+ Acquisition of Quiterian adds visual data mining, social media analytics and predictive analytics for non-technical users

SAN MATEO, Calif.--(BUSINESS WIRE)--October 29, 2012--Actuate Corporation (NASDAQ: BIRT), The BIRT Companyand the leader in open source business intelligence (BI), today announced financial results for the third quarter 2012.

“Our mixed third quarter results reflect some macroeconomic uncertainty particularly in Europe. However, our core BIRT-based business continues to drive a strong medium to long term outlook for Actuate. Our focus remains upon hiring sales-generating headcount and investing in research and development, to take advantage of the growing pipeline of opportunities for commercial BIRT,” said Pete Cittadini, President and CEO of Actuate. “We believe our recent acquisition of Quiterian fits very well into Actuate’s core business and strengthens our unique ability to help more end users identify and operationalize insights derived from any data source. Quiterian’s analytics capabilities will empower business users far beyond the capabilities of existing data discovery and business intelligence technologies, to present them with a powerful combination of analysis, visualization and information delivery options.”

Tweet this: #Actuate NASDAQ: $BIRT: License revenue +13% YOY; Non-GAAP diluted EPS $0.08; Non-GAAP Op Margin 18%

Revenues as reported in accordance with U.S. generally accepted accounting principles (GAAP) for the third quarter of 2012 were $32.2 million, down 5% when compared with $33.8 million in the third quarter of 2011. License revenues for the third quarter of 2012 were $13.3 million, up 13% when compared with $11.8 million in the year-ago quarter. Service revenues for the quarter were $18.9 million, compared with $22.0 million reported in the same quarter last year. For the nine months ended September 30, 2012, GAAP revenues were $103.2 million compared to GAAP revenues of $99.6 million for the comparable period of 2011. License revenues for the nine months ended September 30, 2012 were $42.4 million, up 18% when compared with $35.9 million for the comparable period of 2011. Services revenues for the nine months ended September 30, 2012 were $60.9 million compared to $63.7 million for the comparable period of 2011.

GAAP operating income was $2.7 million for the third quarter of 2012, compared with $6.8 million in the third quarter of 2011. GAAP net income for the third quarter of 2012 was $107,000, or $0.00 per diluted share, compared with net income of $4.7 million, or $0.09 per diluted share, in the third quarter of 2011. For the nine months ended September 30, 2012, GAAP operating income was $15.2 million compared with $13.1 million in the comparable period of 2011. GAAP net income for the nine months ended September 30, 2012 was $9.5 million, or $0.18 per diluted share, compared with $7.0 million, or $0.14 per diluted share, in the comparable period of 2011.

Non-GAAP net income for the third quarter of 2012 was $4.0 million, or $0.08 per diluted share, compared with non-GAAP net income of $6.8 million, or $0.13 per diluted share in the third quarter of 2011. Non-GAAP operating margin and net income margin for the third quarter of 2012 was 18% and 12%, respectively. Non-GAAP net income for the nine months ended September 30, 2012 was $16.2 million, or $0.30 per diluted share, compared with $17.5 million, or $0.34 per diluted share, in the comparable period of 2011. Non-GAAP operating margin and net income margin for the nine months ended September 30, 2012 was 22% and 16%, respectively.

Cash flow from operations for the nine months ended September 30, 2012 was $16.6 million, an increase of 16% from the same period a year ago. Cash and short term investments totaled $74.6 million on September 30, 2012, an increase of $11.1 million from September 30, 2011.

In August 2012, the Board of Directors approved a $30 million share repurchase program. During the third quarter of 2012 the Company repurchased $6.0 million worth of stock. The share repurchase authorization does not have an expiration date and the pace and timing of repurchases will depend on factors such as cash generation from operations, the volume of employee stock plan activity, cash requirements for acquisitions, economic and market conditions, stock price and legal and regulatory requirements.

On October 22^nd, Actuate announced that it acquired Quiterian S.L., a privately held software company that provides visual data mining, social media analytics and predictive analytics for business and other non-technical users. Quiterian is an established player in Business Intelligence as noted by leading analyst firms. It has a well established customer base that includes public and private organizations in Telco, eCommerce, Financial Services, Healthcare and Gaming. Notable customers with massive data sets include Telefonica, Vodafone, Orange, La Caixa, Deutsche Bank, Volkswagen, BBVA, Renault, Bayer and several governmental bodies in Spain and Latin America including security and police forces, healthcare, public transportation and tax agencies.

