Blue Coat Systems, Inc. (NASDAQ:BCSI), the technology leader in
Application Delivery Networking, today reported its financial results
for its third fiscal quarter ended January 31, 2010. Total net revenue
for the third quarter of fiscal 2010 was $127.1 million, an increase of
16% compared with net revenue of $109.6 million in the third quarter of
fiscal 2009, and an increase of 6% compared with net revenue of $120.4
million in the second quarter of fiscal 2010.
"The third quarter marked a period of continued growth for Blue Coat,”
said Brian NeSmith, president and chief executive officer Blue Coat
Systems. "In the quarter, business was strong across all major
geographic regions, as customers continue to value our unique ADN
product portfolio. We will continue to invest in strategic opportunities
in the ADN market to accelerate growth while not sacrificing the bottom
line.”
On a GAAP basis, the Company reported net income of $6.9 million,
including $9.1 million of restructuring charges, or $0.15 per diluted
share, in the third quarter of fiscal 2010, compared with net income of
$1.1 million, or $0.02 per diluted share, in the third quarter of fiscal
2009, and net income of $8.4 million, or $0.19 per diluted share, in the
second quarter of fiscal 2010.
The Company reported non-GAAP net income of $17.1 million, or $0.37 per
diluted share, in the third quarter of fiscal 2010, compared with
non-GAAP net income of $9.3 million, or $0.21 per diluted share, in the
third quarter of fiscal 2009, and non-GAAP net income of $13.1 million,
or $0.29 per diluted share, in the second quarter of fiscal 2010. A
reconciliation of the GAAP to non-GAAP financial measures is included in
Table 2 of this press release.
"I am particularly pleased with the strong improvement in non-GAAP
operating profitability and record operating cash flow in the third
quarter,” said Gordon C. Brooks, senior vice president and chief
financial officer Blue Coat Systems. "Our non-GAAP operating margin
percentage increased sequentially 440 basis points to 19.9%, and our
trailing 12 month operating cash flow was $76 million, an increase of
24%.”
The Company ended the quarter on January 31, 2010, with cash, cash
equivalents, and restricted cash of $188.2 million, an increase of $45.7
million from the prior quarter. Cash flow provided by operations in the
third quarter of fiscal 2010 was $42.2 million.
Financial Outlook
For the fourth fiscal quarter ending April 30, 2010, the Company
currently expects net revenue in the range of $129 to $134 million. On a
GAAP basis, the Company currently expects net income of $0.25 to $0.31
per diluted share. On a non-GAAP basis, the Company currently expects
net income of $0.36 to $0.41 per diluted share. For the fourth quarter
of fiscal 2010, the Company is assuming a diluted share count of
approximately 47.3 million shares.
About Non-GAAP Financial Measures
The Company uses non-GAAP financial measures of income for internal
evaluation and to report the results of its business. These non-GAAP
financial measures include non-GAAP gross profit, non-GAAP operating
income, non-GAAP net income, and non-GAAP diluted net income per share.
These measures are not in accordance with, nor an alternative to, U.S.
generally accepted accounting principles or GAAP. These measures are
intended to supplement GAAP financial information, and may be different
from non-GAAP financial measures used by other companies. The Company
believes that these measures provide useful information to its
management, board of directors and investors regarding its ongoing
operating activities and business trends related to its financial
condition and results of operations. The Company believes that it is
useful to provide investors with information to understand how specific
line items in the statement of operations are affected by certain items,
such as the fair value write-up of acquired inventory sold, stock-based
compensation expense, amortization of intangible assets, expenses for
matters related to the stock option investigation, and restructuring
expenses, and related income tax adjustments. In addition, the Company’s
management and board of directors use these non-GAAP financial measures
in developing operating budgets and in reviewing the Company’s financial
results of operations, since items such as expense related to the fair
value write-up of acquired inventory sold, stock-based compensation
expense, amortization of intangible assets, expenses for matters related
to the stock option investigation, and restructuring expenses, and
related income tax adjustments do not impact its current resource
allocation decisions. Additionally, the Company believes that inclusion
of these non-GAAP financial measures provides consistency and
comparability with its past reports of financial results. However,
investors should be aware that non-GAAP measures have inherent
limitations and should be read in conjunction with the Company’s
consolidated financial statements prepared in accordance with GAAP.
