Delaware
(State or other jurisdiction of Incorporation)
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000-24347
(Commission File Number)
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65-0694077
(IRS Employer Identification No.)
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2000 Ultimate Way, Weston, Florida___
(Address of principal executive offices)
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33326
(Zip Code)
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¨
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Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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¨
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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¨
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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¨
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Pre-commencement communications pursuant to Rule 13e-4(c ) under the Exchange Act (17 CFR 240.13e-4(c ))
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Number
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Description
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99.1
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Press Release, dated February 7, 2012
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SIGNATURES
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THE ULTIMATE SOFTWARE GROUP, INC.
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By: /s/ Mitchell K. Dauerman
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Mitchell K. Dauerman
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Executive Vice President, Chief Financial Officer and Treasurer
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(Principal Financial and Accounting Officer)
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Dated: February 8, 2012
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•
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Record Q4 Recurring Revenues of $57.1 Million, a 24% Year-over-Year Increase
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•
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Record Q4 Total Revenues of $72.7 Million, a 20% Year-over-Year Increase
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•
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Record 2011 Recurring Revenues of $213.8 Million, a 25% Year-over-Year Increase
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•
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Record 2011 Total Revenues of $269.2 Million, an 18% Year-over-Year Increase
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§
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Recurring revenues grew by 24% for the fourth quarter of 2011 and by 25% for the 2011 year – primarily due to revenue growth from our Software-as-a-Service (SaaS) offering – both versus comparable 2010 periods. Recurring revenues for the fourth quarter of 2011 were 79% of total revenues versus 76% of total revenues for 2010’s fourth quarter. Recurring revenues were 79% of total revenues for the 2011 year versus 75% for 2010.
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§
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Ultimate’s total revenues for the fourth quarter of 2011 increased by 20% compared with those for the fourth quarter of 2010. Ultimate’s total revenues for 2011 increased by 18% compared with those of 2010.
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§
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Ultimate’s annualized retention rate exceeded 96% for its existing recurring revenue customer base.
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§
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The operating income (or operating margin), on a non-GAAP basis, for the fourth quarter of 2011 was $11.4 million (or 16%) compared with $7.9 million (or 13%) for the fourth quarter of 2010. Non-GAAP operating income (or non-GAAP operating margin) for 2011 was $31.5 million (or 12%) compared with $21.8 million (or 10%) for 2010.
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§
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Net income, on a non-GAAP basis, for the fourth quarter of 2011 increased to $6.6 million compared with $4.6 million for the fourth quarter of 2010. Non-GAAP net income for 2011 increased to $18.1 million compared with $12.8 million for 2010.
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§
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Ultimate generated $4.8 million in cash from operations for the fourth quarter ended December 31, 2011. For the year ended December 31, 2011, we generated $28.4 million in cash from operations and repurchased 346,988 shares of our common stock for $17.3 million under our stock repurchase plan. As of December 31, 2011, Ultimate had 1,058,187 shares available for repurchase in the future under our stock repurchase plan. The combination of cash, cash equivalents, and marketable securities was $55.3 million as of December 31, 2011, compared with $50.2 million as of December 31, 2010.
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§
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Days sales outstanding were 71 days at December 31, 2011, representing a reduction of one day compared with days sales outstanding at December 31, 2010.
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§
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Ultimate added Succession Management to its suite of cloud solutions for managing employees from recruitment through retirement. UltiPro Succession Management involves both management and individual employees in an ongoing, collaborative process. Employees can manage their own talent profiles—updating factors that influence succession readiness such as mobility preferences, languages, education, accomplishments, and competencies—to ensure that leadership has a rich understanding of the company’s talent landscape while company executives have the flexibility to develop succession plans for jobs, talent pools, or individuals.
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§
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Co-sponsored by Dell and IBM, we held our Ultimate Partner Forum, known as Connections, in March 2011 and had the largest attendance in our history—820 attendees. Our customers, partners, and HR industry influencers came to share ideas, hear about Ultimate’s future direction, and expand their peer networks. Ultimate’s 2012 Connections conference will be held on March 27-30, 2012 in Las Vegas.