Quiterian Analytics will be integrated into Actuate’s flagship product, ActuateOne, and will be known as BIRT Analytics. A product overview is available at: http://www.youtube.com/watch?v=iSaG7KbdLc0.

During the third quarter, Actuate received significant new and repeat business from, among others:

Amazon.com, Inc., Air Company Limited, Audit Bureau of Circulations, Bank of America Corporation, Callidus Software Inc., CGI Group Inc., Cisco Systems, Computer Word Processing Systems, Inc., Enel Servizi SRL, Hankyu Travel International Co., Ltd., J.P. Morgan Chase & Co., CA, Inc., Peoplefluent, Sircon Corporation - a Vertafore Company, Toshiba Finance Corporation, US Department of the Army HQDA and Washington Headquarters Services (DOD).

Actuate’s management will be holding a conference call at 2:00 p.m. PT (5:00 p.m. ET) today, October 29, 2012 to further discuss these results. The dial-in number for the call is 877-407-8035 (201-689-8035 for international participants) and the conference ID is #400905. The conference call will be broadcast live on the Investor Relations section of Actuate’s web site at http://www.actuate.com/investor and will be available as an archived replay for a limited time thereafter.

Actuate founded and co-leads the BIRT open source project, which is used by over 2 million developers around the globe and serves as the foundation of the ActuateOne^® platform. Applications built on ActuateOne deliver more business and consumer insights to more people than all BI companies combined - ensuring organizations are ready for the exponential growth of Big Data and the proliferation of touch devices.

The ActuateOne platform empowers developers to rapidly develop custom, BIRT-based business analytics and customer communications applications. ActuateOne applications built with one BIRT design can access and integrate any data, including unstructured sources. They provide one user experience regardless of skill level and are supported by one platform for any cloud, hybrid, on-premise, web or touch device deployment.

Headquartered in Silicon Valley, Actuate has over 5,000 customers globally in a diverse range of business areas including financial services, technology and the public sector. Actuate is listed on NASDAQ under the symbol BIRT. For more information, visit www.actuate.com or engage with the BIRT community at www.birt-exchange.com.

This press release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). Actuate management evaluates and makes operating decisions using various performance measures. In addition to our GAAP results, we also consider adjusted net income, which we refer to as non-GAAP net income. We further consider various components of non-GAAP net income such as non-GAAP gross margin and non-GAAP operating expense. Non-GAAP net income is generally based on the revenues of our product, maintenance and services business operations and the costs of those operations, such as cost of revenue, research and development, sales and marketing and general and administrative expenses, that management considers in evaluating our ongoing core operating performance. Non-GAAP net income consists of net income excluding amortization of intangible assets, equity plan-related compensation expenses, acquisition related expenses, restructuring charges, asset impairment costs, non-recurring facilities adjustments, other one-time termination costs, foreign currency exchange gains and losses related to the revaluation of monetary assets and liabilities and other charges and gains which management does not consider reflective of our core operating business. Non-GAAP net income also includes an adjustment to add back revenue that could not be recognized due to the impact of purchase accounting on the acquired Xenos revenue contracts. Intangible assets consist primarily of purchased technology, in-process research and development, trade names, customer relationships, employment agreements and other intangible assets issued in connection with acquisitions. Restructuring charges consist of severance and benefits, excess facilities and asset-related charges and include strategic reallocations or reductions of personnel resources. Equity plan-related compensation expenses represent the fair value of all share-based payments to employees, including grants of employee stock options recognized during the period. For purposes of comparability across other periods and against other companies in our industry, non-GAAP net income is adjusted by the amount of additional taxes or tax benefit that the Company would accrue using a normalized effective tax rate applied to the non-GAAP results. Our non-GAAP earnings per share calculation also includes an adjustment to total outstanding shares to reflect what the share amount would have been if it were calculated using non-GAAP results.

Non-GAAP net income is a supplemental measure of our performance that is not required by, nor presented in accordance with, GAAP. Moreover, it should not be considered as an alternative to net income, operating income, or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities or as a measure of our liquidity. We present non-GAAP net income because we consider it an important supplemental measure of our performance.

