EX-99 5 a4561115_ex993.txt EXHIBIT 99.3 RECONCILIATION Exhibit 99.3 Non-GAAP Financial Measures The Company has used non-GAAP pro forma financial measures, excluding adjustments related to purchase accounting and restructuring costs, in analyzing financial results because they provide meaningful information regarding the Company's operational performance and facilitate management's internal comparisons to the Company's historical operating results and comparisons to competitors' operating results. The Company believes that these non-GAAP financial measures are useful to investors because they allow for greater transparency. Wherever non-GAAP financial measures have been presented, the Company has reconciled them to their GAAP counterparts. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. PeopleSoft Reconciliation of Non-GAAP to GAAP financial measures (a) (in thousands except margin percentages and per share amounts)
-------- --------- --------- ------------ --------- Q1 '02 Q2 '02 Q3 '02 Q4 '02 FY 2002 -------- --------- --------- ------------ --------- Operating income reconciliation: Proforma operating income $63,396 $59,766 $62,508 $77,241 $262,911 Revenue impact of deferred maintenance write-down - - - - - Acquired in-process research and development charges (2,800) (8,679) - - (11,479) Restructuring charges - - - - - Amortization of capitalized software and intangible assets - - - - - Adjustments to restructuring reserves - - - 1,204 1,204 -------- --------- --------- ------------ --------- GAAP operating income (loss) $60,596 $51,087 $62,508 $78,445 $252,636 ======== ========= ========= ============ ========= Operating margin reconciliation: Proforma operating margin 13.1 % 12.4 % 13.3 % 15.1 % 13.5 % Revenue impact of deferred maintenance write-down - - - - - Acquired in-process research and development charges (0.6)% (1.8)% - - (0.6)% Restructuring charges - - - - - Amortization of capitalized software and intangible assets - - - - - Adjustments to restructuring reserves - - - 0.2 % 0.1 % -------- --------- --------- ------------ --------- GAAP operating margin 12.5 % 10.6 % 13.3 % 15.3 % 13.0 % ======== ========= ========= ============ ========= Proforma operating expense reconciliation: Proforma operating expenses Acquired in-process research and development charges Restructuring charges Amortization of capitalized software and intangible assets GAAP operating income expense Net income reconciliation: Proforma net income $46,266 $44,699 $44,615 $56,670 $192,250 Revenue impact of deferred maintenance write-down - - - - - Acquired in-process research and development charges (1,722) (8,679) - - (10,401) Restructuring charges - - - - - Amortization of capitalized software and intangible assets - - - - - Adjustments to restructuring reserves - - - 740 740 -------- --------- --------- ------------ --------- GAAP net income $44,544 $36,020 $44,615 $57,410 $182,589 ======== ========= ========= ============ ========= Net income per share reconciliation: Proforma net income per share $0.14 $0.14 $0.14 $0.18 $0.60 Revenue impact of deferred maintenance write-down - - - - - Acquired in-process research and development charges - (0.03) - - (0.03) Restructuring charges - - - - - Amortization of capitalized software and intangible assets - - - - - -------- --------- --------- ------------ --------- GAAP diluted income (loss) per share $0.14 $0.11 $0.14 $0.18 $0.57 ======== ========= ========= ============ ---------
Footnote: (a) GAAP represents accounting principles generally accepted in the United States of America For a complete set of financial statements, see the Company's 2002 Annual Report of Form 10-K and quarterly filings on Form 10-Q on the Company's website located at www.peoplesoft.com. PeopleSoft Reconciliation of Non-GAAP to GAAP financial measures (a) (in thousands except margin percentages and per share amounts) (CONTINUED)
-------- --------- --------- ------------ --------- Q1 '03 Q2 '03 Q3 '03 Q4 '03 FY 2003 -------- --------- --------- ------------ --------- Operating income reconciliation: Proforma operating income $51,783 $64,019 $89,414 $112,492 $317,708 Revenue impact of deferred maintenance write-down - - (50,892) (49,958) (100,850) Acquired in-process research and development charges - - (14,500) - (14,500) Restructuring charges - (13,799) (8,773) (10,048) (32,620) Amortization of capitalized software and intangible assets - - (24,702) (28,443) (53,145) Adjustments to restructuring reserves - - - - -------- --------- --------- ------------ --------- GAAP operating income (loss) $51,783 $50,220 $(9,453) $24,043 $116,593 ======== ========= ========= ============ ========= Operating margin reconciliation: Proforma operating margin 11.3 % 12.9 % 13.2 % 15.3 % 13.4 % Revenue impact of deferred maintenance write-down - - (7.5)% (6.6)% (4.1)% Acquired in-process research