Descartes Reports Fiscal 2010 Fourth Quarter and Year End
Financial Results
GlobeNewswire
2010-03-10
23% Annual Increase in Quarterly Services Revenues Drives Record
Quarterly and Annual Operating Performance
WATERLOO, Ontario, March 10, 2010 (GLOBE NEWSWIRE) -- Descartes Systems
Group (TSX:DSG) (Nasdaq:DSGX), a federated global logistics network,
announced financial results for its fiscal 2010 fourth quarter (Q4FY10)
and year (FY10) ended January 31, 2010. All financial results
referenced are in United States (U.S.) currency and, unless otherwise
indicated, are determined in accordance with U.S. Generally Accepted
Accounting Principles (GAAP).
Q4FY10 Financial Results
As described in more detail below, key financial highlights for
Descartes in Q4FY10 included:
-- Revenues of $18.9 million, up $3.2 million or 20% from $15.7 million in
the fourth quarter of last fiscal year (Q4FY09) and consistent with
$18.9 million in the previous quarter (Q3FY10);
-- Services revenues of $17.7 million, or 94% of total revenues. Q4FY10
services revenues were up 23% from $14.4 million in Q4FY09 and down 2%
from $18.0 million in Q3FY10;
-- Gross margin of 68%, consistent with 68% in Q4FY09 and compared to 69%
in Q3FY10;
-- Net income of $10.3 million, compared to $15.4 million in Q4FY09 and
$1.0 million in Q3FY10. Net income in Q4FY10 and Q4FY09 included
non-cash, deferred income tax recoveries of $10.9 million and $13.1
million, respectively, as Descartes recorded deferred tax assets for
prior period tax losses that are anticipated to be applied against
taxable income earned in future periods;
-- Earnings per share on a diluted basis of $0.17, compared to $0.29 in
Q4FY09 and $0.02 in Q3FY10;
-- Days sales outstanding of 47 days, down 3 days from 50 days in Q4FY09,
and compared to 48 days last quarter;
-- Adjusted Net Income of $5.2 million, up 13% from $4.6 million in Q4FY09
and consistent with $5.2 million in Q3FY10. Adjusted Net Income as a
percentage of revenues was 28% this quarter, compared to 29% in Q4FY09
and consistent with 28% in Q3FY10. Adjusted Net Income per share on a
diluted basis for Q4FY10 was $0.08, compared to $0.09 in both Q4FY09 and
Q3FY10.
Adjusted Net Income is a non-GAAP financial measure provided as a
complement to financial results presented in accordance with GAAP. We
define Adjusted Net Income as earnings before interest, taxes,
depreciation and amortization (for which we include amortization of
intangible assets, contingent acquisition consideration, deferred
compensation, stock-based compensation and related taxes),
acquisition-related expenses and restructuring charges. These items are
considered by management to be outside Descartes' ongoing operational
results. Adjusted Net Income per diluted share is determined by
dividing Adjusted Net Income by our shares outstanding on a diluted
basis. A reconciliation of Adjusted Net Income to net income determined
in accordance with GAAP and of Adjusted Net Income per diluted share to
net income per diluted share determined in accordance with GAAP is
provided later in this release.
