KFX Kofax

Kofax® Limited (NASDAQ:KFX) (LSE:KFX), a leading provider of smart process applications for the business critical First Mile™ of customer interactions, today provides unaudited IFRS quarterly financial statements for the fiscal years ended June 30, 2012 and 2013 and the quarter ended September 30, 2013 to assist investors in understanding the Company’s business and provide references for evaluating future performance. This information is being provided in response to increased interest from U.S. investors and analysts in more detailed historical financial results of the Company. These condensed, consolidated financial statements are unaudited and are intended to supplement the half year and full year statements previously published.

In addition, the Company has provided certain non-IFRS, or “adjusted,” financial measures as well as supplemental reconciliation data. Please refer to the discussion of non-IFRS financial measures and associated reconciliations in the statements for more information regarding the Company’s use of non-IFRS measures.

About Kofax

Kofax Limited is a leading provider of smart process applications for the business critical First Mile of customer interactions. These begin with an organization’s systems of engagement, which generate real time, information intensive communications from customers, and provide an essential connection to their systems of record, which are typically large scale, rigid enterprise applications and repositories not easily adapted to more contemporary technology. Success in the First Mile can dramatically improve an organization’s customer experience and greatly reduce operating costs, thus driving increased competitiveness, growth and profitability. Kofax software and solutions provide a rapid return on investment to more than 20,000 customers in financial services, insurance, government, healthcare, business process outsourcing and other markets. Kofax delivers these through its own sales and service organization, and a global network of more than 800 authorized partners in more than 75 countries throughout the Americas, EMEA and Asia Pacific. For more information, visit kofax.com.

©2014 Kofax Limited. Kofax is a registered trademark and First Mile is a trademark of Kofax Limited.

                                    Kofax Limited Unaudited Condensed Consolidated Income Statements ($ in thousands, except per share amounts)   Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014   Software licenses $ 24,257 $ 33,261 $ 21,936 $ 37,801 $ 22,132 $ 25,017 $ 26,422 $ 38,657 $ 24,444 Maintenance services 27,603 29,458 28,071 28,652 29,876 30,804 29,966 31,105 32,098 Professional services   6,650     7,291     8,685     8,816     8,127     7,883     7,933     8,396     8,870   Total revenue 58,510 70,010 58,692 75,269 60,135 63,704 64,321 78,158 65,412   Cost of software licenses 2,516 2,744 2,309 3,732 2,431 2,295 2,576 3,386 2,656 Cost of maintenance services 3,982 4,100 4,547 3,791 4,226 4,537 4,753 4,678 4,807 Cost of professional services 5,728 6,375 7,189 7,492 6,925 7,205 7,182 7,031 7,629 Research and development 8,282 8,250 8,677 8,595 8,471 8,433 9,010 8,772 9,077 Sales and marketing 24,427 24,220 24,244 23,401 24,485 23,720 24,565 25,439 28,039 General and administrative 10,039 10,602 9,304 9,151 9,328 9,907 9,082 8,969 9,189 Amortization of acquired intangible assets 889 1,016 1,477 1,808 1,607 1,619 1,587 1,894 2,224 Acquisition-related costs 363 1,411 2,153 1,943 1,438 1,505 1,600 139 2,104 Restructuring costs 43 4,733 (214 ) 355 − − − − − Other operating expenses, net   406     389     85     (211 )   1,179     678     417     121     311   Operating costs and expenses   56,675     63,840     59,771     60,057     60,090     59,899     60,772     60,429     66,036   Income/(loss) from operations 1,835 6,170 (1,079 ) 15,212 45 3,805 3,549 17,729 (624 ) Finance income 2,230 1,577 815 1,327 51 65 20 151 3,845 Finance expense   (114 )   (185 )   (158 )   (198 )   (173 )   (1,722 )   (2,901 )   (2,420 )   (156 ) Net finance income/(expense)   2,116     1,392     657     1,129     (122 )   (1,657 )   (2,881 )   (2,269 )   3,689  

Income/(loss) from continuing operations, before tax

3,951 7,562 (422 ) 16,341 (77 ) 2,148 668 15,460 3,065   Income tax expense 1,268 3,090 84 5,553 789 1,651 997 4,761 610   Discontinued operations 138 501 387 387 − − − − −

 

                 