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§
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A leading technology research, analysis, and advisory firm, Forrester Research, selected Ultimate as a Groundswell Award winner in October 2011. The Forrester Groundswell Awards recognize excellence in achieving business and organizational goals through innovation in social technology applications. Ultimate was a winner in the business-to-business “Embracing” category for its collaborative customer community called “Ideas.” Ultimate launched the Ideas community to help its customers share information, interact, and provide direct feedback on UltiPro. Previous winners of the Forrester Groundswell Awards include Microsoft, IBM, Starbucks, and Salesforce.com.
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§
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Ultimate won a SuperNova Award from Constellation Research in the advanced analytics category in November 2011. Ultimate’s Director of Business Intelligence and his team worked collaboratively with an Ultimate customer to develop a predictive analytics tool that HR leaders can use to monitor and address retention risks proactively.
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§
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Ultimate’s customer support center was awarded Service Capability & Performance (SCP) certification for best practices for the 13th consecutive year. The SCP Standards represent the global benchmark for service excellence and are recognized by leading technology companies around the world.
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§
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In January 2012, Ultimate was ranked #25 on FORTUNE’s “100 Best Companies to Work For” list, the first year that Ultimate applied for consideration. Ultimate is the only human capital management provider on the 2012 list and the highest ranked cloud vendor on the list. Ultimate was previously recognized twice as the #1 medium-sized company to work for in America by The Great Place to Work Institute.
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§
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Recurring revenues of approximately $60.0 million;
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§
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Total revenues of approximately $76.0 million; and
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§
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Operating margin, on a non-GAAP basis (discussed below), of approximately 6%.
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§
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Recurring revenues to increase by approximately 25% over 2011;
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§
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Total revenues to increase by approximately 23% over 2011; and
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§
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Operating margin, on a non-GAAP basis (discussed below), of approximately 15%.
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THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(In thousands, except per share amounts)
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For the Three Months
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For the Twelve Months
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|||||||||||||||
Ended December 31,
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Ended December 31,
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|||||||||||||||
2011
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2010
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2011
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2010
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Revenues:
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Recurring
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$ | 57,146 | $ | 46,038 | $ | 213,785 | $ | 170,905 | ||||||||
Services | 14,911 | 13,959 | 53,195 | 55,368 | ||||||||||||
License
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681 | 409 | 2,218 | 1,538 | ||||||||||||
Total revenues
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72,738 | 60,406 | 269,198 | 227,811 | ||||||||||||
Cost of revenues:
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||||||||||||||||
Recurring
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16,748 | 13,101 | 63,505 | 49,144 | ||||||||||||
Services
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13,235 | 12,932 | 52,341 | 49,843 | ||||||||||||
License
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154 | 105 | 488 | 255 | ||||||||||||
Total cost of revenues
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30,137 | 26,138 | 116,334 | 99,242 | ||||||||||||
Gross profit
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42,601 | 34,268 | 152,864 | 128,569 | ||||||||||||
Operating expenses:
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Sales and marketing
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15,496 | 14,038 | 63,145 | 58,374 | ||||||||||||
Research and development
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13,763 | 10,790 | 51,356 | 42,222 | ||||||||||||
General and administrative
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5,561 | 4,708 | 21,931 | 19,727 | ||||||||||||
Total operating expenses
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34,820 | 29,536 | 136,432 | 120,323 | ||||||||||||
Operating income
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7,781 | 4,732 | 16,432 | 8,246 | ||||||||||||
Other (expense) income:
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||||||||||||||||
Interest and other expense
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(36 | ) | (69 | ) | (401 | ) | (263 | ) | ||||||||
Other income, net
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14 | 53 | 91 | 188 | ||||||||||||
Total other expense, net