The following table summarizes Descartes' results in the categories
specified below over the past 5 fiscal quarters (unaudited, dollar
amounts in millions):
----------------------------------------------------------------------------
Q4 Q3 Q2 Q1 Q4
FY10 FY10 FY10 FY10 FY09
--------- -------- -------- -------- ---------
Revenues 18.9 18.9 18.6 17.4 15.7
Services revenues 17.7 18.0 17.1 16.8 14.4
Gross margin 68% 69% 68% 70% 68%
Net income* 10.3 1.0 0.8 2.2 15.4
Adjusted Net Income 5.2 5.2 5.2 4.7 4.6
Adjusted Net Income as a
% of revenues 28% 28% 28% 27% 29%
Adjusted Net Income per
diluted share 0.08 0.09 0.10 0.09 0.09
DSOs (days) 47 48 48 49 50
----------------------------------------------------------------------------
* Net income was positively impacted by net non-cash deferred income tax
recoveries of $10.9 million, $0.7 million and $13.1 million in Q4FY10,
Q1FY10 and Q4FY09, respectively. Net income was also impacted by net
non-cash deferred income tax expenses as tax losses were applied to taxable
income in the amounts of $1.5 million and $1.6 million in Q3FY10 and
Q2FY10, respectively. Net income in Q4FY10 was also impacted by $3.0
million in non-cash stock-based compensation expense, as further described
herein, compared to $0.2 million, $0.1 million, $0.1 million and $0.2
million in Q3FY10, Q2FY10, Q1FY10 and Q4FY09, respectively.
Total revenues of $18.9 million in Q4FY10 were comprised of $17.7
million (94%) in services revenues and $1.2 million (6%) in license
revenues. Q4FY10 services revenues were up 23% from $14.4 million in
Q4FY09 and compared to $18.0 million in Q3FY10.
Geographically, $11.1 million of revenues (59%) were generated in the
U.S., $4.0 million (21%) in Europe, Middle East and Africa ("EMEA"),
$2.6 million (14%) in Canada, $1.0 million (5%) in the Asia Pacific
region and $0.3 million (1%) in the Americas, excluding the U.S. and
Canada. This geographic distribution is determined based on location of
customer, as opposed to prior periods where it was determined based on
Descartes' geographic area of operation.
"Our diligent attention to our operating model has delivered positive
results," said Stephanie Ratza, CFO at Descartes. "We maintain a solid
balance sheet with a healthy cash position and will continue to focus
closely on our operations while we execute on our consolidation
strategy."
"There is a new immediacy for our customers; the world has changed and
our customers need to change with it. We have, and will, continue to
work with our customers to provide solutions that allow them to save
money now and help them comply with regulatory requirements for
shipments through our federated Global Logistics Network and
value-added services," said Art Mesher, Descartes' CEO. "Our
customer-focused strategy and proactive approach to solving logistics
problems has put time on our customers' side and our side as we
collectively advance to making the world a better place through
logistics."
FY10 Financial Results
As described in more detail below, key financial highlights for
Descartes in FY10 included the following:
-- Revenues of $73.8 million, up $7.8 million or 12% from $66.0 million in
Descartes' fiscal year ended January 31, 2009 (FY09);
-- Services revenues of $69.6 million, or 94% of total revenues, up 14%
from $61.0 million in FY09;
-- Gross margin of 69%, up from 66% in the same period a year ago;
-- Net income of $14.3 million compared to $20.2 million in FY09. Net
income in FY10 and FY09 included net non-cash deferred income tax
recoveries of $8.5 million and $11.7 million, respectively, as Descartes
recorded deferred tax assets for prior period tax losses that are
anticipated to be applied against taxable income earned in future
periods;
-- Earnings per share on a diluted basis of $0.25 per share compared to
$0.38 per share in FY09; and
-- Adjusted Net Income of $20.3 million, an increase of $3.3 million or 19%
from Adjusted Net Income of $17.0 million in FY09. Adjusted Net Income
as a percentage of revenues was 28% in FY10 compared to 26% in FY09.
Adjusted Net Income is a non-GAAP financial measure provided as a
complement to the GAAP financial measures in this release. A
reconciliation of Adjusted Net Income to net income determined in
accordance with GAAP is provided later in this release.