and development charges - - (2.1)% - (0.6)% Restructuring charges - (2.8)% (1.3)% (1.4)% (1.4)% Amortization of capitalized software and intangible assets - - (3.8)% (3.8)% (2.2)% Adjustments to restructuring reserves - - - - - -------- --------- --------- ------------ --------- GAAP operating margin 11.3 % 10.1 % (1.5)% 3.5 % 5.1 % ======== ========= ========= ============ ========= Proforma operating expense reconciliation: Proforma operating expenses $585,572 $622,691 Acquired in-process research and development charges 14,500 - Restructuring charges 8,773 10,048 Amortization of capitalized software and intangible assets 24,702 28,443 --------- ------------ GAAP operating income expense $633,547 $661,182 ========= ============ Net income reconciliation: Proforma net income $38,479 $45,020 $62,086 $73,838 $219,423 Revenue impact of deferred maintenance write-down - - (33,283) (31,891) (65,174) Acquired in-process research and development charges - - (14,500) - (14,500) Restructuring charges - (8,486) (5,493) (6,414) (20,393) Amortization of capitalized software and intangible assets - - (16,155) (18,157) (34,312) Adjustments to restructuring reserves - - - - -------- --------- --------- ------------ --------- GAAP net income $38,479 $36,534 $(7,345) $17,376 $85,044 ======== ========= ========= ============ ========= Net income per share reconciliation: Proforma net income per share $0.12 $0.14 $0.17 0.20 0.64 Revenue impact of deferred maintenance write-down - - (0.09) (0.08) (0.19) Acquired in-process research and development charges - - (0.04) - (0.04) Restructuring charges - (0.03) (0.02) (0.02) (0.06) Amortization of capitalized software and intangible assets - - (0.04) (0.05) (0.10) -------- --------- --------- ------------ --------- GAAP diluted income (loss) per share $0.12 $0.11 $(0.02) $0.05 $0.25 ======== ========= ========= ============ --------- Total revenue reconciliation Proforma total revenue $674,986 $735,183 Revenue impact of deferred maintenance write-down (50,892) (49,958) --------- ------------ GAAP total revenue $624,094 $685,225 ========= ============ Maintenance revenue reconciliation Proforma maintenance revenue $285,474 $314,211 Revenue impact of deferred maintenance write-down (50,892) (49,958) --------- ------------ GAAP maintenance revenue $234,582 $264,253 ========= ============ Service margin reconciliation Proforma service margin 57% 58% Intangible amortization in cost of services (4)% (2)% --------- ------------ Proforma service margin net of intangible amortization 53.0% 56% Revenue impact of deferred maintenance write-down (3)% (4)% --------- ------------ GAAP service margin 50.0% 52% ========= ============ Product development expense reconciliation Proforma product development expense $125,506 $133,934 Intangible amortization in product development 2,205 3,015 --------- ------------ GAAP product development expense $127,711 $136,949 ========= ============ Product development as a percentage of revenues reconciliation Proforma development as a percentage of pro forma revenues 19% 18% Revenue impact of deferred maintenance write-down 1 % 2 % --------- ------------ Proforma product development expense as a percentage of revenues 20% 20% Intangible amortization in product development - - --------- ------------ GAAP product development expense as a percentage of revenues 20% 20% ========= ============ Deferred maintenance revenue reconciliation (at acquisition) Deferred maintenance prior to purchase accounting write-down $636,816 Deferred maintenance write-down 143,919 Revenue impact of deferred maintenance write-down (50,892) --------- GAAP deferred maintenance revenue $543,789 ========= License margin reconciliation Proforma license margin 92% 92% Intangible amortization in cost of license (6)% (6)% --------- ------------ GAAP license margin 86% 86% ========= ============ Sales and marketing expense reconciliation Proforma sales and marketing expense $165,715 $186,072 Intangible amortization in sales and marketing 2,839 3,771 --------- ------------ GAAP sales and marketing expense $168,554 $189,843 ========= ============ Sales and marketing expense as a percentage of revenues reconciliation Proforma sales and marketing as a percentage of pro forma revenues 25% 25% Revenue impact of deferred maintenance write-down 2 % 2 % --------- ------------ Proforma sales and marketing as a percentage of revenues 27% 27% Intangible amortization in sales and marketing - 1 % --------- ------------ GAAP sales and marketing expense as a percentage of revenues 27% 28% ========= ============
Footnote: (a) GAAP represents accounting principles generally accepted in the United States of America For a complete set of financial statements, see the Company's 2002 Annual Report of Form 10-K and quarterly filings on Form 10-Q on the Company's website located at www.peoplesoft.com.