Refer to the accompanying tables for a detailed reconciliation of GAAP
to non-GAAP gross profit, operating income, net income and net income
per share.
Conference Call & Webcast
Blue Coat will hold its quarterly conference call to discuss results for
the third quarter of fiscal 2010 and the outlook for the fourth quarter
of fiscal 2010 on Tuesday, February 23, 2010 at 5:00 p.m. ET (2:00 p.m.
PT). Participants in the United States should call (800) 553-5260.
International participants should call (612) 332-0720. The passcode for
the call is: 145328. The conference call can also be accessed through an
audio webcast from the Company’s website, www.bluecoat.com/company/investorrelations.
A replay of the call will be available starting on Tuesday, February 23,
2010 at 8:00 p.m. ET (5:00 p.m. PT), and can be accessed by calling
(800) 475-6701 for U.S. participants and (320) 365-3844 for
international participants. The passcode for the replay is 145328.
About Blue Coat Systems
Blue Coat Systems, Inc. is the technology leader in Application Delivery
Networking. Blue Coat offers an Application Delivery Network
Infrastructure that provides the visibility, acceleration and security
required to optimize and secure the flow of information to any user, on
any network, anywhere. This application intelligence enables enterprises
to tightly align network investments with business requirements, speed
decision making and secure business applications for long-term
competitive advantage. For additional information, please visit www.bluecoat.com.
FORWARD-LOOKING STATEMENTS: This document contains certain
forward-looking statements.
All statements other than statements
of historical fact are statements that could be deemed forward-looking
statements including: statements regarding our business outlook and
future financial and operating results; any statements of expectation or
belief; any statements regarding plans, strategies and objectives of
management for future operations; and any statements of assumptions
underlying any of the foregoing.
Risks, uncertainties and
assumptions include the risks that are described from time to time in
the Securities and Exchange Commission reports filed by the Company,
including but not limited to the risks described in the Company’s most
recent reports on Form 10-K and Form 10-Q, particularly under the
heading "Risk Factors.” No assurances can be given that any of the
events anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what impact they will have on the
results of operations or financial condition of the Company. The Company
assumes no obligation and does not intend to update any of these
forward-looking statements except as required by applicable law after
the date on which it was made.
Blue Coat and the Blue Coat logo are registered trademarks or trademarks
of Blue Coat Systems, Inc. and/or its affiliates in the United States
and certain other countries. All other trademarks mentioned in this
document are the property of their respective owners.