Income/(loss) attributable to equity holders of the Parent

$ 2,545   $ 3,971     ($893 ) $ 10,401     ($866 ) $ 497     ($329 ) $ 10,699   $ 2,455     Basic earnings per share $ 0.03   $ 0.04     ($0.01 ) $ 0.13     ($0.01 ) $ 0.01     ($0.01 ) $ 0.13   $ 0.03     Diluted earnings per share $ 0.03   $ 0.04     ($0.01 ) $ 0.12     ($0.01 ) $ 0.01     ($0.01 ) $ 0.12   $ 0.03                                           Kofax Limited Unaudited Condensed Consolidated Statements of Financial Position ($ in thousands)   Q1-2012 Q2-2012 Q3-2012   Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Current assets Cash and cash equivalents $ 92,519 $ 62,344 $ 82,036 $ 81,122 $ 90,282 $ 87,031 $ 86,806 $ 93,413 $ 71,999 Trade receivables, net 41,948 64,230 45,084 59,521 47,549 48,438 51,116 60,929 43,994 Inventories 1,959 2,121 1,903 1,542 1,382 1,955 1,801 1,800 2,056 Deferred tax assets 5,259 5,715 890 4,864 4,660 810 515 2,024 746 Other current assets   15,278   15,604   16,384   10,151   11,970   12,038   9,800   8,657   10,746 Total current assets 156,963 150,014 146,297 157,200 155,843 150,272 150,038 166,823 129,541   Other non-current assets 7,616 8,423 5,513 5,285 5,227 4,822 3,998 3,671 3,510 Property and equipment 6,292 5,828 5,696 5,571 5,244 5,084 4,792 4,510 4,515 Deferred tax assets 11,098 10,715 11,448 10,363 11,893 11,585 12,253 14,350 24,226 Intangible assets   153,348   183,422   183,413   179,358   179,778   178,472   190,003   189,789   240,500 Assets classified as held for sale   −   414   414   −   −   −   −   −   − Total assets $ 335,317 $ 358,816 $ 352,781 $ 357,777 $ 357,985 $ 350,235 $ 361,084 $ 379,143 $ 402,292   Current liabilities Trade and other payables $ 33,623 $ 37,490 $ 32,190 $ 33,820 $ 33,270 $ 29,771 $ 37,726 $ 35,504 $ 36,555 Deferred income – current 47,796 54,273 58,459 58,508 56,615 57,219 61,980 62,955 64,124 Current tax liabilities 14,745 18,118 10,500 12,255 12,051 6,876 6,626 10,106 9,711 Provisions – current   6,657   11,098   10,656   9,609   7,416   8,103   9,175   8,397   11,682 Total current liabilities 102,821 120,979 111,805 114,192 109,352 101,969 115,507 116,962 122,072   Employee benefits 2,852 2,634 2,733 2,259 2,236 2,185 2,051 3,018 3,299 Deferred income – non-current 6,758 5,813 5,037 5,078 4,834 4,585 4,480 5,095 7,468 Deferred tax liabilities 14,319 17,172 16,791 14,112 13,189 13,081 11,986 14,607 19,918 Provisions – non-current   2,142   3,847   3,488   4,196   5,423   2,997   2,676   2,334   7,257 Total Liabilities 128,892 150,445 139,854 139,837 135,034 124,817 136,700 142,016 160,014   Total Shareholders’ equity   206,425   208,371   212,927   217,940   222,951   225,418   224,384   237,127   242,278   Total liabilities and Shareholders’ equity $ 335,317 $ 358,816 $ 352,781 $ 357,777 $ 357,985 $ 350,235 $ 361,084 $ 379,143 $ 402,292                                         Kofax Limited Unaudited Condensed Consolidated Statements of Cash Flows ($ in thousands)   Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Cash flows from operating activities Income from continuing operations before tax $ 