The following table summarizes Descartes' results in the categories
specified below over the past two fiscal years (unaudited, dollar
amounts in millions, except per share amounts):
FY10 FY09
--------- ---------
Revenues 73.8 66.0
Services revenues 69.6 61.0
Net income* 14.3 20.2
Diluted EPS* 0.25 0.38
Adjusted Net Income 20.3 17.0
Adjusted Net Income as a
% of revenues 28% 26%
* Net income and earnings per share on a
diluted basis in FY10 and FY09 were
positively impacted by net non-cash deferred
income tax recoveries of $8.5 million and
$11.7 million, respectively. Net income in
FY10 was also impacted by $3.4 million in
non-cash stock-based compensation expense, as
further described herein, compared to $0.5
million in FY09.
Total revenues of $73.8 million in FY10 were comprised of $69.6 million
in services revenues and $4.2 million in license revenues. As a
percentage of total revenues, services revenues were 94%, compared to
92% in FY09, with the balance of the revenues in each period being
license revenues.
Geographically, $44.5 million of revenues (60%) were generated in the
U.S., $15.8 million (21%) in EMEA, $9.1 million (12%) in Canada, $3.6
million (5%) in the Asia Pacific region and $0.8 million (1%) in the
Americas, excluding the U.S. and Canada. This geographic distribution
is determined based on location of customer, as opposed to prior
periods where it was determined based on Descartes' geographic area of
operation.
Cash Position at January 31, 2010
As at January 31, 2010, Descartes had $94.6 million in cash comprised
of $89.5 million in cash and cash equivalents and $5.1 million in
short-term investments. As at January 31, 2009, we had $57.6 million in
cash and cash equivalents and short-term investments.
The table set forth below provides a summary of cash flows for FY10 in
millions of dollars:
Cash, cash equivalents and short-term investments, February 1,
2009 57.6
------
Cash provided by operating activities 16.5
Additions to capital assets (1.6)
Acquisition of subsidiaries and acquisition-related costs (15.0)
Issuance of common shares, net of issue costs 40.3
Effect of foreign exchange rates on cash and cash equivalents (3.2)
------
Net change in cash, cash equivalents and short-term investments 37.0
------
Cash, cash equivalents and short-term investments, January 31,
2010 94.6
Non-Cash Stock-based Compensation Expense
In Q4FY10, we reviewed our stock option forfeiture rate assumptions
used in connection with expensing stock options. We changed our
forfeiture rate assumptions used in FY10 after considering various
factors, including our recent stock price increase and evidence of the
decline in the attrition rate of employees who had been granted stock
options. In addition, we reviewed the estimated forfeiture rate we used
in each of the two previous fiscal years, determined to adjust it to
the actual forfeiture rate over these periods and determined that the
aggregate impact of $1.1 million was immaterial to these periods and to
FY10. We accounted for these changes in estimated forfeiture rates and
the corresponding reconciliation to actual forfeitures in Q4FY10,
resulting in $3.0 million in non-cash stock-based compensation expense
in Q4FY10.
Bid To Acquire Porthus
On February 22, 2010, Descartes, through a wholly-owned subsidiary,
commenced a conditional voluntary cash bid (the "Bid") to acquire all
the shares of Zemblaz NV (NYSE Alternext Brussels:ALPTH) (formerly
denominated Porthus NV, "Porthus"). Porthus is a leading provider of
global trade management solutions.
Descartes' offer is a cash bid of EUR 12.50 per share, EUR 12.33 per
warrant issued pursuant to Porthus' April 21, 2000 warrant plan and EUR
20.76 per warrant issued pursuant to Porthus' November 7, 2001 warrant
plan. As of December 11, 2009, Porthus had 2,348,790 outstanding shares
and 23,759 warrants convertible into 71,277 additional shares.
Depending on the number of warrants exercised for shares prior to
closing, the aggregate consideration payable by Descartes as part of
the Bid is expected to be between approximately EUR 29.7 million
(equivalent to approximately USD 40.4 million at March 9, 2010) and EUR
30.3 million (equivalent to approximately USD 41.2 million at March 9,
2010).