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|
|
|
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BLUE COAT SYSTEMS, INC.
|
|
Table 1
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
January 31,
|
|
October 31,
|
|
January 31,
|
|
January 31,
|
|
|
|
2010
|
|
2009
|
|
2009
|
|
2010
|
|
2009
|
|
Net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
84,125
|
|
|
$
|
76,502
|
|
|
$
|
72,495
|
|
|
$
|
234,319
|
|
|
$
|
231,221
|
|
|
Service
|
|
|
42,991
|
|
|
|
43,934
|
|
|
|
37,101
|
|
|
|
129,222
|
|
|
|
99,902
|
|
|
Total net revenue
|
|
|
127,116
|
|
|
|
120,436
|
|
|
|
109,596
|
|
|
|
363,541
|
|
|
|
331,123
|
|
|
Cost of net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
20,734
|
|
|
|
19,261
|
|
|
|
19,028
|
|
|
|
59,478
|
|
|
|
66,261
|
|
|
Service
|
|
|
11,381
|
|
|
|
12,947
|
|
|
|
11,474
|
|
|
|
36,365
|
|
|
|
33,445
|
|
|
Total cost of net revenue
|
|
|
32,115
|
|
|
|
32,208
|
|
|
|
30,502
|
|
|
|
95,843
|
|
|
|
99,706
|
|
|
Gross profit
|
|
|
95,001
|
|
|
|
88,228
|
|
|
|
79,094
|
|
|
|
267,698
|
|
|
|
231,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
42,923
|
|
|
|
45,608
|
|
|
|
43,608
|
|
|
|
134,107
|
|
|
|
132,208
|
|
|
Research and development
|
|
|
21,419
|
|
|
|
19,568
|
|
|
|
18,606
|
|
|
|
60,823
|
|
|
|
56,963
|
|
|
General and administrative
|
|
|
11,941
|
|
|
|
11,176
|
|
|
|
10,877
|
|
|
|
35,833
|
|
|
|
35,192
|
|
|
Amortization of intangible assets
|
|
|
1,803
|
|
|
|
1,822
|
|
|
|
1,821
|
|
|
|
5,446
|
|
|
|
4,846
|
|
|
Restructuring
|
|
|
9,059
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,059
|
|
|
|
1,546
|
|
|
Total operating expenses
|
|
|
87,145
|
|
|
|
78,174
|
|
|
|
74,912
|
|
|
|
245,268
|
|
|
|
230,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
7,856
|
|
|
|
10,054
|
|
|
|
4,182
|
|
|
|
22,430
|
|
|
|
662
|
|
|
Interest income
|
|
|
57
|
|
|
|
72
|
|
|
|
289
|
|
|
|
230
|
|
|
|
1,140
|
|
|
Interest expense
|
|
|
(226
|
)
|
|
|
(227
|
)
|
|
|
(233
|
)
|
|
|
(681
|
)
|
|
|
(620
|
)
|
|
Other income (expense), net
|
|
|
(758
|
)
|
|
|
155
|
|
|
|
(440
|
)
|
|
|
(619
|
)
|
|
|
(1,980
|
)
|
|
Income (loss) before income taxes
|
|
|
6,929
|
|
|
|
10,054
|
|
|
|
3,798
|
|
|
|
21,360
|
|
|
|
(798
|
)
|
|
Provision for income taxes
|
|
|
21
|
|
|
|
1,687
|
|
|
|
2,735
|
|
|
|
2,089
|
|
|
|
4,225
|
|
|
Net income (loss)
|
|
$
|
6,908
|
|
|
$
|
8,367
|
|
|
$
|
1,063
|
|
|
$
|
19,271
|
|
|
$
|
(5,023
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share
|
|
$
|
0.15
|
|
|
$
|
0.19
|
|
|
$
|
0.03
|
|
|
$
|
0.44
|
|
|
$
|
(0.13
|
)
|
|
Diluted net income (loss) per share
|
|
$
|
0.15
|
|
|
$
|
0.19
|
|
|
$
|
0.02
|
|
|
$
|
0.42
|
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in computing basic net income (loss)
per share
|
|
|
44,591
|
|
|
|
43,777
|
|
|
|
42,433
|
|
|
|
43,854
|
|
|
|
38,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in computing diluted net income
(loss) per share
|
|
|
46,780
|
|
|
|
45,202
|
|
|
|
43,190
|
|
|
|
45,484
|
|
|
|
38,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BLUE COAT SYSTEMS, INC.