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(22 | ) | (16 | ) | (310 | ) | (75 | ) | ||||||||
Income from continuing operations, before income taxes
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7,759 | 4,716 | 16,122 | 8,171 | ||||||||||||
Provision for income taxes
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(5,783 | ) | (3,270 | ) | (11,840 | ) | (5,161 | ) | ||||||||
Income from continuing operations
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$ | 1,976 | $ | 1,446 | $ | 4,282 | $ | 3,010 | ||||||||
Loss from discontinued operations, net of tax
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– | – | – | (853 | ) | |||||||||||
Net income
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$ | 1,976 | $ | 1,446 | $ | 4,282 | $ | 2,157 | ||||||||
Basic earnings per share:
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||||||||||||||||
Earnings from continuing operations
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$ | 0.08 | $ | 0.06 | $ | 0.17 | $ | 0.12 | ||||||||
Loss from discontinued operations
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$ | – | $ | – | $ | – | $ | (0.03 | ) | |||||||
Total
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$ | 0.08 | $ | 0.06 | $ | 0.17 | $ | 0.09 | ||||||||
Diluted earnings per share:
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Earnings from continuing operations
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$ | 0.07 | $ | 0.05 | $ | 0.15 | $ | 0.11 | ||||||||
Loss from discontinued operations
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$ | – | $ | – | $ | – | $ | (0.03 | ) | |||||||
Total
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$ | 0.07 | $ | 0.05 | $ | 0.15 | $ | 0.08 | ||||||||
Weighted average shares outstanding:
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Basic
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26,055 | 25,302 | 25,814 | 24,960 | ||||||||||||
Diluted
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27,838 | 27,412 | 27,806 | 27,101 |
For the Three Months Ended December 31,
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For the Twelve Months Ended December 31,
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2011
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2010
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2011
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2010
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Stock-based compensation expense:
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Cost of recurring revenues
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$ | 382 | $ | 245 | $ | 1,402 | $ | 914 | ||||||||
Cost of services revenues
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357 | 291 | 1,464 | 1,238 | ||||||||||||
Sales and marketing
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1,580 | 1,575 | 6,824 | 6,678 | ||||||||||||
Research and development
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428 | 281 | 1,625 | 1,218 | ||||||||||||
General and administrative
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903 | 789 | 3,694 | 3,201 | ||||||||||||
Total non-cash stock-based compensation expense
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$ | 3,650 | $ | 3,181 | $ | 15,009 | $ | 13,249 | ||||||||
Amortization of acquired intangibles:
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General and administrative
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$ | – | $ | 28 | $ | 83 | $ | 281 | ||||||||
Loss from discontinued operations:
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Foreign currency translation
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||||||||||||||||
adjustment (1)
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$ | – | $ | – | $ | – | $ | (912 | ) | |||||||
(1)
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Pursuant to applicable accounting rules, the amount attributable to our wholly-owned subsidiary in the United Kingdom (“UK Subsidiary”) and accumulated in the translation adjustment component of equity became realized during the twelve months ended December 31, 2010, the period in which discontinued operations for the UK Subsidiary were complete and the UK Subsidiary was dissolved.
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THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES
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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
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(In thousands)
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||||||||
As of
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As of
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|||||||
December 31,
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December 31,
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|||||||
2011
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2010
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|||||||
ASSETS
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Current assets:
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Cash and cash equivalents
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$ | 46,149 | $ | 40,889 | ||||
Investments in marketable securities
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7,584 | 8,884 | ||||||
Accounts receivable, net
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56,186 | 47,570 | ||||||
Prepaid expenses and other current assets
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22,944 | 18,613 | ||||||
Deferred tax assets, net
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1,277 | 1,434 | ||||||
Total current assets before funds held for clients
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134,140 | 117,390 | ||||||
Funds held for clients
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118,660 | 72,875 | ||||||
Total current assets
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252,800 | 190,265 | ||||||
Property and equipment, net
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24,486 | 18,075 | ||||||
Capitalized software, net