3,951 $ 7,562 ($422 ) $ 16,341 ($77 ) $ 2,148 $ 668 $ 15,460 $ 3,065 Loss from discontinued operations before tax   (138 )   (501 )   (387 )   (462 )   −     −     −     −     −   Income from operations before tax 3,813 7,061 (809 ) 15,879 (77 ) 2,148 668 15,460 3,065 Adj to reconcile profit before tax to net cash flows: Finance income (2,230 ) (1,577 ) (815 ) (1,327 ) (51 ) (65 ) (20 ) (151 ) (3,845 ) Finance expense 114 185 158 198 173 1,722 2,901 2,420 156 Depreciation and amortization 2,515 2,576 2,944 3,068 3,190 3,084 3,088 3,510 3,635 Share-based payment expense 1,057 1,122 881 845 362 829 (294 ) 496 749 Gain on disposal of property and equipment − − − (153 ) − − − − − Changes in operating assets and liabilities Trade receivables 10,016 (20,188 ) 20,101 (16,789 ) 12,648 (1,098 ) (3,354 ) (9,577 ) 20,173 Other assets (247 ) (7,299 ) 4,407 5,173 (976 ) (615 ) 3,232 (789 ) (1,184 ) Trade and other payables (12,300 ) 10,819 (7,710 ) 364 (1,962 ) (3,931 ) 8,528 (2,474 ) (5,719 ) Deferred income (2,917 ) 5,640 2,651 657 (2,930 ) 52 5,064 2,043 1,170 Provisions (214 ) 4,017 1,667 926 922 1,425 (3,506 ) 40 1,608 Payments under restructuring – personnel (397 ) (594 ) (2,302 ) (38 ) (840 ) (27 ) 6 (2 ) (100 ) Income taxes paid   (437 )   153     (2,616 )   (9,272 )   (1,851 )   (2,927 )   (2,385 )   (3,586 )   (1,302 ) Net cash inflow from operating activities (1,227 ) 1,915 18,557 (469 ) 8,608 597 13,928 7,390 18,406     Cash flows from investing activities Purchase of property and equipment, licenses and similar rights (866 ) (646 ) (709 ) (986 ) (588 ) (645 ) (552 ) (1,265 ) (1,070 ) Disposal of property and equipment, licenses and similar rights 8 33 33 746 1 − (1 ) − − Acquisition of subsidiaries, net cash acquired − (29,018 ) (296 ) (1,027 ) (1,402 ) (3,097 ) (12,105 ) (155 ) (40,141 ) Purchase of financial instrument − (502 ) 2 − − − − − − Proceeds from sale of discontinued ops. 1,023 (1,023 ) − 5,074 − 600 3 − − Interest received   28     −       145     339     46     61     23     1     29   Net cash outflow from investing activities 193 (31,156 ) (825 ) 4,146 (1,944 ) (3,081 ) (12,631 ) (1,419 ) (41,182 )     Cash flows from financing activities Issue of share capital 43 131 649 584 1,513 232 186 (65 ) 94 Decrease in long term borrowings (279 ) − 176 − − − − − − Purchases of and proceeds from employee benefit shares − − − (2,868 ) − (959 ) 6 551 230 Interest paid   (113 )   (93 )   163     (385 )   (51 )   (170 )   (162 )   38     (137 ) Net cash inflow from financing activities (349 ) 38 988 (2,669 ) 1,462 (897 ) 30 524 187     Net increase/(decrease) in cash and cash equivalents   (1,383 )   (29,203 )   18,720     1,008     8,127     (3,381 )   1,327     6,495     (22,589 ) Cash and cash equivalents at start of the period 98,271 92,519 62,344 82,036 81,122 90,282 87,031 86,806 93,413 Exchange rate effects   (4,369 )   (972 )   972     (1,922 )   1,034     129     (1,552 )   112     1,175   Cash and cash equivalents at the end of the period $ 92,519   $ 62,344   $ 82,036   $ 81,122   $ 90,282   $ 87,031   $ 86,806   $ 93,413   $ 71,999      