|
|
Table 2
|
|
Reconciliation of GAAP to Non-GAAP Financial Measures
|
|
(In thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
January 31,
|
|
October 31,
|
|
January 31,
|
|
January 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2009
|
|
2010
|
|
2009
|
|
Gross Profit Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross profit
|
|
|
|
$
|
95,001
|
|
|
$
|
88,228
|
|
|
$
|
79,094
|
|
|
$
|
267,698
|
|
|
$
|
231,417
|
|
|
|
Fair value write-up of acquired inventory sold
|
|
A
|
|
|
497
|
|
|
|
985
|
|
|
|
1,409
|
|
|
|
2,807
|
|
|
|
14,699
|
|
|
|
Stock-based compensation expense included in cost of revenue
|
|
B
|
|
|
254
|
|
|
|
815
|
|
|
|
439
|
|
|
|
1,659
|
|
|
|
1,339
|
|
|
|
Amortization of intangible assets
|
|
C
|
|
|
1,239
|
|
|
|
1,347
|
|
|
|
1,386
|
|
|
|
3,934
|
|
|
|
3,738
|
|
|
Non-GAAP gross profit
|
|
|
|
$
|
96,991
|
|
|
$
|
91,375
|
|
|
$
|
82,328
|
|
|
$
|
276,098
|
|
|
$
|
251,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating income (loss)
|
|
|
|
$
|
7,856
|
|
|
$
|
10,054
|
|
|
$
|
4,182
|
|
|
$
|
22,430
|
|
|
$
|
662
|
|
|
|
Fair value write-up of acquired inventory sold
|
|
A
|
|
|
497
|
|
|
|
985
|
|
|
|
1,409
|
|
|
|
2,807
|
|
|
|
14,699
|
|
|
|
Stock-based compensation expense
|
|
B
|
|
|
4,549
|
|
|
|
5,527
|
|
|
|
4,458
|
|
|
|
14,887
|
|
|
|
13,801
|
|
|
|
Amortization of intangible assets
|
|
C
|
|
|
3,042
|
|
|
|
3,169
|
|
|
|
3,207
|
|
|
|
9,380
|
|
|
|
8,584
|
|
|
|
Expenses (reversals) for matters related to the stock option
investigation
|
|
D
|
|
|
337
|
|
|
|
(1,052
|
)
|
|
|
356
|
|
|
|
(13
|
)
|
|
|
1,712
|
|
|
|
Restructuring
|
|
E
|
|
|
9,059
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,059
|
|
|
|
1,546
|
|
|
Non-GAAP operating income
|
|
|
|
$
|
25,340
|
|
|
$
|
18,683
|
|
|
$
|
13,612
|
|
|
$
|
58,550
|
|
|
$
|
41,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss)
|
|
|
|
$
|
6,908
|
|
|
$
|
8,367
|
|
|
$
|
1,063
|
|
|
$
|
19,271
|
|
|
$
|
(5,023
|
)
|
|
|
Fair value write-up of acquired inventory sold
|
|
A
|
|
|
497
|
|
|
|
985
|
|
|
|
1,409
|
|
|
|
2,807
|
|
|
|
14,699
|
|
|
|
Stock-based compensation expense
|
|
B
|
|
|
4,549
|
|
|
|
5,527
|
|
|
|
4,458
|
|
|
|
14,887
|
|
|
|
13,801
|
|
|
|
Amortization of intangible assets
|
|
C
|
|
|
3,042
|
|
|
|
3,169
|
|
|
|
3,207
|
|
|
|
9,380
|
|
|
|
8,584
|
|
|
|
Expenses (reversals) for matters related to the stock option
investigation
|
|
D
|
|
|
337
|
|
|
|
(1,052
|
)
|
|
|
356
|
|
|
|
(13
|
)
|
|
|
1,712
|
|
|
|
Restructuring
|
|
E
|
|
|
9,059
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,059
|
|
|
|
1,546
|
|
|
|
Income tax adjustments
|
|
F
|
|
|
(7,304
|
)
|
|
|
(3,917
|
)
|
|
|
(1,233
|
)
|
|
|
(15,155
|
)
|
|
|
(7,638
|
)
|
|
Non-GAAP net income
|
|
|
|
$
|
17,088
|
|
|
$
|
13,079
|
|
|
$
|
9,260
|
|
|
$
|
40,236
|
|
|
$
|
27,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) per Share
Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net income (loss) per share
|
|
|
|
$
|
0.15
|
|
|
$
|
0.19
|
|
|
$
|
0.02
|
|
|
$
|
0.42
|
|
|
$
|
(0.13
|
)
|
|
|
Fair value write-up of acquired inventory sold
|
|
A
|
|
|
0.01
|
|
|
|
0.02
|
|
|
|
0.03
|
|
|
|
0.06
|
|
|
|
0.34
|
|
|
|
Stock-based compensation expense
|
|
B
|
|
|
0.10
|
|
|
|
0.12
|
|
|
|
0.10
|
|
|
|
0.33
|
|
|
|
0.32
|
|
|
|
Amortization of intangible assets
|
|
C
|
|
|
0.07
|
|
|
|
0.07
|
|
|
|
0.07
|
|
|
|
0.20
|
|
|
|
0.20
|
|
|
|
Expenses (reversals) for matters related to the stock option
investigation
|
|
D
|
|
|
0.01
|
|
|
|
(0.02
|
)
|
|
|
0.01
|
|
|
|
-
|
|
|
|
0.04
|
|
|
|
Restructuring
|
|
E
|
|
|
0.19
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.20
|
|
|
|
0.04
|
|
