Announces Record Profits and Operating Margin FAIRFAX, Va., Oct. 25
/PRNewswire-FirstCall/ -- webMethods, Inc. (NASDAQ:WEBM), a leading
provider of business integration and optimization software, today
announced financial results for its fiscal second quarter ended
September 30, 2005. Total revenue for the fiscal second quarter was
approximately $49.2 million, compared to $50.8 million in the prior
year period. License revenue for the fiscal second quarter was
approximately $19.4 million, compared to $23.9 million in the prior
year period. Under U.S. generally accepted accounting principles
(GAAP), the company's net income for the September 2005 quarter was
$2.6 million, or earnings of $0.05 per share, compared to net loss
of $4.1 million, or a loss of $0.08 per share, in the prior year
period. Adjusting the financial results as described below in "Non-
GAAP Financial Measures," the company reported non-GAAP net income
of $2.9 million, or earnings of $0.05 per share in the September
2005 quarter, compared to non-GAAP net income of $659,000, or
earnings of $0.01 per share, in the prior year period. Important
information regarding these results is provided below under
"Non-GAAP Financial Measures" and should be read to better
understand the charges excluded in results and why this information
is presented. "The continued focus on our cost structure has
resulted in our reporting the lowest quarterly expenses since the
company's initial public offering in February 2000. By aligning our
resources more closely with our objective of improving the yield on
our sales and marketing investments, we also delivered the best
quarterly bottom line performance in the company's history," said
David Mitchell, president and CEO, webMethods, Inc. "During the
September 2005 quarter many of our significant transactions were
won due to the strength of our solution selling model and the
uniqueness of webMethods Fabric 6.5," continued Mr. Mitchell. "As
we enter the traditionally stronger part of our fiscal year, we are
encouraged that demand for our total business integration solutions
continues to grow." Additional September 2005 Quarterly Financial
Highlights: * Operating margin was 4% and non-GAAP operating margin
was 7%. * Cash and marketable securities at September 30, 2005
increased by approximately $4.3 million to approximately $148
million from $143.7 million at June 30, 2005. * Days Sales
Outstanding (DSOs) decreased by 8 days from the prior quarter to 75
days. * Total deferred revenue at September 30, 2005 decreased by
$1.7 million to $44.6 million from $46.2 million at June 30, 2005.
* International revenue accounted for approximately 37% of total
revenue in the September 2005 quarter, consistent with the prior
quarter. Financial Outlook: Based on currently available
information, webMethods anticipates total revenue in the quarter
ending December 31, 2005 will be in the range of $50 million to $53
million, which includes license revenue in the range of $20 million
to $23 million. GAAP net income per share for the December 2005
quarter is anticipated to be in the range of $0.03 to $0.07.
Non-GAAP net income per share for the December 2005 quarter is
anticipated to be in the range of $0.04 to $0.07. Non-GAAP net
income for the December 2005 quarter is expected to exclude
amortization of warrant charge of approximately $661,000 and
amortization of acquired intangible assets of approximately
$599,000 and includes an income tax provision assuming a 35%
effective tax rate. Important information regarding the use of this
non-GAAP financial measure is provided below under "Non-GAAP
Financial Measures" and should be read to better understand the
charges excluded in results and why this non- GAAP information is
presented. Technology Highlights: webMethods extended our suite of
new business process productivity solutions with the introduction
of webMethods for Payments Monitoring. These webMethods
Fabric-based solutions address unique industry-specific
requirements through process-specific management, monitoring and
professional services methodologies. webMethods for Compliance,
released in the fiscal first quarter, was subsequently recognized
by Forrester Research in their report Controls Monitoring Solutions
Gaining Momentum, Forrester Research, Inc., August 2005 as one of
six software solutions recognized for meeting its criteria for
continuous controls monitoring, which was identified as a key
component for achieving sustainable regulatory compliance. During
the quarter, webMethods also extended its product capabilities for
mainframe integration and product information management (PIM) via
partnerships with NEON Systems and GXS, respectively. Additionally,
webMethods was recognized by Intelligent Enterprise magazine with
its 2005 Reader's Choice Award for the "Best Business Activity
Monitoring System" in the publication's October 1st issue. Global
Customer Wins: webMethods won new and additional business in the