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1,765 | 3,115 | ||||||
Goodwill
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3,025 | 3,025 | ||||||
Investments in marketable securities
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1,546 | 433 | ||||||
Other assets, net
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15,056 | 11,656 | ||||||
Deferred tax assets, net
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20,142 | 22,988 | ||||||
Total assets
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$ | 318,820 | $ | 249,557 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable
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$ | 6,265 | $ | 4,683 | ||||
Accrued expenses
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11,589 | 11,074 | ||||||
Deferred revenue
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83,416 | 71,808 | ||||||
Capital lease obligations
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2,694 | 2,551 | ||||||
Total current liabilities before client fund obligations
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103,964 | 90,116 | ||||||
Client fund obligations
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118,660 | 72,875 | ||||||
Total current liabilities
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222,624 | 162,991 | ||||||
Deferred revenue
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3,147 | 6,287 | ||||||
Deferred rent
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3,384 | 3,022 | ||||||
Capital lease obligations
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2,175 | 2,406 | ||||||
Income taxes payable
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1,866 | 1,866 | ||||||
Total liabilities
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233,196 | 176,572 | ||||||
Stockholders’ equity:
|
||||||||
Preferred Stock, $.01 par value
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– | – | ||||||
Series A Junior Participating Preferred Stock, $.01 par value
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– | – | ||||||
Common Stock, $.01 par value
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302 | 290 | ||||||
Additional paid-in capital
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242,100 | 216,262 | ||||||
Accumulated other comprehensive income (loss)
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(57 | ) | 126 | |||||
Accumulated deficit
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(47,971 | ) | (52,253 | ) | ||||
194,374 | 164,425 | |||||||
Treasury stock, at cost
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(108,750 | ) | (91,440 | ) | ||||
Total stockholders’ equity
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85,624 | 72,985 | ||||||
Total liabilities and stockholders’ equity
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$ | 318,820 | $ | 249,557 |
THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES
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||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(In thousands)
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For the Twelve Months Ended
|
||||||||
December 31,
|
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2011
|
2010
|
|||||||
Cash flows from operating activities:
|
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Net income
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$ | 4,282 | $ | 2,157 | ||||
Adjustments to reconcile net income to net cash
|
||||||||
provided by operating activities:
|
||||||||
Depreciation and amortization
|
11,620 | 11,883 | ||||||
Provision for doubtful accounts
|
1,586 | 1,549 | ||||||
Non-cash stock-based compensation expense
|
15,009 | 13,249 | ||||||
Realized loss on foreign currency translation
|
||||||||
adjustment
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- | 912 | ||||||
Income taxes
|
11,507 | 4,982 | ||||||
Excess tax benefits from stock-based payments
|
(8,504 | ) | (6,671 | ) | ||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(10,202 | ) | (10,669 | ) | ||||
Prepaid expenses and other current assets
|
(4,331 | ) | (3,019 | ) | ||||
Other assets
|
(3,483 | ) | 362 | |||||
Accounts payable
|
1,582 | 207 | ||||||
Accrued expenses and deferred rent
|
877 | 938 | ||||||
Deferred revenue
|
8,468 | 9,536 | ||||||
Net cash provided by operating activities
|
28,411 | 25,416 | ||||||
Cash flows from investing activities:
|
||||||||
Purchases of marketable securities
|
(14,610 | ) | (9,223 | ) | ||||
Maturities of marketable securities
|
14,794 | 9,429 | ||||||
Net purchases of securities with customer funds
|
(45,785 | ) | (49,315 | ) | ||||
Purchases of property and equipment
|
(13,671 | ) | (4,980 | ) | ||||
Net cash used in investing activities
|
(59,272 | ) | (54,089 | ) | ||||
Cash flows from financing activities:
|
||||||||
Repurchases of Common Stock
|
(17,310 | ) | (19,784 | ) | ||||
Net proceeds from issuances of Common Stock
|
13,282 | 14,897 | ||||||
Excess tax benefits from stock-based payments
|
8,504 | 6,671 | ||||||
Shares acquired to settle employee tax withholding liability
|
(10,941 | ) | (2,797 | ) | ||||
Principal payments on capital lease obligations
|
(3,016 | ) | (2,503 | ) | ||||
Net increase in customer fund obligations
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45,785 | 49,315 | ||||||
Net cash provided by financing activities
|
36,304 | 45,799 | ||||||
Effect of foreign currency exchange rate changes on cash
|
(183 | ) | 79 | |||||
Net increase in cash and cash equivalents
|
5,260 | 17,205 | ||||||
Cash and cash equivalents, beginning of period
|
40,889 | 23,684 | ||||||
Cash and cash equivalents, end of period
|
$ | 46,149 | $ | 40,889 | ||||
Supplemental disclosure of cash flow information:
|
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Cash paid for interest
|
$ | 241 | $ | 218 | ||||
Cash paid for income taxes
|
$ | 604 | $ | 203 | ||||
Supplemental disclosure of non-cash financing activities:
|
||||||||
-Ultimate entered into capital lease obligations to acquire new equipment totaling $3.0
million and $3.9 million for the twelve months ended December 31, 2011 and 2010,
respectively.
