EX-99.1 2 a4747589-ex991.txt PEOPLESOFT, INC. PRESS RELEASE Exhibit 99.1 PeopleSoft Reports Third Quarter 2004 Results PLEASANTON, Calif.--(BUSINESS WIRE)--xx--PeopleSoft, Inc. (Nasdaq:PSFT) today announced its third quarter 2004 financial results. For the quarter ended September 30, 2004, the Company reported license revenue of $161 million, a 24 percent increase over Q2 2004. PeopleSoft also reported total revenue of $699 million, an increase of 8 percent over the previous quarter and a Company record. Q3 pro forma net income was $62 million, an increase of 22 percent over the prior quarter. Pro forma earnings per share were $0.17 for the third quarter compared with $0.14 in the prior quarter. Q3 GAAP net income was $24 million, an increase of 115 percent when compared with Q2. Q3 GAAP earnings per share were $0.06, a 100 percent increase over $0.03 in the prior quarter. Q3 pro forma operating margin was 13.2 percent, an increase from 11.7 percent when compared with Q2. Q3 GAAP operating margin was 5.0 percent, an increase from 2.2 percent in the prior quarter. Cash flow from operations was $76 million for the quarter. At September 30, 2004, the Company's cash and investment balances were $1.7 billion and Days Sales Outstanding was 52 days. Pro forma results exclude restructuring charges, and purchase accounting adjustments arising from the acquisition of J.D. Edwards, including the revenue impact of the deferred maintenance write-down to fair value, and the amortization of capitalized software and intangibles. Pro forma results for the third quarter of 2004 exclude executive separation charges and asset impairment charges. Pro forma results also exclude costs directly associated with Oracle's hostile tender offer. A reconciliation of the pro forma to GAAP financial measures in this press release is incorporated below and is available on our website at www.peoplesoft.com. Management Commentary "PeopleSoft's Q3 performance had everything to do with delivering the best products and exceptional sales execution," said Phil Wilmington, co-president of PeopleSoft. "Our Q3 license revenue was very balanced -- double-digit sequential growth in North America and Europe and across all three product lines." "Strong top-line and bottom-line performance, solid cash flow, and low DSO, and a robust Q4 Pipeline, combined with operational excellence, are the hallmarks of a healthy and vibrant company," said Kevin Parker, co-president and Chief Financial Officer. "PeopleSoft delivered all of that this quarter." Customer Wins PeopleSoft added 138 new customers during the quarter, accounting for 21 percent of total license revenue. The Company's preliminary estimate for these numbers was 150 and 30 percent, respectively, on October 4. New and existing customers that chose PeopleSoft's applications during the quarter included: All American Semiconductor, American Pad & Paper, AstraZeneca, Corning, Countywide Home Loans, FedEx Kinko's, Fox Entertainment Group, Hewitt Associates, Manpower, Merck & Company, Metropolitan Life Insurance, Milacron, 3M, O2 GmbH, Pernod Ricard, State of Ohio, Tetra Technologies, The Nautilus Group, TXU Australia Group, U.S. Space and Naval Warfare Systems Command, University of Pittsburg Medical Center and the University of Texas. Non-GAAP Financial Measures The Company utilizes financial measures that are not prepared in accordance with generally accepted accounting principles in analyzing financial results because the Company believes that they are useful to investors and management in evaluating the Company's ongoing financial performance. These non-GAAP financial measures facilitate making historical comparisons by excluding the impact of certain events, such as the costs associated with responding to Oracle's hostile tender offer, the impact of the acquisition of J.D. Edwards, restructuring and other charges. These events might otherwise obscure the results of our ongoing business activities when compared to our competitors or our own historical performance. In addition, presentation of these non-GAAP financial measures enables investors to evaluate the Company's performance under both the GAAP and pro forma measures that management and the Board of Directors use to evaluate the Company's performance. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Where non-GAAP financial measures have been included in this press release, the Company has reconciled the GAAP to the non-GAAP measures in the table below. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. The following table reconciles the non-GAAP financial measures to GAAP (In thousands except EPS): Q3 2004 Q2 2004 Q3 2004 Q2 2004 Net Net Income EPS Income EPS Operating Margin -------------------------------------------- Pro forma $61,830 $0.17 $50,536 $0.14 13.2% 11.7% Revenue impact of deferred maintenance write-down (1,995) (0.01)(10,252)(0.03) -0.4% -2.2% Restructuring charges (5,255) (0.01) (2,460)(0.01) -1.2% -0.6% Amortization of capitalized software and intangible assets (16,744) (0.05)(16,377)(0.04) -3.8% -4.1% Oracle costs (5,279) (0.01)(10,469)(0.03) -1.2% -2.6% Executive separation charges (6,421) (0.02) -1.0% Asset impairment charges (2,550) (0.01) -0.6% -------------------------------------------- GAAP $23,586 $0.06 $10,978 $0.03 5.0% 2.2% ============================================ Company to Host Conference Call PeopleSoft will host a conference call today, October 21, 2004, at 3:00 p.m. PT/6:00 p.m. ET to discuss the quarterly results. A live audio-only web cast of the call will be made available in the Investor Relations section of the Company's web site at www.peoplesoft.com. A replay of the call will be made available for seven days following the call and will be accessible on the Company's web site. About PeopleSoft PeopleSoft (Nasdaq:PSFT) is the world's second largest provider of enterprise application software with 12,750 customers in more than 25 industries and 150 countries. For more information, visit us at www.peoplesoft.com. PeopleSoft and the PeopleSoft logo are registered trademarks of PeopleSoft, Inc. All other Company and product names may be trademarks of their respective owners. Copyright (C) 2004 PeopleSoft, Inc. All rights reserved. Forward-Looking Statements This press release may contain forward-looking statements about PeopleSoft's goals, beliefs, expectations, or predictions for both future activities and financial results. You are cautioned that these forward-looking statements are only predictions and that they may differ materially from actual future events or results. The Company's forward-looking statements are as of the date they are made and PeopleSoft undertakes no obligation to update or revise them. Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the PeopleSoft's actual results to differ materially from those projected in such forward-looking statements. These risks, assumptions and uncertainties include, but are not limited to: the costs and disruption to PeopleSoft's business arising from the Oracle tender offer; the Company's ability to successfully complete the integration of J.D. Edwards into PeopleSoft and to achieve anticipated synergies; economic and political conditions in the U.S. and abroad; the ability to complete and deliver products and services within currently estimated time frames and budgets; the ability to manage expenses effectively; the ability to achieve revenue from products and services that are under development; competitive and pricing pressures; and other risks referenced from time to time in PeopleSoft's filings with the Securities and Exchange Commission. Please refer to PeopleSoft's most recent annual report on Form 10-K and subsequently filed quarterly reports on Form 10-Q for more information on the risk factors that could cause actual results to differ from the Company's expectations. PEOPLESOFT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (unaudited) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2004 2003 2004 2003 ------ ------ ------ ------ Revenues: License fees $161,411 $160,459 $422,313 $353,026 Maintenance revenue 320,216 234,582 919,314 640,066 Professional services revenue 217,208 229,053 647,592 588,700 ---------- ---------- ---------- ---------- Service revenues 537,424 463,635 1,566,906 1,228,766 ---------- ---------- ---------- ---------- Total revenues 698,835 624,094 1,989,219 1,581,792 Costs and expenses: Cost of license fees 23,039 21,941 71,186 40,230 Cost of services 248,096 230,189 697,504 560,356 Sales and marketing expense 186,766 168,554 532,527 419,604 Product development expense 137,639 127,711 402,951 296,062 General and administrative expense 49,047 61,879 171,284 135,918 Restructuring, acquisition and other charges 18,969 23,273 31,241 37,072 ---------- ---------- ---------- ---------- Total costs and expenses 663,556 633,547 1,906,693 1,489,242 ---------- ---------- ---------- ---------- Operating income (loss) 35,279 (9,453) 82,526 92,550 Other income, net 4,394 7,556 12,190 19,234 ---------- ---------- ---------- ---------- Income (loss) before provision for income taxes 39,673 (1,897) 94,716 111,784 Provision for income taxes 16,087 4,243 35,947 42,911 ---------- ---------- ---------- ---------- Income (loss) before minority interest 23,586 (6,140) 58,769 68,873 Minority interest in net income -- 1,205 -- 1,205 ---------- ---------- ---------- ---------- Net income (loss) $ 23,586 $ (7,345) $ 58,769 $ 67,668 ========== ========== ========== ========== Basic income (loss) per share $ 0.06 $ (0.02) $ 0.16 $ 0.21 ========== ========== ========== ========== Shares used in basic per share computation 365,438 357,289 363,756 329,511 ========== ========== ========== ========== Diluted income (loss) per share $ 0.06 $ (0.02) $ 0.16 $ 0.20 ========== ========== ========== ========== Shares used in diluted per share computation 369,984 357,289 370,095 333,673 ========== ========== ========== ========== PEOPLESOFT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except employee count) (unaudited) SEPTEMBER 30, DECEMBER 31, 2004 2003 -------------- ------------- Assets: Current assets: Cash and cash equivalents $ 467,077 $ 439,385 Short-term investments and restricted cash 1,160,653 961,906 Accounts receivable, net 401,919 462,528 Income taxes refunds receivable -- 18,749 Deferred tax assets 22,530 58,630 Prepaid expenses and other current assets 64,603 69,997 ----------- ----------- Total current assets 2,116,782 2,011,195 Property and equipment, net 512,379 448,211 Long term investments 50,620 29,219 Deferred tax assets 22,474 42,049 Capitalized software, net 190,297 234,217 Goodwill 1,014,873 1,005,660 Other intangible assets, net 397,586 444,991 Other assets 8,335 9,186 ----------- ----------- Total assets $4,313,346 $4,224,728 =========== =========== Liabilities and Stockholders' Equity: Current liabilities: Accounts payable $ 45,340 $ 51,190 Accrued liabilities 157,419 158,360 Restructuring liabilities 48,596 78,250 Accrued compensation and related expenses 215,605 224,983 Income taxes payable 8,026 106,355 Short-term deferred revenues 642,350 588,590 ----------- ----------- Total current liabilities 1,117,336 1,207,728 Long-term deferred revenues 120,116 119,896 Other liabilities 40,105 37,655 ----------- ----------- Total liabilities 1,277,557 1,365,279 Stockholders' equity: Common stock 3,847 3,776 Additional paid-in capital 2,628,561 2,508,995 Retained earnings 743,616 684,847 Treasury stock (387,803) (387,046) Accumulated other comprehensive income 47,568 48,877 ----------- ----------- Total stockholders' equity 3,035,789 2,859,449 ----------- ----------- Total liabilities and stockholders' equity $4,313,346 $4,224,728 =========== =========== Worldwide employee count 11,225 12,163 PEOPLESOFT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (unaudited) NINE MONTHS ENDED SEPTEMBER 30, -------------- 2004 2003 ------ ------ Operating activities: Net income $ 58,769 $ 67,668 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 167,554 113,827 Provision for doubtful accounts 5,052 7,151 Tax benefits from employee stock transactions 8,861 6,235 Provision (benefit) for deferred income taxes 55,833 (12,101) Gain on sales of investments and disposition of property and equipment, net (1,831) (3,535) Non-cash stock compensation 10,848 7,359 Non-cash restructuring, acquisition and other charges 8,777 17,519 Changes in operating assets and liabilities: Accounts receivable 51,101 106,963 Accounts payable and accrued liabilities (36,883) (18,433) Accrued compensation and related expenses (16,176) (28,074) Income taxes, net (79,128) (8,831) Deferred revenues 53,709 41,607 Other (5,346) 14,576 ------------------------- Net cash provided by operating activities 281,140 311,931 Investing activities: Purchase of available-for-sale investments (5,474,251) (8,540,083) Proceeds from sales and maturities of investments 5,256,065 9,159,986 Purchases of property and equipment (142,846) (231,365) Acquisitions, net of cash acquired -- (519,934) ------------------------- Net cash used in investing activities (361,032) (131,396) Financing activities: Net proceeds from employee stock transactions 105,986 77,382 ------------------------- Net cash provided by financing activities 105,986 77,382 Effect of foreign exchange rate changes on cash and cash equivalents 1,598 18,056 ------------------------- Net increase in cash and cash equivalents 27,692 275,973 Cash and cash equivalents at beginning of period 439,385 319,344 ------------------------- Cash and cash equivalents at end of period $467,077 $595,317 ------------------------- CONTACT: PeopleSoft, Inc. Steve Swasey, 925-694-5230 (Public Relations) steve_swasey@peoplesoft.com Bob Okunski, 877-528-7413 (Investor Relations) bob_okunski@peoplesoft.com