September 2005 quarter with strategic customers worldwide. The
company continued momentum in several vertical industries, with
particular strength in financial services and government. The
following companies represent important new and follow-on business
that closed during the September 2005 quarter: Adobe, Agos, Amtrak,
Baxter Healthcare, Cabela's, Cable & Wireless, Chartered
SemiConductor, CNRS (Centre Nationale de la Recherche
Scientifique), Dean Foods, U.S. Department of the Navy, Eastman
Kodak, Fonterra, Fujitsu Social Sciences Lab, GXS, Haemonetics,
Henkel KGaA, Hiscox, Idaho Power, ING North America, J.D. Irving,
Juniper Networks, Matsushita Electric, Medtronic, National Commerce
Bank, National Reconnaissance Office, NE Chemcat, Office Depot,
Progress Energy, Societe Generale, T-Systems, U.S. Forest Service,
and Wales and West Utilities Limited, among others. Record Number
of Customer Projects Move Into Production: In the September 2005
quarter, webMethods documented over 170 global customer projects
that moved into production, including: 3M, Actebis Holding GmbH,
Adobe Systems, AEP Energy Services Inc., AFLAC, AGCO Corporation,
Alcatel, All Nippon Airways, Applera, Cadence Design Systems,
Colgate-Palmolive Company, Coors Brewing Company, Corporate
Express, Dade Behring, Inc., Fosters Group Limited, France Telecom,
Gates Corporation, Hewlett-Packard Company, Iceland Air,
International Paper, Johnson and Johnson, Koninklijke Ahold NV,
Lafarge North America, Level 3 Communications, Liberty Mutual
Insurance Company, Massachusetts Mutual Life, Medtronic, National
City Corporation, Nationale Bank of Belgium, Nomura Research
Institute Ltd., Robert Bosch GmbH, Solectron, Sony Australia
Limited, Standard Register Company, Staples, Toshiba Corporation,
Trane Company and Worldwide Technologies, Inc., among others.
Conference Call Information: webMethods will host a conference call
at 5:00 p.m. Eastern Standard Time today to discuss the company's
fiscal second quarter financial results and its future guidance.
The conference call will be available via webcast at
http://www.webmethods.com/investors. A replay of this call will be
available through November 1, 2005. Please dial 1-(800) 642-1687 in
North America and 1-(706) 645-9291 outside North America,
confirmation number 1209334. Non-GAAP Financial Measures In
accordance with the Rules and Regulations of the Securities and
Exchange Commission, webMethods prepares financial statements in
accordance with GAAP. In addition to evaluating webMethods'
GAAP-based financial information, management evaluates the
performance of, and operates, the core business of the company
using certain non-GAAP financial measures. While these non-GAAP
financial measures are not a substitute for results reported under
GAAP, management relies upon the non-GAAP measures in operating the
business because management feels these measures provide additional
information regarding the operational and performance indicators
that more closely reflect the operations of the company's core
business. This press release contains operating results for the
quarters and six- month periods ended September 2005 and September
2004, and anticipated operating results for the quarter ending
December 31, 2005, that are not in accordance with GAAP because
they exclude certain non-cash amortization charges and unusual or
infrequent items outside webMethods' core business operations, and
include a provision for income taxes assuming a 35% effective tax
rate. Non-GAAP results for the quarters and six-month periods ended
September 2005 and 2004 exclude (1) amortization of deferred
warrant charges, (2) amortization of acquired intangible asset
charges, (3) restructuring costs in the September 2005 and 2004 and
June 2005 quarters and (4) impairment of equity investment in a
private company in the September 2004 quarter. The financial
information attached to this press release reconciles the non-GAAP
operating results given above to GAAP for the quarters and
six-month periods ended September 2005 and 2004. Investors are
encouraged to review that reconciliation of non-GAAP operating
results to the most directly comparable GAAP financial measures
provided in the attached financial information. webMethods believes
that non-GAAP financial measures that exclude those non-cash
amortization charges and unusual or infrequent items outside its
core business operations provide a more useful assessment of the
company's performance of its core operations. webMethods'
management excludes those items in analyzing the performance of,
and operating, the company's core business, in part for the
following reasons: * The amortization of deferred warrant charge
relates to a single warrant granted by the company in March 2001 in
connection with an original equipment manufacturer (OEM) Agreement
entered into by the company at that time. The company believes the
issuance of that warrant was unusual in its sales and marketing
practices and that there is no direct correlation between the