|
|
Income tax adjustments
|
|
F
|
|
|
(0.16
|
)
|
|
|
(0.09
|
)
|
|
|
(0.02
|
)
|
|
|
(0.33
|
)
|
|
|
(0.18
|
)
|
|
|
Anti-dilution adjustment for GAAP-based net loss
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.01
|
|
|
Non-GAAP diluted net income per share
|
|
|
|
$
|
0.37
|
|
|
$
|
0.29
|
|
|
$
|
0.21
|
|
|
$
|
0.88
|
|
|
$
|
0.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing GAAP diluted net income (loss) per share
|
|
|
|
|
46,780
|
|
|
|
45,202
|
|
|
|
43,190
|
|
|
|
45,484
|
|
|
|
38,342
|
|
|
|
Effect of dilutive securities
|
|
G
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,597
|
|
|
Shares used in computing non-GAAP diluted net income per share
|
|
|
|
|
46,780
|
|
|
|
45,202
|
|
|
|
43,190
|
|
|
|
45,484
|
|
|
|
42,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)
|
Purchase accounting rules require that the inventory we acquired
in the Packeteer acquisition be written-up to its estimated fair
market value. The fair value write-up increases the cost of
revenue, essentially eliminating the profit that would normally
have been recognized at the time such inventory is sold. To
facilitate comparability of gross margin between periods, the fair
value write-up related to acquired inventory sold has been
excluded on a non-GAAP basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(B)
|
Stock-based compensation expense consists of non-cash charges for
employee stock options, restricted stock awards, restricted stock
units and employee stock purchase plan awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results include stock-based compensation expense as follows
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
January 31,
|
|
October 31,
|
|
January 31,
|
|
January 31,
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
2009
|
|
2010
|
|
2009
|
|
|
Cost of revenue
|
|
|
|
$
|
254
|
|
|
$
|
815
|
|
|
$
|
439
|
|
|
$
|
1,659
|
|
|
$
|
1,339
|
|
|
|
Sales and marketing
|
|
|
|
|
1,630
|
|
|
|
2,070
|
|
|
|
1,529
|
|
|
|
5,387
|
|
|
|
4,780
|
|
|
|
Research and development
|
|
|
|
|
1,476
|
|
|
|
1,457
|
|
|
|
1,397
|
|
|
|
4,465
|
|
|
|
3,898
|
|
|
|
General and administrative
|
|
|
|
|
1,189
|
|
|
|
1,185
|
|
|
|
1,093
|
|
|
|
3,376
|
|
|
|
3,784
|
|
|
|
|
Subtotal
|
|
|
|
|
4,549
|
|
|
|
5,527
|
|
|
|
4,458
|
|
|
|
14,887
|
|
|
|
13,801
|
|
|
|
Restructuring
|
|
|
|
|
108
|
|
|
|
-
|
|
|
|
-
|
|
|
|
108
|
|
|
|
88
|
|
|
|
|
Total
|
|
|
|
$
|
4,657
|
|
|
$
|
5,527
|
|
|
$
|
4,458
|
|
|
$
|
14,995
|
|
|
$
|
13,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(C)
|
Amortization of intangible assets associated with acquisitions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(D)
|
Includes expenses for matters related to the Company's stock option
investigation, including professional fees.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(E)
|
Current period restructuring includes severance costs associated
with the Fiscal 2010 Restructuring Plan. Prior period
restructuring included severance costs for Blue Coat employees
terminated in connection with the Packeteer acquisition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(F)
|
Income tax adjustment is used to reconcile the GAAP tax provision to
a non-GAAP tax provision utilizing an expected long-term effective
tax rate of 30%.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(G)
|
The effect of dilutive securities was excluded from GAAP diluted
weighted average shares due to the reported net loss under GAAP,
but are included for non-GAAP diluted weighted average shares
since we have non-GAAP net income.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BLUE COAT SYSTEMS, INC.