Discussion of Non-IFRS Measures

Management uses financial measures, both IFRS and non-IFRS, in analyzing and assessing the overall performance of the business and for making operational decisions. We have provided and believe that the non-IFRS financial measures and supplemental reconciliation to IFRS financial measures are useful to investors and other users of our financial statements because the non-IFRS financial measures may be used as additional tools to compare business performance across peer companies, periods and financial markets.

While we use non-IFRS measures as a tool to enhance our understanding of certain aspects of our financial performance, we do not believe that these non-IFRS measures are a substitute for, or are superior to, the information provided by IFRS results. As such, the presentation of non-IFRS measures is not intended to be considered in isolation or as a substitute for any measure prepared in accordance with IFRS. The primary limitations associated with the use of non-IFRS measures as compared to IFRS results are that non-IFRS measures may not be comparable to similarly titled measures used by other companies in our industry and that non-IFRS measures may exclude financial information that some investors may consider important in evaluating our performance. We compensate for these limitations by providing disclosure of the differences between non-IFRS measures and IFRS results, including providing a reconciliation of each non-IFRS measure to IFRS results, in order to enable investors to perform their own analysis of our operating results.

Non-IFRS Revenue - We defined non-IFRS revenue as revenue, as reported under IFRS, increased to include revenue that is associated with our historic acquisitions that has been excluded from reported results for a given period due to the effects of purchase accounting. In accordance with IFRS purchase accounting, an acquired company’s deferred revenue at the date of acquisition is subject to a fair value adjustment which reduces the deferred amount and revenues recognized subsequent to an acquisition. We include non-IFRS revenue to allow for more complete comparisons to the financial results of our historical operations, forward-looking guidance and the financial results of peer companies. We believe these adjustments are useful to management and investors as a measure of the ongoing performance of the business. Additionally, although acquisition-related revenue adjustments are non-recurring, we may incur similar adjustments in connection with future acquisitions.

Non-IFRS Income from Operations - We define non-IFRS income from operations as income from operations, as reported under IFRS, excluding the effect of acquisition fair value adjustment to revenue, share-based payment expense, depreciation expense, amortization of acquired intangible assets, acquisition-related costs, restructuring costs and other operating expense, net. Share-based payment expense, depreciation expense and amortization of acquired intangible assets in our non-IFRS income from operations reconciliation represent non-cash charges which are not considered by management in evaluating our operating performance. Acquisition-related costs consist of: (i) costs directly attributable to our acquisition strategy and the evaluation, consummation and integration of our acquisitions (composed substantially of professional services fees including legal, accounting and other consultants and to a lesser degree to our personnel whose responsibilities are devoted to acquisition activities), and (ii) transition compensation costs (composed substantially of contingent payments for shares that are treated as compensation expense and retention payments that are anticipated to become payable to employees, as well as severance payments to employees whose positions were made redundant). These acquisition-related costs are not considered to be related to the organic continuing operations of the acquired businesses and are generally not relevant to assessing or estimating the long-term performance of the acquired assets. Restructuring costs are not considered in assessing our performance as we have not generally incurred such costs for our continuing operations. Other operating expense, net represents items that are not necessarily related to our recurring operations and which therefore are not, under IFRS, included in other expense lines. Accordingly, we exclude those amounts when assessing non-IFRS income from operations. At times when we are communicating with our shareholders, analysts and other parties we refer to non-IFRS income from operations as adjusted EBITDA.

We assess non-IFRS income from operations as a percentage of total non-IFRS revenue and by doing so, we are able to evaluate our relative performance of our revenue growth compared to the expense growth for those items included in non-IFRS income from operations. This measure allows management and our Board of Directors to compare our performance against that of other companies in our industry that may be of different sizes.

Adjusted Cash Flows from Operations - We define adjusted cash flows from operations as net cash inflows from operating activities, as reported under IFRS, adjusted for income taxes paid or refunded and payments under restructurings. Income tax payments paid/(refunded) is included in this reconciliation as the timing of cash payments and receipts can vary significantly from year-to-year based on a number of factors, including the influence of acquisitions on our consolidated tax attributes. Payments for restructurings relate to a specific activity that is not part of ongoing operations.

Adjusted diluted earnings per share - We define adjusted diluted earnings per share as diluted earnings per share, as reported under IFRS, adjusted by certain items that are also excluded from our non-IFRS income from operations and which are discussed above. The most comparable IFRS metrics, ‘income (loss) from continuing operations, after tax’ and ‘earnings per share – diluted,’ also include the reconciling items finance income (expense), net, and the impacts of income taxes on each of the other reconciling items. Therefore, we include this non-IFRS measure in order to provide a more complete comparison of our earnings per share from one period to another.