Management excludes from non-GAAP net income certain recurring items to facilitate its review of the comparability of the Company's core operating performance on a period-to-period basis because such items are not related to the Company's ongoing core operating performance as viewed by management. Management uses this view of its operating performance for purposes of comparison with its business plan and individual operating budgets and allocations of resources. Additionally, when evaluating potential acquisitions, management excludes the items described above from its consideration of target performance and valuation.

The Company believes that, in general, these items possess one or more of the following characteristics: their magnitude and timing is largely outside of the Company's control; they are unrelated to the ongoing operation of the business in the ordinary course; they are unusual and the Company does not expect them to occur in the ordinary course of business; or they are non-operational, or non-cash expenses involving stock option grants.

The Company believes that the presentation of these non-GAAP financial measures is warranted for several reasons:

1) Such non-GAAP financial measures provide an additional analytical tool for understanding the Company's financial performance by excluding the impact of items that may obscure trends in the core operating performance of the business;

2) Since the Company has historically reported non-GAAP results to the investment community, the Company believes the inclusion of non-GAAP numbers provides consistency and enhances investors' ability to compare the Company's performance across financial reporting periods;

3) These non-GAAP financial measures are employed by the Company's management in its own evaluation of performance and are utilized in financial and operational decision making processes, such as budget planning and forecasting;

4) These non-GAAP financial measures facilitate comparisons to the operating results of other companies in our industry, which use similar financial measures to supplement their GAAP results, thus enhancing the perspective of investors who wish to utilize such comparisons in their analysis of the Company's performance.

Set forth below are additional reasons why specific items are adjusted in the Company's non-GAAP financial measures:

a) Amortization charges for purchased technology and other intangible assets are excluded because they are inconsistent in amount and frequency and are significantly impacted by the timing and magnitude of the Company's acquisition transactions. We analyze and measure our operating results without these charges when evaluating our core performance. Generally, the impact of these charges to the Company's net income tends to diminish over time following an acquisition.

b) While stock-based compensation constitutes an ongoing and recurring expense of the Company, it is not an expense that typically requires or will require cash settlement by the Company. We therefore exclude these charges for purposes of evaluating our core performance as well as with respect to evaluating any potential acquisition.

c) Restructuring charges are primarily related to severance costs and/or the disposition of excess facilities driven by modifications of business strategy. These costs are excluded because they are inherently variable in size, and are not specifically included in the Company's annual operating plan and related budget due to the rapidly changing facts and circumstances typically associated with such modifications of business strategy.

d) Other one-time termination costs relate to benefits provided to the estate of one of Actuate’s senior executives who passed away on December 31, 2010. The benefits were approved by the Compensation Committee of the Board of Directors in February 2011. These costs are excluded because they are non-recurring and are not specifically included in the Company’s annual operating plan and related budget. Management believes that these costs are unrelated to the ongoing operation of its business in the ordinary course and are non-operational.

e) The deferred revenue adjustment relates to our acquisition of Xenos Group, Inc, which was concluded in February 2010. In accordance with the fair value provisions of Accounting Standards Codification ("ASC") 805, Business Combination, acquired deferred revenue of approximately $1.5 million was recorded on the opening balance sheet, which was approximately $3.3 million lower than the historical carrying value. This purchase accounting requirement adversely impacts the Company's reported GAAP revenue primarily for the first twelve months post-acquisition. In order to provide investors with financial information that facilitates comparison of both historical and future results, the Company has provided non-GAAP financial measures which exclude the impact of the purchase accounting adjustment. The Company believes that this non-GAAP financial adjustment is useful to investors because it allows investors to (a) evaluate the effectiveness of the methodology and information used by management in its financial and operational decision-making and (b) compare past and future reports of financial results of the Company as the revenue reduction related to acquired deferred revenue will not recur when related terms are renewed in future periods.

