of revenues: Cost of license fees 29.1 5% 19.7 4% 48% Cost of support, services and other 151.3 27% 145.0 28% 4% Sales and marketing 142.4 26% 135.6 26% 5% Research and development 80.6 14% 76.3 14% 6% General and administrative 62.6 11% 62.1 12% 1% Total operating expenses 466.0 83% 438.7 84% 6% Operating income 95.6 17% 86.2 16% 11% Interest expense, net 7.8 1% 11.8 1% -34% Other (income) expense 3.5 1% (2.0) 0% * Income before income taxes 84.3 15% 76.4 15% 10% Provision for income taxes 28.7 5% 26.0 5% 10% Net income $55.6 10% $50.4 10% 10% Earnings per common share: Basic $0.81 $0.74 Diluted $0.75 $0.69 Weighted average common shares: Basic 68.851 68.017 Diluted 74.040 72.834 * not meaningful SSA GLOBAL TECHNOLOGIES, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO ADJUSTED (NON-GAAP) CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) (Unaudited) Three Months Ended April 30, 2006 2006 2005 2005 Revenue: GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP License fees (1) $62.3 $0.5 $62.8 $52.5 $- $52.5 Support 90.3 - 90.3 86.4 - 86.4 Services and other 42.0 - 42.0 41.5 - 41.5 Total revenue 194.6 0.5 195.1 180.4 - 180.4 Operating expenses: Cost of revenues: Cost of license fees 11.7 - 11.7 7.5 - 7.5 Amortization of acquired technology (2) 4.0 (4.0) - 3.6 (3.6) - Cost of support, services and other 51.6 - 51.6 49.4 - 49.4 Sales and marketing 49.2 - 49.2 46.4 - 46.4 Research and develop- ment 27.3 - 27.3 26.6 - 26.6 General and administra- tive 22.1 - 22.1 19.5 - 19.5 Non-cash stock option compensation expense (3) 3.9 (3.9) - 2.4 (2.4) - Amortization of intangibles (2) 7.2 (7.2) - 6.4 (6.4) - Restructuring charges (benefits) (4) 3.1 (3.1) - 0.1 (0.1) - Total operating expens- es 180.1 (18.2) 161.9 161.9 (12.5) 149.4 Operating income 14.5 18.7 33.2 18.5 12.5 31.0 Interest expense, net 2.9 - 2.9 3.9 - 3.9 Other (income) expense 1.4 - 1.4 (0.8) - (0.8) Income before income taxes 10.2 18.7 28.9 15.4 12.5 27.9 Provision for income taxes (6) 5.6 4.2 9.8 6.2 3.3 9.5 Net income 4.6 14.5 19.1 9.2 9.2 18.4 Preferred stock dividends (7) - - - 7.9 (7.9) - Preferred stock dividends in excess of stated amount (7) - - - 11.1 (11.1) - Distributed earnings - preferred stockholders - - - 19.0 (19.0) - Net income (loss) to common stock- holders $4.6 $14.5 $19.1 $(9.8) $28.2 $18.4 Earnings (loss) per common share (7): Basic $0.07 $0.27 $(2.05) $0.27 Diluted $0.06 $0.26 $(2.05) $0.25 Earnings per preferred share (7): Basic and diluted $- $- $6.33 $- Weighted average common shares (7): Basic 69.725 - 69.725 4.785 63.232 68.017 Diluted 72.812 0.611 73.423 4.785 67.961 72.746 Weighted average preferred shares (7): Basic and diluted - 3.000 (3.000) - Nine Months Ended April 30, 2006 2006 2005 2005 Revenue: GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP License fees (1) $171.1 $1.6 $172.7 $144.9 $- $144.9 Support 266.2 - 266.2 258.7 - 258.7 Services and other 122.7 - 122.7 121.3 - 121.3 Total revenue 560.0 1.6 561.6 524.9 - 524.9 Operating expenses: Cost of revenues: Cost of license fees 29.1 - 29.1 19.7 - 19.7 Amortization of acquired technology (2) 12.4 (12.4) - 11.9 (11.9) - Cost of support, services and other 151.3 - 151.3 145.0 - 145.0 Sales and marketing 142.4 - 142.4 135.6 - 135.6 Research and develop- ment (2) 82.3 (1.7) 80.6 76.3 - 76.3 General and administra- tive 62.6 - 62.6 62.1 - 62.1 Non-cash stock option compensation expense (3) 10.2 (10.2) - 7.3 (7.3) - Amortization of intangib- les (2) 21.0 (21.0) - 19.2 (19.2) - Restructuring charges (benefits) (4) 