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THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES
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Unaudited Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
|
|||||||||||||||||
(In thousands, except per share amounts)
|
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Three Months Ended | Twelve Months Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||||
Non-GAAP operating income from continuing operations reconciliation: | |||||||||||||||||
Operating income from continuing operations
|
$ | 7,781 | $ | 4,732 | $ | 16,432 | $ | 8,246 | |||||||||
Operating income from continuing operations, as a % of total revenues
|
10.7 | % | 7.8 | % | 6.1 | % | 3.6 | % | |||||||||
Add back:
|
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Non-cash stock-based compensation expense
|
3,650 | 3,181 | 15,009 | 13,249 | |||||||||||||
Non-cash amortization of acquired intangible assets
|
– | 28 | 83 | 281 | |||||||||||||
Non-GAAP operating income from continuing operations
|
$ | 11,431 | $ | 7,941 | $ | 31,524 | $ | 21,776 | |||||||||
Non-GAAP operating income from continuing operations, as a % of total revenues
|
15.7 | % | 13.1 | % | 11.7 | % | 9.6 | % | |||||||||
Non-GAAP net income after discontinued operations reconciliation:
|
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Net income after discontinued operations
|
$ | 1,976 | $ | 1,446 | $ | 4,282 | $ | 2,157 | |||||||||
Add back:
|
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Non-cash stock-based compensation expense
|
3,650 | 3,181 | 15,009 | 13,249 | |||||||||||||
Non-cash amortization of acquired intangible assets
|
– | 28 | 83 | 281 | |||||||||||||
Non-cash foreign currency translation adjustment from discontinued operations
|
– | – | – | 912 | |||||||||||||
Income tax effect
|
929 | (11 | ) | (1,238 | ) | (3,824 | ) | ||||||||||
Non-GAAP net income after discontinued operations
|
$ | 6,555 | $ | 4,644 | $ | 18,136 | $ | 12,775 | |||||||||
Non-GAAP net income after discontinued operations, per diluted share, reconciliation: (1)
|
|||||||||||||||||
Net income after discontinued operations, per diluted share
|
$ | 0.07 | $ | 0.05 | $ | 0.15 | $ | 0.08 | |||||||||
Add back:
|
|||||||||||||||||
Non-cash stock-based compensation expense
|
0.13 | 0.12 | 0.54 | 0.49 | |||||||||||||
Non-cash amortization of acquired intangible assets
|
– | – | – | 0.01 | |||||||||||||
Non-cash foreign currency translation adjustment from discontinued operations
|
– | – | – | 0.03 | |||||||||||||
Income tax effect
|
0.04 | – | (0.04 | ) | (0.14 | ) | |||||||||||
Non-GAAP net income after discontinued operations, per diluted share
|
$ | 0.24 | $ | 0.17 | $ | 0.65 | $ | 0.47 | |||||||||
Shares used in calculation of GAAP net income per share: (1)
|
|||||||||||||||||
Basic
|
26,055 | 25,302 | 25,814 | 24,960 | |||||||||||||
Diluted
|
27,838 | 27,412 | 27,806 | 27,101 | |||||||||||||
Shares used in calculation of non-GAAP net income per share:
|
|||||||||||||||||
Basic
|
26,055 | 25,302 | 25,814 | 24,960 | |||||||||||||
Diluted
|
27,838 | 27,412 | 27,806 | 27,101 | |||||||||||||
(1) The non-GAAP net income per diluted share reconciliation is calculated on a diluted weighted average share basis for GAAP periods.
|