f) Foreign currency exchange gains and losses represent the net gain or loss that Actuate has recorded for the impact of currency exchange rate movements on monetary assets and liabilities denominated in foreign currencies related to the revaluation of these assets and liabilities. Actuate presents non-GAAP financial information excluding foreign exchange gains and losses for several reasons. These foreign currency gains and losses are generally unpredictable and can cause Actuate’s reported results to vary significantly. The magnitude and timing of these gains and losses are largely outside of Actuate’s control because Actuate has not engaged in hedging or taken other actions to reduce the likelihood of incurring a sizeable net gain or loss in future periods. Management believes that these gains and losses are unrelated to the ongoing operation of its business in the ordinary course and are non-operational. Management therefore excludes these items for the purposes of evaluating core performance and they are not specifically included in the Company’s annual operating plans, budgets or management compensation structure. Actuate believes that investors benefit from a supplemental non-GAAP financial measure that excludes these items because it allows more meaningful comparability of results between periods and enables investors to compare Actuate’s core operating results in different periods without this variability.

g) The Facilities Adjustment relates to the Company’s new and old headquarters facilities and their related leases. In the second quarter of fiscal 2012 the Company initiated a lease for its new headquarters in the BayCenter facility, which the Company occupied in July 2012. As a result of this new lease, the Company incurred duplicate rent during a portion of the second quarter of fiscal 2012 as it was paying rent on both the old Bridgepointe campus and the new BayCenter facility. The Facilities Adjustment compensates for this duplicate rent. In addition, as part of the old lease, Actuate was required to restore the facility back to its original condition upon expiration of the lease period. The Facilities Adjustment serves to add restoration costs on the old headquarters facility back to income.

The Facilities Adjustment is made for non-GAAP purposes because the underlying costs are non-recurring in nature, are unrelated to the Company's core operations in the ordinary course, and are not included in our annual operating plan and related budget. They are directly impacted by the timing of the Company's lease transactions and we analyze and measure our operating results without these charges when evaluating our core performance. Actuate believes that investors benefit from a supplemental non-GAAP financial measure that excludes these items because it allows more meaningful comparability of results between periods and enables investors to compare Actuate’s core operating results in different periods without this variability.

h) Asset impairment costs are excluded because they inherently vary in size and are not specifically included in the Company's annual operating plan. Furthermore, asset impairment charges do not typically require any cash outlay and the timing of such impairments is largely outside of the Company's control.

i) Income tax expense is adjusted by the amount of additional expense or benefit that we would accrue if we used non-GAAP results instead of GAAP results in the calculation of our tax liability, taking into consideration the Company's long-term tax structure. The Company is using a normalized effective tax rate of 30% for 2012. Prior to 2012 the Company used a normal non-GAAP tax rate of 20%. This adjustment is made because the rate remains subject to change based on several factors, including variations over time in the geographic business mix and statutory tax rates. This non-GAAP estimated tax rate is reviewed annually.

j) Acquisition-related costs are costs incurred during the third quarter of 2012 related to our acquisition of Quiterian. The acquisition was closed in October 2012. These costs are excluded because they are inconsistent in amount and frequency and are directly impacted by the timing and magnitude of the Company’s acquisition transactions. We analyze and measure our operating results without these charges when evaluating our core performance. These acquisition-related costs are unrelated to the Company’s core operations in the ordinary course and are not included in our annual operating plan and budget.

In the future, the Company expects to continue reporting non-GAAP financial measures excluding items described above and the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above. Accordingly, exclusion of these and other similar items in our non-GAAP presentation should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

As stated above, the Company presents non-GAAP financial measures because it considers them to be important supplemental measures of performance. However, non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for the Company's GAAP results. In the future, the Company expects to incur expenses similar to the non-GAAP adjustments described above and expects to continue reporting non-GAAP financial measures excluding such items. Some of the limitations in relying on non-GAAP financial measures are:

Pursuant to the requirements of SEC Regulation G, a detailed reconciliation between the Company's GAAP and non-GAAP financial results is provided in this press release and is available in the investor relations section of the Company's web site for a limited time at http://www.actuate.com/investor. Investors are advised to carefully review and consider this information strictly as a supplement to the GAAP results that are contained in this press release and in the Company's SEC filings.