Impact of Oracle response costs: Operating expenses excluding Oracle response costs $433,720 $615,656 $649,940 Oracle response costs 13,502 17,891 11,242 --------- --------- ------------ GAAP costs and expenses $447,222 $633,547 $661,182 ========= ========= ============ General and administrative expenses excluding Oracle response costs $29,818 $46,609 $46,582 Oracle response costs 11,206 15,270 11,010 --------- --------- ------------ GAAP general and administrative expenses $41,024 $61,879 $57,592 ========= ========= ============ Sales and marketing expenses excluding Oracle response costs $129,196 $165,933 $189,611 Oracle response costs 2,296 2,621 232 --------- --------- ------------ GAAP sales and marketing expenses $131,492 $168,554 $189,843 ========= ========= ============ Proforma operating income excluding Oracle response costs $77,521 $107,305 $123,734 Oracle response costs (13,502) (17,891) (11,242) --------- --------- ------------ Proforma operating income 64,019 89,414 112,492 Non-recurring items (13,799) (98,867) (88,449) --------- --------- ------------ GAAP operating income (loss) $50,220 $(9,453) $24,043 ========= ========= ============ Proforma operating margin excluding Oracle response costs 15.9% 16.8% Oracle response costs (2.7)% (1.5)% --------- ------------ Proforma operating margin 13.2% 15.3% Non-recurring items (14.7)% (11.8)% --------- ------------ GAAP operating margin (1.5)% 3.5% ========= ============ Proforma net income per share excluding Oracle response costs $0.17 $0.20 $0.22 Oracle response costs (0.03) (0.03) (0.02) --------- --------- ------------ Proforma net income per share 0.14 0.17 0.20 Non-recurring items (0.03) (0.19) (0.15) --------- --------- ------------ GAAP diluted income (loss) per share $0.11 $(0.02) $0.05 ========= ========= ============ GAAP net income per share excluding Oracle response costs $0.14 $0.01 $0.07 Oracle response costs (0.03) (0.03) (0.02) --------- --------- ------------ GAAP diluted income (loss) per share $0.11 $(0.02) $0.05 ========= ========= ============ Q1'04 Forecast net income per share reconciliation: Proforma net income per share $0.17 - 0.18 Revenue impact of deferred maintenance write-down (0.04) Amortization of acquired intangible assets (0.05) Restructuring charges (0.02) ------------ GAAP diluted income per share $0.06 - 0.07 ============ FY'04 Forecast net income per share reconciliation: Proforma net income per share $0.92 - 0.95 Revenue impact of deferred maintenance write-down (0.08) Amortization of acquired intangible assets (0.20) Restructuring charges (0.02) ------------ GAAP diluted income per share $0.62 - 0.65 ============
Footnote: For a complete set of financial statements, see the Company's 2002 Annual Report of Form 10-K and quarterly filings on Form 10-Q on the Company's website located at www.peoplesoft.com.