non-cash amortization of the deferred warrant charge and the
financial results achieved under the OEM Agreement. Amortization of
the deferred warrant charge is expected to end in April 2006. * The
amortization of acquired intangible assets is a non-cash
amortization charge relating to three acquisitions completed by the
company in fiscal year 2004. This amortization charge is a fixed,
non- cash charge that relates to prior-year acquisitions rather
than current- period operations. As a result, management does not
include this charge in its internal review of the company's current
period operations. * Restructuring costs include severance and
other costs relating to restructurings undertaken to align the
company's cost structure with changing market conditions. The
company believes each of the restructuring charges is a discrete,
unusual event and unrelated to another. The company does not
believe that these restructuring charges reflect its core business
operations. * The impairment of equity investment in private
company is a non-cash write-off of the carrying value of an
investment made by the company in April 2000. The recording of the
other-than-temporary decline in value in investment relates to
prior-year investing activities and is a non- recurring item
unrelated to current-period operations. Non-GAAP operating results
should not be considered as a substitute for, or superior to,
measures of financial performance prepared in accordance with GAAP,
and may be different from non-GAAP financial measures used by
others. webMethods' management uses these non-GAAP measures to
better understand and manage operations and to evaluate the
performance of the company's core operations, in comparisons of the
company's historical results of core operations and in comparisons
to competitors' core operating results. webMethods believes that
these non-GAAP measures are useful to investors in evaluating our
operating performance and allows investors and management to
compare the results of core operations from period to period by
removing these unusual or infrequent items and certain non-cash
amortization charges from our operating results. webMethods also
believes that these non-GAAP measures enhance comparability of
webMethods' results of operations to those of other enterprise
software companies, to non-GAAP operating results webMethods
historically has reported, to financial guidance provided by
webMethods and to financial models and expectations of certain
investors and securities analysts. About webMethods, Inc.
webMethods (NASDAQ:WEBM) provides business integration software to
integrate, assemble and optimize available IT assets to drive
business process productivity. webMethods delivers an innovative,
enterprise-class business integration platform that incorporates
proven integration technology with next generation capabilities
into one interoperable set of tools that delivers a unique
combination of efficiency, agility and control. webMethods combines
industry leadership with a zealous commitment to customers to
deliver tangible business value to more than 1,300 global
customers. webMethods is headquartered in Fairfax, Va., with
offices throughout the U.S., Europe, Asia Pacific and Japan. More
information about the company can be found at
http://www.webmethods.com/. The webMethods name and logo are
registered trademarks of webMethods, Inc. in the United States and
certain other countries. All other marks mentioned are trademarks
or service marks of their respective companies. This press release
and the conference call announced in it may contain various remarks
about the future expectations, plans and prospects of webMethods
that constitute forward-looking statements for purposes of the safe
harbor provisions of U.S. securities laws. Specific forward-looking
statements relate to future market opportunities for webMethods'
solutions, webMethods' products and services and their performance,
the size and strength of our markets, the size and quality of our
pipeline, expected future financial performance (including total
revenue, license revenue, level of cash and marketable securities,
non-cash or non-recurring charges, expenses, net earnings or loss,
earnings or loss per share), and non-GAAP operating results per
share, expected financial metrics, webMethods' future cost savings
and expense levels, the anticipated result of marketing and selling
models and approaches, the anticipated contributions to webMethods'
future financial performance of certain products or geographic
regions of its business, demand for some or all of its products and
the contribution to webMethods' revenue of business partners or
webMethods' products or services. Actual results of webMethods may
differ materially from those indicated by these forward-looking
statements as a result of various risks and uncertainties,
including the impact of economic conditions, geopolitical factors,
seasonal factors, competitive and pricing pressures, terrorism and