Cautionary Note Regarding Forward Looking Statements: The statements contained in this press release that are not purely historical are forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These include statements regarding Actuate’s expectations, beliefs, hopes, intentions or strategies regarding the future. All such forward-looking statements are based upon information available to Actuate as of the date hereof, and Actuate disclaims any obligation to update or revise any such forward-looking statements based on changes in expectations or the circumstances or conditions on which such expectations may be based. Actual results could differ materially from Actuate’s current expectations. Factors that could cause or contribute to such differences include, but are not limited to, the general spending environment for information technology products and services in general and Rich Internet Application, performance management, business intelligence and print stream software in particular, quarterly fluctuations in our revenues and other operating results, our ability to expand our international operations, our ability to successfully compete against current and future competitors, the impact of acquisitions including the acquisition of Quiterian on the Company’s financial and/or operating condition, the ability to increase revenues through our indirect distribution channels, general economic and geopolitical uncertainties and other risk factors that are discussed in Actuate’s Securities and Exchange Commission filings, specifically Actuate 2011 Annual Report on Form 10-K filed on March 9, 2012 as well as its quarterly reports on Form-10Q.

ACTUATE CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
(unaudited)

		Three Months Ended							Nine Months Ended
Revenue reconciliation:		September 30,						(a)	September 30,						(a)
			2012			2011		Notes		2012			2011		Notes
GAAP revenue		$	32,179		$	33,809			$	103,243		$	99,635
Non-GAAP adjustments:
	Deferred revenue adjustment - Xenos		-			16		(g)		-			83		(g)
Total non-GAAP revenues		$	32,179		$	33,825			$	103,243		$	99,718


		Three Months Ended							Nine Months Ended
		September 30,						(a)	September 30,						(a)
Operating expense reconciliation:			2012			2011		Notes		2012			2011		Notes

GAAP operating expenses		$	29,466		$	27,007			$	88,024		$	86,518
Non-GAAP adjustments:
	Amortization of purchased technology		(273	)		(273	)	(b)		(820	)		(820	)	(b)
	Amortization of other intangibles		(289	)		(289	)	(c)		(867	)		(1,007	)	(c)
	Stock-based compensation expense		(2,210	)		(974	)	(d)		(5,604	)		(4,496	)	(d)
	Restructuring charges		(21	)		(158	)	(e)		(54	)		(889	)	(e)
	Acquisition related costs		(168	)		-		(f)		(168	)		-		(f)
	Other one-time termination costs		-			-				-			(148	)	(h)
	Facilities adjustment		-			-				(380	)		-		(i)
	Asset impairment		-			-				(89	)		(1,681	)	(j)
Total non-GAAP operating expenses		$	26,505		$	25,313			$	80,042		$	77,477


		Three Months Ended							Nine Months Ended
Operating income reconciliation:		September 30,						(a)	September 30,						(a)
			2012			2011		Notes		2012			2011		Notes
Total non-GAAP revenues		$	32,179		$	33,825			$	103,243		$	99,718
Total non-GAAP operating expenses			(26,505	)		(25,313	)			(80,042	)		(77,477	)
Total non-GAAP operating income		$	5,674		$	8,512			$	23,201		$	22,241


		Three Months Ended							Nine Months Ended
Net income reconciliation:		September 30,						(a)	September 30,						(a)
			2012			2011		Notes		2012			2011		Notes
GAAP income before income taxes		$	2,832		$	7,648			$	15,727		$	11,496
Non-GAAP adjustments:
	Amortization of purchased technology		273			273		(b)		820			820		(b)
	Amortization of other intangibles		289			289		(c)		867			1,007		(c)
	Stock-based compensation expense		2,210			974		(d)		5,604			4,496		(d)
	Restructuring charges		21			158		(e)		54			889		(e)
	Acquisition related costs		168			-		(f)		168			-		(f)
	Deferred revenue adjustment - Xenos		-			16		(g)		-			83		(g)
	Other one-time termination costs		-			-				-			148		(h)
	Facilities adjustment		-			-				380			-		(i)
	Asset impairment		-			-				89			1,681		(j)
	Foreign currency exchange (gain)/loss		(72	)		(812	)	(k)		(505	)		1,314		(k)
Non-GAAP income before income taxes			5,721			8,546				23,204			21,934
Non-GAAP tax provision			1,716			1,709		(l)		6,961			4,387		(l)
Non-GAAP net income			4,005			6,837				16,243			17,547
Basic non-GAAP net income per share		$	0.08		$	0.14			$	0.33		$	0.37
Shares used in basic per share calculation			49,207			48,058				49,156			46,873
Diluted non-GAAP net income per share		$	0.08		$	0.13			$	0.30		$	0.34
Shares used in diluted per share calculation			53,238			52,724		(m)		53,318			51,756		(m)


(a) This table contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). Such measures are intended to serve as a supplement to the GAAP results presented elsewhere in this press release, and should not be considered in isolation or as a substitute for such GAAP results. See the section entitled Discussion of Non-GAAP Financial Measures in this press release for additional information regarding: the manner in which management uses these non-GAAP financial measures; the economic substance behind management's decision to use such measures; the material limitations associated with use of these non-GAAP financial measures as compared to the use of the most directly comparable GAAP financial measures; the manner in which management compensates for these limitations when using these non-GAAP financial measures; and the substantive reasons why management believes these non-GAAP financial measures provide useful information to investors.