                                    Kofax Limited Non-IFRS Measures ($ in thousands, except per share amounts)   Acquisition Fair Value Adjustment to Revenue   Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Software license $ 124 $ 122 $ 73 $ 47 $ 43 $ 42 $ 39 $ 32 $ 1,515 Maintenance service 143 326 627 412 − 112 21 72 307 Professional service   −     −     −     −     −     −     −     −     314   Total fair value adjustment to revenue $ 267   $ 448   $ 700   $ 459   $ 43   $ 154   $ 60   $ 104   $ 2,136     Non-IFRS Software License Software License $ 24,257 $ 33,261 $ 21,936 $ 37,801 $ 22,132 $ 25,017 $ 26,422 $ 38,657 $ 24,444 Acquisition Fair Value Adjustment   124     122     73     47     43     42     39     32     1,515   Total Non-IFRS Software License $ 24,381   $ 33,383   $ 22,009   $ 37,848   $ 22,175   $ 25,059   $ 26,461   $ 38,689   $ 25,959     Non-IFRS Maintenance Services Maintenance Services $ 27,603 $ 29,458 $ 28,071 $ 28,652 $ 29,876 $ 30,804 $ 29,966 $ 31,105 $ 32,098 Acquisition Fair Value Adjustment   143     326     627     412     −     112     21     72     307   Total Non-IFRS Maintenance Services $ 27,746   $ 29,784   $ 28,698   $ 29,064   $ 29,876   $ 30,916   $ 29,987   $ 31,177   $ 32,405     Non-IFRS Professional Services Professional Services $ 6,650 $ 7,291 $ 8,685 $ 8,816 $ 8,127 $ 7,883 $ 7,933 $ 8,396 $ 8,870 Acquisition Fair Value Adjustment   −     −     −     −     −     −     −     −     314   Total Non-IFRS Professional Services $ 6,650   $ 7,291   $ 8,685   $ 8,816   $ 8,127   $ 7,883   $ 7,933   $ 8,396   $ 9,184     Non-IFRS Total Revenue Total Revenue $ 58,510 $ 70,010 $ 58,692 $ 75,269 $ 60,135 $ 63,704 $ 64,321 $ 78,158 $ 65,412 Acquisition Fair Value Adjustment   267     448     700     459     43     154     60     104     2,136   Total Non-IFRS Revenue $ 58,777   $ 70,458   $ 59,392   $ 75,728   $ 60,178   $ 63,858   $ 64,381   $ 78,262   $ 67,548       Non-IFRS Income from Operations   Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Income from operations $ 1,835 $ 6,170 ($1,079 ) $ 15,212 $ 45 $ 3,805 $ 3,549 $ 17,729 ($624 ) Acquisition fair value adjustment to revenue 267 448 700 459 43 154 60 104 2,136 Share-based payment expense 1,057 1,122 881 845 362 829 (294 ) 496 749 Depreciation and amortization expense 1,656 1,530 1,433 1,294 1,583 1,465 1,501 1,460 1,383 Amortization of acquired intangible assets 889 1,016 1,477 1,808 1,607 1,619 1,587 1,894 2,224 Acquisition-related costs 363 1,411 2,097 1,887 1,438 1,505 1,600 139 2,104 Restructuring costs 43 4,733 (214 ) 355 − − − − − Other operating expenses, net   406     389     85     (211 )   1,179     678     417     121     311   Non-IFRS income from operations $ 6,516   $ 16,819   $ 5,380   $ 21,649   $ 6,257   $ 10,055   $ 8,420   $ 21,943   $ 8,283       Adjusted Diluted Earnings per Share   Q1-2012 Q2-2012   Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Net income $ 2,545 $ 3,971 ($893 ) $ 10,401 ($866 ) $ 497 ($329 ) $ 10,699 $ 2,455 Acquisition fair value adjustment to revenue 267 448 700 459 43 154 60 104 2,136 Share-based payment expense 1,057 1,122 881 845 362 829 (294 ) 496 749 Amortization of acquired intangible assets 889 1,016 1,477 1,808 1,607 1,619 1,587 1,894 2,224 Acquisition-related costs 363 1,411 2,097 1,887 1,438 1,505 1,600 139 2,104 Restructuring costs 43 4,733 (214 ) 355 − − − − − Net finance, other income and expense, net (1,710 ) (1,003 ) (572 ) (1,340 ) 1,301 2,335 3,298 2,390 (3,378 ) Tax effect of above adjustments   (245 )   (1,784 )   (416 )   (879 )   (753 )   (1,126 )   (990 )   (1,431 )   (2,090 ) Adjusted net income $ 3,209   $ 9,914   $ 3,060   $ 13,536   $ 3,132   $ 5,813   $ 4,932   $ 14,291   $ 4,200   Adjusted diluted earnings per share   0.04     0.11     0.03     0.16     0.04     0.07     0.05     0.16     0.05   Diluted shares   90,287     88,895     88,468     88,848     88,431     88,921     88,562     89,259     90,351       Reconciliation of Adjusted Cash Flow from Operations   Q1-2012 Q2-2012   Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Cash inflows/(outflows) from operations ($1,227 ) $ 1,915 $ 18,557 ($469 ) $ 8,608 $ 597 $ 13,928 $ 7,390 $ 18,406 Income taxes (paid)/received (437 ) 153 (2,616 ) (9,272 ) (1,851 ) (2,927 ) (2,385 ) (3,586 ) (1,302 ) Payments under restructuring   (397 )   (594 )   (2,302 )   (38 )   (840 )   (27 )   6     (2 )   (100 ) Adjusted cash inflows/(outflows) from operations   (393 )   2,356     23,475     8,841     11,299     3,551     16,307     10,978     19,808                                           Kofax Limited Non-IFRS Measures ($ in thousands) Income Statements - non-IFRS   Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Non-IFRS Software licenses $ 24,381 $ 33,383 $ 22,009 $ 37,848 $ 22,175 $ 25,059 $ 26,461 $ 38,689 $ 25,959 Non-IFRS Maintenance services 27,746 29,784 28,698 29,064 29,876 30,916 29,987 31,177 32,405 Non-IFRS Professional services   6,650   7,291   8,685   8,816   8,127   7,883   7,933   8,396   9,184 Non-IFRS Total revenue 58,777 70,458 59,392 75,728 60,178 63,858 64,381 78,262 67,548   Cost of software licenses (1) 2,495 2,726 2,293 3,718 2,413 2,279 2,560 3,371 2,642 Cost of maintenance services (1) 3,832 3,961 4,413 3,671 4,072 4,397 4,611 4,524 4,663 Cost of professional services (1) 5,475 6,114 6,900 7,237 6,631 6,945 6,928 6,763 7,384 Research and development (1) 7,722 7,783 8,235 8,176 7,976 7,902 8,487 8,371 8,527 Sales and marketing (1) 23,496 23,292 23,488 22,698 23,936 22,974 24,374 24,601 27,259 General and administrative (1)   9,241   9,763   8,683   8,579   8,893   9,306   9,001   8,689   8,790 Non-IFRS operating costs and expenses 52,261 53,639 54,012 54,079 53,921 53,803 55,961 56,319 59,265   Non-IFRS income from operations $ 6,516 $ 16,819 $ 5,380 $ 21,649 $ 6,257 $ 10,055 $ 8,420 $ 21,943 $ 8,283  