related uncertainties in the U.S. and abroad on the company's
customers and prospects and their IT spending budgets and
priorities; impact upon operations of legal compliance matters or
internal controls review, improvement and remediation; difficulties
in achieving or maintaining anticipated expense levels and
controlling major expenses; variations in the size and timing of
customer orders and demand for software offered by webMethods;
impact of compliance programs and claims for alleged violations of
requirements and duties; impact of changes in management or staff
levels; variations in revenue influenced by software vendor or
systems integrator partners; impact of rapid technological change;
and these and other risks and uncertainties discussed more fully in
webMethods' SEC filings, including those discussed under the
heading "Factors That May Affect Future Operating Results" in the
Business section of webMethods' Form 10-K for the year ended March
31, 2005 and webMethods' Form 10-Q for the period ended June 30,
2005, which are on file with the U.S. Securities and Exchange
Commission and may be accessed at http://www.sec.gov/ or
webMethods' investor relations web page at
http://www.webmethods.com/investors/. webMethods disclaims any
obligation to update or correct any forward-looking statements made
herein due to the occurrence of events after the issuance of this
press release. webMethods, Inc. Condensed Consolidated Statements
of Operations (in thousands, except shares and per share data)
(Unaudited) Three Months Ended Six Months Ended September 30,
September 30, 2005 2004 2005 2004 Revenue License $19,390 $23,851
$37,857 $38,657 Professional services 11,326 12,077 23,009 24,601
Maintenance 18,452 14,838 36,037 29,445 Total revenue 49,168 50,766
96,903 92,703 Cost of revenue Amortization of intangibles 599 599
1,198 1,198 License 271 245 485 865 Professional services and
maintenance 13,481 14,280 27,035 28,553 Total cost of revenue
14,351 15,124 28,718 30,616 Gross profit 34,817 35,642 68,185
62,087 Operating expenses Sales and marketing 17,051 20,587 34,326
42,362 Research and development 10,126 10,820 21,244 21,870 General
and administrative 5,401 4,868 11,615 9,941 Restructuring and other
related charges 431 2,756 719 2,756 Total operating expenses 33,009
39,031 67,904 76,929 Operating income (loss) 1,808 (3,389) 281
(14,842) Interest income and other, net 993 387 2,148 1,025
Impairment of equity investment in private company - (1,057) -
(1,057) Net income (loss) before taxes $2,801 $(4,059) $2,429
$(14,874) Provision for income taxes 243 65 385 69 Net income
(loss) $2,558 $(4,124) $2,044 $(14,943) Basic and fully diluted net
income (loss) per share $0.05 $(0.08) $0.04 $(0.28) Shares used in
computing per share amount Basic 53,609,637 53,088,527 53,492,483
52,958,538 Fully Diluted 54,304,756 53,088,527 53,854,784
52,958,538 webMethods, Inc. Condensed Consolidated Balance Sheets
(in thousands) (Unaudited) September 30, March 31, 2005 2005 ASSETS
Current assets: Cash and cash equivalents $89,130 $57,209
Marketable securities available for sale 58,891 78,332 Accounts
receivable, net 41,213 47,326 Prepaid expenses and other current
assets 6,219 6,401 Total current assets 195,453 189,268 Marketable
securities available for sale - 14,513 Property and equipment, net
10,762 10,342 Goodwill 46,704 46,704 Intangibles assets, net 7,192
8,390 Other assets 4,686 6,127 Total assets $264,797 $275,344
LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $7,835 $8,673 Accrued expenses 12,431 16,506
Accrued salaries and commissions 9,381 12,219 Deferred revenue
39,847 43,055 Current portion of capital lease 406 475 Total
current liabilities 69,900 80,928 Capital lease obligations, net of
current portion 113 139 Other long term liabilities 3,133 3,374
Long term deferred revenue 4,714 6,371 Total liabilities 77,860
90,812 Total stockholders' equity 186,937 184,532 Total liabilities
and stockholders' equity $264,797 $275,344 webMethods, Inc.
Condensed Consolidated Statements of Cash Flows (in thousands)
(unaudited) Six Months Ended September 30, 2005 2004 Cash flows
from operating activities: Net income (loss) $2,044 $(14,943)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities: Depreciation and amortization 2,776
3,243 Provision for (recovery of) doubtful accounts (376) 241
Amortization of deferred stock compensation related to employee
stock options and non-employee stock warrants 1,352 1,322
Amortization of acquired intangibles 1,198 1,198 Deferred rent
(229) - Impairment of equity investment in private company - 1,057
Increase (decrease) in cash resulting from changes in assets and
liabilities: Accounts receivable 5,514 952 Prepaid expenses and
other current assets 85 (1,598) Other assets 1,315 980 Accounts
payable (523) (1,866) Accrued expenses and other liabilities
(3,875) (1,851) Accrued salaries and commissions (2,613) 149
Deferred revenue (3,725) 911 Other liabilities (73) - Net cash