(b) Amortization of purchased technology acquired in prior acquisitions. Purchased technology is amortized over the estimated life of the underlying asset.

(c) Amortization of other intangibles includes identifiable intangible assets including trade names, employment agreements and customer relationships acquired through various acquisition transactions. Other identified intangibles are amortized over the estimated remaining life of the underlying intangibles.

(d) Actuate accounts for stock-based compensation expense under the fair value method in accordance with the authoritative guidance issued by the Financial Accounting Standards Board ("FASB") related to the measurement and disclosure of stock-based compensation expense. Stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period. For the three months ended September 30, 2012, stock-based expense included approximately (in thousands): $231, $618, $196, and $1,165, related to cost of services revenues, sales and marketing expense, research and development expense and general and administrative expense, respectively.

(e) The restructuring expense for the third quarter of 2012 consists primarily of idle facilities charges related to a Xenos facility in Europe. The restructuring expense for the second quarter of 2011 consists of severance payments, payroll taxes and extended medical benefits related to a reduction-in-force.

(f) Costs associated with the acquisition of Quiterian.

(g) The deferred revenue adjustment relates to our acquisition of Xenos, Inc, which was concluded in February of 2010. In accordance with the fair value provisions of Accounting Standards Codification ("ASC") 805, Business Combination, acquired deferred revenue of approximately $1.5 million was recorded on the opening balance sheet, which was approximately $3.3 million lower than the historical carrying value. This purchase accounting requirement adversely impacts the Company's reported GAAP revenue primarily for the first twelve months post-acquisition. In order to provide investors with financial information that facilitates comparison of both historical and future results, the Company has provided non-GAAP financial measures which exclude the impact of the purchase accounting adjustment.

(h) Other one-time termination costs relate to benefits provided to the estate of one of Actuate's senior executives who passed away on December 31, 2010. The benefits were approved by the Compensation Committee of the Board of Directors in February 2011.

(i) The lease on our new headquarters located at 951 Mariners Island Boulevard commenced on June 1, 2012. However, we relocated to this new facility on July 23, 2012. During the second quarter and as a result of our contractual commitments, we incurred rent expenses on both the Bridgepointe and the Mariners Island facilities. The rent adjustment above prorates and adjusts the rent expenses during the quarter to only include rent for the occupied Bridgepointe facility. We also incurred a one-time lease restoration charge associated with the Bridgepointe facility during the second quarter of 2012.

(j) Represents the impairment of the remaining balance of Xenos In-process Research and Development ("IPR&D").

(k) Foreign currency exchange gains and losses represent the net gain or loss that Actuate has recorded for the impact of currency exchange rate movements on monetary assets and liabilities denominated in foreign currencies related to the revaluation of these assets and liabilities.

(l) Income tax expense is adjusted by the amount of additional expense or benefit that we would accrue if we used non-GAAP results instead of GAAP results in the calculation of our tax liability, taking into consideration the company's long-term tax structure. The Company used a normalized effective tax rate of 30% in 2012. Prior to fiscal 2012, the Company used a normalized effective rate of 20%.

(m) Shares used in calculating diluted earnings per share have been adjusted to reflect what the share amounts would have been if they were calculated using non-GAAP results.