8.5 (8.5) - (1.4) 1.4 - Total operating expen- ses 519.8 (53.8) 466.0 475.7 (37.0) 438.7 Operating income 40.2 55.4 95.6 49.2 37.0 86.2 Interest expense, net 7.8 - 7.8 11.8 - 11.8 Loss on early extinguishment of debt (5) 3.3 (3.3) - - - - Other (income) expense 3.5 - 3.5 (2.0) - (2.0) Income before income taxes 25.6 58.7 84.3 39.4 37.0 76.4 Provision for income taxes (6) 13.4 15.3 28.7 15.8 10.2 26.0 Net income 12.2 43.4 55.6 23.6 26.8 50.4 Preferred stock dividends (7) - - - 23.3 (23.3) - Preferred stock dividends in excess of stated amount (7) - - - 32.5 (32.5) - Cash dividend paid to preferred stockholders (7) - - - 25.0 (25.0) - Distributed earnings - preferred stockholders - - - 80.8 (80.8) - Net income (loss) to common stock- holders $12.2 $43.4 $55.6 $(57.2) $107.6 $50.4 Earnings (loss) per common share (7): Basic $0.18 $0.81 $(11.95) $0.74 Diluted $0.17 $0.75 $(11.95) $0.69 Earnings per preferred share (7): Basic and diluted $- $- $26.93 $- Weighted average common shares (7): Basic 68.851 - 68.851 4.785 63.232 68.017 Diluted 73.429 0.611 74.040 4.785 68.049 72.834 Weighted average preferred shares (7): Basic and diluted - 3.000 (3.000) - Footnotes - Adjustments: (1) In connection with the Epiphany acquisition, we were required to eliminate deferred license revenue for purchase accounting purposes. The adjustment amount represents license fees that would have been otherwise recorded by Epiphany that were not recognized for GAAP purposes. (2) Represents the amortization of intangible assets and charges associated with acquisitions, which includes acquired technology, customer lists, patents and in-process research and development charges. (3) Represents non-cash stock-based compensation expense associated with stock options granted to certain employees on July 31, 2003 and the adoption of SFAS 123R effective August 1, 2005. (4) Restructuring charges (benefits) include costs associated with SSA employee severance and facilities termination costs and adjustments to restructuring liabilities assumed in connection with acquisitions that occur more than twelve months subsequent to the consummation of the related acquisition. (5) Represents a non-cash charge for the write-off of unamortized deferred financing fees associated with early repayment of long-term debt. (6) Provision for income taxes is adjusted to 34% for all periods as this represents the Company's estimated long-term effective cash income tax rate. The Company's cash income tax rate was approximately 10% for fiscal 2005. (7) For the three and nine months ended April 30, 2005, the adjustments give effect to the issuance of common stock associated with the initial public offering of common stock as if it occurred November 1, 2004 and August 1, 2004, respectively, including (a) conversion of preferred stock into 52.755 million shares of common stock, (b) issuance of 10.350 million shares in the initial public offering and (c) inclusion of potentially dilutive securities in diluted earnings per common share that were anti-dilutive for historical reporting purposes. For the three and nine months ended April 30, 2006, the adjustment gives effect to the inclusion of potentially dilutive securities in diluted earnings per common share that were anti-dilutive for GAAP reporting purposes. SSA GLOBAL TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in millions) April 30, January 31, July 31, 2006 2006 2005 Assets (Unaudited) (Unaudited) (Unaudited) Current assets: Cash and cash equivalents $140.6 $136.0 $165.4 Restricted cash 0.6 3.1 4.9 Investments - 0.5 - Accounts receivable, net 170.2 181.3 144.1 Deferred tax assets 19.5 19.9 19.9 Prepaid and other current assets 28.9 26.9 25.7 Total current assets 359.8 367.7 360.0 Non-current assets: Restricted cash 3.3 4.2 - Property and equipment, net 19.3 19.7 18.3 Intangible assets, net 169.7 170.7 143.1 Goodwill 400.8 391.4 296.3 Deferred tax assets - - 6.4 Other 9.1 6.8 6.6 Total non-current assets 602.2 592.8 470.7 Total Assets $962.0 $960.5 $830.7 Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt $4.0 $4.0 $1.6 Accounts payable and accrued liabilities 115.2 115.8 106.0 Accrued compensation and related benefits 62.1 61.2 56.5 Deferred revenue 219.9 228.5 183.8 Income taxes payable 3.0 1.8 1.8 Total current liabilities 404.2 411.3 349.7 Non-current liabilities: Long-term debt 208.4 209.2 161.0 Accrued restructuring 11.4 10.4 - Deferred tax liabilities 0.5 3.2 - Other long term obligations 7.7 7.4 7.1 Deferred revenue 33.7 34.9 38.5 Total liabilities 665.9 676.4 556.3 Stockholders' equity 296.1 284.1 274.4 Total Liabilities and Stockholders' Equity $962.0 $960.5 $830.7 SSA GLOBAL TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited) Three Months Ended Nine Months Ended April 30, April 30, 2006 2005 2006 2005 Net income $4.6 $9.2 $12.2 $23.6 Non-cash expenses 23.7 24.1 70.4 68.6 Changes in working capital, net of acquisitions: Accounts receivable 15.8 17.5 (9.1) (9.8) Deferred revenue (18.4) (3.4) 5.3 3.4 Other (6.3) (4.3) (18.4) (22.5) Net cash provided by operating activities 19.4 43.1 60.4 63.3 Cash flows from investing activities: Acquisitions, net of cash acquired (20.0) - (129.6) 1.0 Purchase of property and equipment (1.6) (5.9) (4.4) (9.3) Capitalized software costs and acquired technology (1.2) (1.1) (5.1) (2.4) Other 0.5 - 0.5 - Net cash used in investing activities (22.3) (7.0) (138.6) (10.7) Cash flows from financing activities: Borrowings - - 200.0 - Payments of debt (1.0) (0.6) (157.2) (2.3) Cash dividend paid to preferred stockholders - - - (25.0) Proceeds from stock option exercises 1.8 - 5.1 - Other 3.1 (3.6) 0.1 (3.6) Net cash provided by (used in) financing activities 3.9 (4.2) 48.0 (30.9) Effect of exchange rate changes on cash and cash equivalents 3.6 (0.6) 5.4 1.1 Net increase (decrease) in cash and cash equivalents 4.6 31.3 (24.8) 22.8 Cash and cash equivalents at beginning of period 136.0 97.6 165.4 106.1 Cash and cash equivalents at end of period $140.6 $128.9 $140.6 $128.9 SSA GLOBAL TECHNOLOGIES, INC. AND SUBSIDIARIES RECONCILIATION OF EBITDA TO NET CASH PROVIDED BY OPERATIONS (in millions) (Unaudited) Three Months Ended Nine Months Ended April 30, April 30, 2006 2005 2006 2005 EBITDA (1) $35.1 $34.2 $100.5 $94.8 Interest paid (3.8) (2.3) (10.3) (6.9) Income taxes paid (0.4) (0.6) (1.2) (1.7) Other changes in working capital (11.5) 11.8 (28.6) (22.9) Net cash provided by operations $19.4 $43.1 $60.4 $63.3 (1) Represents net income before interest, income taxes, options amortization, depreciation and amortization related to customer lists, patents, acquired technology, capitalized software development and in-process research and development and restructuring charges (benefits). http://www.newscom.com/cgi-bin/prnh/20051213/CGTU005LOGO http://photoarchive.ap.org/ DATASOURCE: SSA Global CONTACT: Investor, Dawn Drella, +1-312-474-7694, , or Press, Maria Diecidue, +1-312-258-6000, , both of SSA Global Web site: http://www.ssaglobal.com/

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