provided by (used in) operating activities 2,870 (10,205) Cash
flows from investing activities: Purchases of property and
equipment (3,039) (2,660) Net maturities of marketable securities
available for sale 34,091 874 Net cash provided by (used in)
investing activities 31,052 (1,786) Cash flows from financing
activities: Short-term borrowings - 3,533 Payments on short-term
borrowings - (4,284) Payments on capital leases (336) (547)
Proceeds from exercise of stock options and stock issued under the
ESPP 1,438 1,882 Net cash provided by financing activities 1,102
584 Effect of the exchange rate on cash (3,103) (473) Net
increase/(decrease) in cash and cash equivalents 31,921 (11,880)
Cash and cash equivalents at beginning of period 57,209 75,462 Cash
and cash equivalents at end of period $89,130 $63,582 webMethods,
Inc. Non-GAAP Condensed Consolidated Statements of Operations (in
thousands, except shares and per share data) (Unaudited) Three
Months Ended September 30, 2005 As Reported Adjustments* Non-GAAP
Revenues License $19,390 $- $19,390 Professional services 11,326 -
11,326 Maintenance 18,452 - 18,452 Total revenues 49,168 - 49,168
Cost of revenues Amortization of intangibles(1) 599 (599) - License
271 - 271 Professional services and maintenance 13,481 - 13,481
Total cost of revenues 14,351 (599) 13,752 Gross profit 34,817 599
35,416 Operating expenses Sales and marketing(2) 17,051 (661)
16,390 Research and development 10,126 - 10,126 General and
administrative 5,401 - 5,401 Restructuring costs(3) 431 (431) -
Total operating expenses 33,009 (1,092) 31,917 Operating income
(loss) 1,808 1,691 3,499 Interest income and other, net 993 - 993
Impairment of equity investment in private company(4) - - - Net
income (loss) before taxes 2,801 1,691 4,492 Provision for income
taxes(5) 243 1,329 1,572 Net income (loss) $2,558 $362 $2,920 Net
income (loss) per share Basic $0.05 $0.05 Fully Diluted $0.05 $0.05
Shares used in computing per share amount Basic 53,609,637
53,609,637 Fully Diluted 54,304,756 54,304,756 Three Months Ended
September 30, 2004 As Reported Adjustments* Non-GAAP Revenues
License $23,851 $- $23,851 Professional services 12,077 - 12,077
Maintenance 14,838 - 14,838 Total revenues 50,766 - 50,766 Cost of
revenues Amortization of intangibles 599 (599) - License 245 - 245
Professional services and maintenance 14,280 - 14,280 Total cost of
revenues 15,124 (599) 14,525 Gross profit 35,642 599 36,241
Operating expenses Sales and marketing 20,587 (661) 19,926 Research
and development 10,820 - 10,820 General and administrative 4,868 -
4,868 Restructuring and excess facilities costs 2,756 (2,756) -
Total operating expenses 39,031 (3,417) 35,614 Operating income
(loss) (3,389) 4,016 627 Interest income and other, net 387 - 387
Impairment of equity investment in private company (1,057) 1,057 -
Net income (loss) before taxes (4,059) 5,073 1,014 Provision for
income taxes 65 290 355 Net income (loss) $(4,124) $4,783 $659 Net
income (loss) per share Basic $0.01 $0.01 Fully Diluted $0.01 $0.01
Shares used in computing per share amount Basic 53,088,527
53,088,527 Fully Diluted 53,456,078 53,456,078 * webMethods'
management uses non-GAAP measures to better understand and manage
operations and to evaluate the performance of the company's core
operations, in comparisons of the company's historical results of
core operations and in comparisons to competitors' core operating
results. webMethods' believes that these non-GAAP measures are
useful to investors in evaluating our operating performance it
allows investors and management to compare the results of core
operations from period to period by removing these unusual or
infrequent items and certain non-cash amortization charges from our
operating results. webMethods also believes that these non-GAAP
measures enhance comparability of webMethods' results of core
operations to those of other enterprise software companies, to
non-GAAP operating results webMethods historically has reported, to
financial guidance provided by webMethods and to financial models
and expectations of certain investors and securities analysts. (1)
Non-GAAP financial measures exclude amortization of acquired
intangible asset charges of approximately $599,000 per quarter. (2)
Non-GAAP financial measures exclude amortization of deferred
warrant charges of approximately $661,0000 per quarter. (3)
Non-GAAP financial measures exclude restructuring costs of
approximately $431,000 in the September 2005 quarter and
approximately $2,756,000 in the September 2004 quarter (4) Non-GAAP
financial measures exclude impairment of equity investment in
private company of $1,057,000 in the September 2004 quarter. (5)
Non-GAAP financial measures include a provision for income taxes
assuming a 35% effective tax rate. Operating Margin was 3.7% on a
GAAP basis and 7.1% on a non-GAAP basis for the three months ended
September 30, 2005 and (6.7%) on a GAAP basis and 1.2% on a
non-GAAP basis for the three months ended September 30, 2004.