ACTUATE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

		Nine Months Ended
		September 30,
Operating activities			2012			2011
	Net income	$	9,545		$	6,982
	Adjustments to reconcile net income to net cash from operating activities:
	Share-based compensation expense related to stock options and employee stock purchase plan		5,454			3,888
	Tax benefits from exercise of stock options		(2,440	)		(2,729	)
	Amortization of other purchased intangibles		1,687			1,827
	Amortization of debt issuance cost		51			216
	Depreciation		1,587			1,524
	Change in valuation allowance on deferred tax assets		164			1
	Impairment of assets		89			1,681
	Accretion of discount (premium) on short-term debt securities		189			(294	)
	Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
	Accounts receivable, net		6,704			6,650
	Other current assets		(2,635	)		96
	Accounts payable		(241	)		(388	)
	Accrued compensation		(637	)		(1,329	)
	Other accrued liabilities		(521	)		(363	)
	Deferred tax assets, net of liabilities		1,773			584
	Income tax receivable/payable, net		(872	)		(2,187	)
	Other deferred liabilities		3,138			(247	)
	Restructuring liabilities		(69	)		(1,069	)
	Deferred revenue		(6,384	)		(555	)
Net cash provided by operating activities			16,582			14,288

Investing activities
	Purchases of property and equipment		(5,038	)		(509	)
	Proceeds from maturity of investments		22,694			59,366
	Purchases of short-term investments		(29,286	)		(33,176	)
	Security deposits and other		(55	)		115
Net cash provided by (used in) investing activities			(11,685	)		25,796

Financing activities
	Credit facility related payments		(34	)		(40,000	)
	Tax benefit from exercise of stock options		2,440			2,729
	Proceeds from issuance of common stock		9,223			11,698
	Stock repurchases		(15,993	)		(4,999	)
Net cash used in financing activities			(4,364	)		(30,572	)
Effects of exchange rates on cash and cash equivalents			161			633
Net increase in cash and cash equivalents			694			10,145
Cash and cash equivalents at the beginning of the period			38,759			33,269
Cash and cash equivalents at the end of the period		$	39,453		$	43,414

Copyright © 2012 Actuate Corporation. All rights reserved. Actuate and the Actuate logo are registered trademarks of Actuate Corporation and/or its affiliates in the U.S. and certain other countries. All other brands, names or trademarks mentioned may be trademarks of their respective owners.

ACTUATE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)

		September 30,		December 31,
			2012		2011
	ASSETS
Current assets:
	Cash, cash equivalents and short-term investments	$	74,600	$	67,428
	Accounts receivable, net		20,140		26,844
	Other current assets		10,012		7,131
Total current assets			104,752		101,403
Property and equipment, net			7,966		1,927
Goodwill and other intangibles, net			56,157		57,845
Other assets			13,735		15,729
		$	182,610	$	176,904

	LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable	$	1,345	$	1,521
	Restructuring liabilities		108		98
	Accrued compensation		5,355		5,992
	Other accrued liabilities		4,612		5,872
	Deferred revenue		37,073		43,045
Total current liabilities			48,493		56,528

Long term liabilities:
	Other deferred liabilities		3,158		20
	Deferred revenue		1,305		1,717
	Tax liabilities		1,350		1,670
	Restructuring liabilities		27		106
Total long term liabilities			5,840		3,513

Stockholders' equity			128,277		116,863
		$	182,610	$	176,904

ACTUATE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
			2012			2011			2012			2011
Revenues:
	License fees	$	13,304		$	11,815		$	42,389		$	35,914
	Services		18,875			21,994			60,854			63,721
Total revenues			32,179			33,809			103,243			99,635

Costs and expenses:
	Cost of license fees		482			424			1,439			1,366
	Cost of services		5,187			4,998			15,267			15,653
	Sales and marketing		12,067			10,423			35,811			31,819
	Research and development		6,060			5,830			17,668			18,480
	General and administrative		5,360			4,885			16,918			15,623
	Amortization of purchased intangibles		289			289			867			1,007
	Asset impairment		-			-			-			1,681
	Restructuring charges		21			158			54			889
Total costs and expenses			29,466			27,007			88,024			86,518
Income from operations			2,713			6,802			15,219			13,117
Interest income and other income/(expense), net			174			982			763			(840	)
Interest expense			(55	)		(136	)		(255	)		(781	)
Income before income taxes			2,832			7,648			15,727			11,496
Provision for income taxes			2,725			2,926			6,182			4,514
Net income		$	107		$	4,722		$	9,545		$	6,982
Basic net income per share		$	0.00		$	0.10		$	0.19		$	0.15
Shares used in basic per share calculation			49,207			48,058			49,156			46,873
Diluted net income per share		$	0.00		$	0.09		$	0.18		$	0.14
Shares used in diluted per share calculation			52,794			52,285			52,794			51,224