(1)

   

Excludes depreciation, amortization and share based payment expenses

                                        Kofax Limited Supplemental Schedules ($ in thousands)   Depreciation and Amortization Expense Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Cost of software license $ 21 $ 18 $ 16 $ 14 $ 18 $ 16 $ 16 $ 15 $ 14 Cost of maintenance service 150 139 134 120 154 140 142 140 130 Cost of professional service 246 249 281 249 293 260 253 242 220 Research and development 431 402 364 343 419 402 425 430 410 Sales and marketing 544 481 419 380 462 423 440 420 410 General and administrative   264   241   219   188   237   224   225     213     199 Total depreciation expense $ 1,656 $ 1,530 $ 1,433 $ 1,294 $ 1,583 $ 1,465 $ 1,501   $ 1,460   $ 1,383     Share Based Payment Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Cost of software license $ − $ − $ − $ − $ − $ − $ − $ − $ − Cost of maintenance service − − − − − − − 14 14 Cost of professional service 7 12 8 6 1 − 1 26 25 Research and development 129 65 78 76 76 129 98 (29 ) 140 Sales and marketing 387 447 337 323 87 323 (249 ) 418 370 General and administrative 534 598 401 385 198 377 (144 ) 67 200 Acquisition-related costs   −   −   57   55   −   −   −     −     − Total share based payment $ 1,057 $ 1,122 $ 881 $ 845 $ 362 $ 829   ($294 ) $ 496   $ 749  

Source: Kofax

Media Contacts:Kofax LimitedColleen EdwardsVice President, Corporate Communications+1 (949) 783-1582colleen.edwards@kofax.comorInvestor Contacts:MKR Group Inc.Todd Kehrli+1 (949) 468-2300kfx@mkr-group.comorFTI ConsultingSophie McMillan / Elodie Castagna+44 (0) 20 7831 3113kofax@fticonsulting.com