Operating Margin is the percentage derived by dividing operating
income by total revenue. Six Months Ended September 30, 2005 As As
Reported Adjustments* Adjusted Revenue License $37,857 $- $37,857
Professional services 23,009 - 23,009 Maintenance 36,037 - 36,037
Total revenue 96,903 - 96,903 Cost of revenue Amortization of
intangibles(1) 1,198 (1,198) - License 485 - 485 Professional
services and maintenance 27,035 - 27,035 Total cost of revenue
28,718 (1,198) 27,520 Gross profit 68,185 1,198 69,383 Operating
expenses Sales and marketing(2) 34,326 (1,322) 33,004 Research and
development 21,244 - 21,244 General and administrative 11,615 -
11,615 Restructuring costs(3) 719 (719) - Total operating expenses
67,904 (2,041) 65,863 Operating income (loss) 281 3,239 3,520
Interest income and other, net 2,148 - 2,148 Impairment of equity
investment in private company(4) - - - Net income (loss) before
taxes 2,429 3,239 5,668 Provision for income taxes(5) 385 1,599
1,984 Net income (loss) $2,044 $1,640 $3,684 Net income (loss) per
share Basic $0.07 $0.07 Fully Diluted $0.07 $0.07 Shares used in
computing per share amount Basic 53,492,483 53,492,483 Fully
Diluted 53,854,784 53,854,784 Six Months Ended September 30, 2004
As As Reported Adjustments* Adjusted Revenue License $38,657 $-
$38,657 Professional services 24,601 - 24,601 Maintenance 29,445 -
29,445 Total revenue 92,703 - 92,703 Cost of revenue Amortization
of intangibles 1,198 (1,198) - License 865 - 865 Professional
services and maintenance 28,553 - 28,553 Total cost of revenue
30,616 (1,198) 29,418 Gross profit 62,087 1,198 63,285 Operating
expenses Sales and marketing 42,362 (1,322) 41,040 Research and
development 21,870 - 21,870 General and administrative 9,941 -
9,941 Restructuring costs 2,756 (2,756) - In-process research and
development - - - Settlement of intellectual property matter - - -
Total operating expenses 76,929 (4,078) 72,851 Operating income
(loss) (14,842) 5,276 (9,566) Interest income and other, net 1,025
- 1,025 Impairment of equity investment in private company (1,057)
1,057 - Net income (loss) before taxes (14,874) 6,333 (8,541)
Provision for income taxes 69 - 69 Net income (loss) $(14,943)
$6,333 $(8,610) Net income (loss) per share Basic $(0.16) $(0.16)
Fully Diluted $(0.16) $(0.16) Shares used in computing per share
amount Basic 52,958,538 52,958,538 Fully Diluted 52,958,538
52,958,538 * webMethods' management uses non-GAAP measures to
better understand and manage operations and to evaluate the
performance of the company's core operations, in comparisons of the
company's historical results of core operations and in comparisons
to competitors' core operating results. webMethods' believes that
these non-GAAP measures are useful to investors in evaluating our
operating performance it allows investors and management to compare
the results of core operations from period to period by removing
these unusual or infrequent items and certain non-cash amortization
charges from our operating results. webMethods also believes that
these non-GAAP measures enhance comparability of webMethods'
results of core operations to those of other enterprise software
companies, to non-GAAP operating results webMethods historically
has reported, to financial guidance provided by webMethods and to
financial models and expectations of certain investors and
securities analysts. (1) Non-GAAP financial measures exclude
amortization of acquired intangible asset charges of approximately
$1,198,000 per six-month period. (2) Non-GAAP financial measures
exclude amortization of deferred warrant charges of approximately
$1,322,000 per six-month period. (3) Non-GAAP financial measures
exclude restructuring costs of approximately $719,000 for the six
months ending September 2005 and approximately $2,756,000 for the
six months ending September 2004. (4) Non-GAAP financial measures
exclude impairment of equity investment in private company of
$1,057,000 in the six months ended September 2004. (5) Non-GAAP
financial measures include a provision for income taxes assuming a
35% effective tax rate. Operating Margin was 0.3% on a GAAP basis
and 3.6% on a non-GAAP basis for the six months ended September 30,
2005 and (16.0%) on a GAAP basis and (10.3%) on a non-GAAP basis
for the six months ended September 30, 2004. DATASOURCE:
webMethods, Inc. CONTACT: Christopher Martin, Investor Relations,
+1-703-460-6609, , or John Conley, Public Relations,
+1-703-460-5996, , both of webMethods, Inc. Web site:
http://www.webmethods.com/
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