|
|
Table 3
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
|
|
April 30,
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
187,254
|
|
|
$
|
114,163
|
|
|
Accounts receivable, net
|
|
|
|
|
|
60,018
|
|
|
|
77,161
|
|
|
Inventory
|
|
|
|
|
|
|
|
5,689
|
|
|
|
5,700
|
|
|
Prepaid expenses and other current assets
|
|
|
|
15,527
|
|
|
|
13,113
|
|
|
Current portion of deferred income tax assets
|
|
|
9,177
|
|
|
|
7,941
|
|
|
Total current assets
|
|
|
|
|
|
|
277,665
|
|
|
|
218,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
|
|
36,625
|
|
|
|
34,955
|
|
|
Restricted cash
|
|
|
|
|
|
|
962
|
|
|
|
850
|
|
|
Goodwill
|
|
|
|
|
|
|
|
242,611
|
|
|
|
238,466
|
|
|
Identifiable intangible assets, net
|
|
|
|
|
40,094
|
|
|
|
48,774
|
|
|
Non-current portion of deferred income tax assets
|
|
|
|
24,574
|
|
|
|
19,412
|
|
|
Other assets
|
|
|
|
|
|
|
6,790
|
|
|
|
1,758
|
|
|
Total assets
|
|
|
|
|
|
$
|
629,321
|
|
|
$
|
562,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
|
$
|
15,461
|
|
|
$
|
24,105
|
|
|
Accrued payroll and related benefits
|
|
|
|
|
17,002
|
|
|
|
18,374
|
|
|
Deferred revenue
|
|
|
|
|
|
|
96,422
|
|
|
|
96,656
|
|
|
Other current liabilities
|
|
|
|
|
|
12,073
|
|
|
|
12,299
|
|
|
Total current liabilities
|
|
|
|
|
|
140,958
|
|
|
|
151,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue, less current portion
|
|
|
|
|
44,137
|
|
|
|
33,923
|
|
|
Deferred rent, less current portion
|
|
|
|
|
6,409
|
|
|
|
5,703
|
|
|
Long-term income taxes payable
|
|
|
|
|
20,080
|
|
|
|
12,677
|
|
|
Other non-current liabilities
|
|
|
|
|
|
1,188
|
|
|
|
600
|
|
|
Zero Coupon Convertible Senior Notes, due in 2013
|
|
|
77,018
|
|
|
|
76,347
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blue Coat stockholders' equity:
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
2
|
|
|
|
2
|
|
|
Additional paid-in capital
|
|
|
|
|
|
1,207,172
|
|
|
|
1,168,106
|
|
|
Treasury stock
|
|
|
|
|
|
|
(2,826
|
)
|
|
|
(1,629
|
)
|
|
Accumulated deficit
|
|
|
|
|
|
|
(865,599
|
)
|
|
|
(884,870
|
)
|
|
Total Blue Coat stockholders' equity
|
|
|
|
|
338,749
|
|
|
|
281,609
|
|
|
Noncontrolling interest
|
|
|
|
|
|
782
|
|
|
|
-
|
|
|
Total stockholders' equity
|
|
|
|
|
|
339,531
|
|
|
|
281,609
|
|
|
Total liabilities and stockholders' equity
|
|
|
|
$
|
629,321
|
|
|
$
|
562,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BLUE COAT SYSTEMS, INC.
|
|
Table 4
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(In thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended January 31,
|
|
|
|
|
|
|
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
|
|
$
|
19,271
|
|
|
$
|
(5,023
|
)
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
9,999
|
|
|
|
7,467
|
|
|
Amortization
|
|
|
|
|
|
|
10,279
|
|
|
|
9,180
|
|
|
Stock-based compensation
|
|
|
|
|
|
14,995
|
|
|
|
13,888
|
|
|
Tax benefit (expense) of stock option deduction
|
|
|
|
818
|
|
|
|
(928
|
)
|
|
Excess tax benefit from stock-based compensation
|
|
|
|
-
|
|
|
|
(176
|
)
|
|
Loss on disposition of equipment
|
|
|
|
|
551
|
|
|
|
282
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
|
|
|
17,828
|
|
|
|
(1,778
|
)
|
|
Inventory
|
|
|
|
|
|
|
11
|
|
|
|
20,381
|
|
|
Prepaid expenses and other assets
|
|
|
|
|
(3,514
|
)
|
|
|
(1,284
|
)
|
|
Accounts payable
|
|
|
|
|
|
|
(8,644
|
)
|
|
|
2,721
|
|
|
Accrued expenses and other liabilities
|
|
|
|
|
5,868
|
|
|
|
(15,156
|
)
|
|
Deferred income taxes
|
|
|
|
|
|
|
(6,454
|
)
|
|
|
(393
|
)
|
|
Deferred revenue
|
|
|
|
|
|
|
9,980
|
|
|
|
23,683
|
|
|
Net cash provided by operating activities
|
|
|
|
|
70,988
|
|
|
|
52,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment, and technology licenses
|
|
|
(16,078
|
)
|
|
|
(20,605
|
)
|
|
Restricted cash
|
|
|
|
|
|
|
(112
|
)
|
|
|
-
|
|
|
Proceeds from sale and maturities of investment securities
|
|
|
-
|
|
|
|
1,217
|
|
|
Acquisitions, net of cash acquired and prior investment
|
|
|
|
(3,763
|
)
|
|
|
(169,956
|
)
|
|
Net cash used in investing activities
|
|
|
|
|
(19,953
|
)
|
|
|
(189,344
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
Net proceeds from issuance of common stock
|
|
|
|
22,056
|
|
|
|
6,587
|
|
|
Excess tax benefit from stock-based compensation
|
|
|
|
-
|
|
|
|
176
|
|
|
Net proceeds from issuance of convertible senior notes
|
|
|
|
-
|
|
|
|
79,657
|
|
|
Net cash provided by financing activities
|
|
|
|
|
22,056
|
|
|
|
86,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
73,091
|
|
|
|
(50,060
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
114,163
|
|
|
|
160,974
|
|
|
Cash and cash equivalents at end of period
|
|
|
|
$
|
187,254
|
|
|
$
|
110,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BLUE COAT SYSTEMS, INC.
|
|
Table 5
|
|
RECONCILIATION OF PROJECTED GAAP TO
|
|
PROJECTED NON-GAAP FINANCIAL MEASURES
|
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Three Months Ended
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April 30, 2010
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Low
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High
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Projected GAAP Net Income
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$
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11,900
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$
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14,800
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Add back:
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Stock-based compensation expense
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A
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4,400
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4,400
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Amortization of intangible assets
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B
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3,100
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3,100
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Expenses for matters related to the stock option investigation
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C
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500
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500
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Restructuring
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D
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2,500
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2,500
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Income tax adjustments
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E
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(5,600
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)
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(6,100
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)
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Projected Non-GAAP net income
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$
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16,800
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$
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19,200
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Projected GAAP Diluted Net Income per Share
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$
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0.25
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$
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0.31
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Add back:
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Stock-based compensation expense
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A
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0.09
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0.09
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Amortization of intangible assets
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B
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0.07
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0.07
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Expenses for matters related to the stock option investigation
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C
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0.01
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0.01
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Restructuring
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D
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0.05
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0.05
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Income tax adjustments
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E
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(0.11
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)
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(0.12
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)
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Projected Non-GAAP diluted net income per share
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$
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0.36
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$
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0.41
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(A)
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Stock-based compensation expense consists of non-cash charges for
employee stock options, restricted stock awards, restricted stock
units and employee stock purchase plan awards.
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(B)
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Amortization of intangible assets associated with acquisitions.
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(C)
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Includes expenses for matters related to the Company's stock option
investigation, including professional fees.
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(D)
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Restructuring includes severance and facility costs associated with
the Fiscal 2010 Restructuring Plan.
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(E)
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Income tax adjustment is used to reconcile the GAAP tax provision to
a non-GAAP tax provision utilizing an expected long-term effective
tax rate of 30%.
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