The Bid is conditional on Descartes acquiring 95% of Porthus'
outstanding shares and there being no material adverse change to
Porthus or its business prior to closing. If Descartes acquires, as a
consequence of the Bid, 95% or more of Porthus' shares, assuming all
other conditions are satisfied, then Descartes intends to proceed with
a buy-out offer of the remaining shares on the same terms as the Bid.
Certain shareholders of Porthus, holding 51.8% of the shares of
Porthus, including the reference shareholder, Saffelberg Investments,
and all Executive Management, have committed to support the Bid and
tender their shares and warrants to Descartes in the Bid.
The results of the Bid will be announced by March 19, 2010.
Conference Call
Members of Descartes' executive management team are scheduled to host a
conference call to discuss the company's financial results and business
prospects at 8:00 a.m. EST on Wednesday March 10th. Designated numbers
are (800) 699-5854 for North America or +1 (212) 231-2932 for
International. The company simultaneously has scheduled an audio web
cast on the Descartes Web site at www.descartes.com/company/investors.
Phone conference dial-in or web cast log-in is required approximately
10 minutes beforehand.
Replays of the conference call will be available in two formats and
accessible for 24 hours after the call's completion by dialing (800)
633-8284 or +1 (402) 977-9140 and using passcode number 21457849. An
archived replay of the web cast will be available at
www.descartes.com/company/investors.
About Descartes
Descartes (TSX:DSG) (Nasdaq:DSGX), helps organizations with
logistics-intensive businesses to save money by improving the
productivity and performance of their operations. Underlying Descartes'
offerings is the Descartes Global Logistics Network (GLN), one of the
world's most extensive multi-modal business application networks. As a
federated platform, the Descartes GLN combines with component-based
'nano' sized applications to provide messaging services between
logistics trading partners, shipment management services to help manage
third party carriers and private fleet management services for
organizations of all sizes. Descartes' solutions and services deliver
results by enabling organizations around the world to reduce
administrative costs, billing cycles, fleet size, contract carrier
costs, and mileage driven; improve pickup and delivery reliability; and
optimize working capital through fleet visibility. Descartes' hosted,
transactional and packaged solutions deliver repeatable, measurable
results and fast time-to-value. Descartes customers include an
estimated 1,600 ground carriers and more than 90 airlines, 30 ocean
carriers, 900 freight forwarders and third-party providers of logistics
services, and hundreds of manufacturers, retailers, distributors,
private fleet owners and regulatory agencies. The company has more than
400 employees and is based in Waterloo, Ontario, with operations in
Atlanta, Copenhagen, Heverlee, Pittsburgh, Ottawa, Montreal, Miami,
Washington D.C., Derby, London, Silver Spring, Stockholm, Suzhou,
Shanghai, Tokyo, and Toronto. For more information, visit
www.descartes.com.
The Descartes Systems Group logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=4065
Safe Harbor Statement
This release contains forward-looking information within the meaning of
applicable securities laws ("forward-looking statements") that relate
to the positioning of Descartes to provide value to customers and
shareholders; its execution of its consolidation strategy; its
acquisition of Porthus; and other matters. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors and assumptions that may cause the actual results, performance
or achievements of Descartes, or developments in Descartes' business or
industry, to differ materially from the anticipated results,
performance or achievements or developments expressed or implied by
such forward-looking statements. Such factors include, but are not
limited to, the impact on Descartes' business of the global economic
downturn; Descartes' ability to continue to align operating expenses to
visible and recurring revenues; the impact of foreign currency exchange
rates; Descartes' ability to successfully execute on acquisitions and
to integrate acquired businesses and assets, and to predict expenses
associated with and revenues from the acquisitions; Descartes' ability
to retain or obtain sufficient capital to execute on its business
strategy, including its acquisition strategy; the ability to attract
and retain key personnel and the ability to manage the departure of key
personnel; departures of key customers; disruptions in the movement of
freight; the potential for future goodwill or intangible impairment as
a result of other-than-temporary decreases in Descartes' market
capitalization; the satisfaction of applicable closing conditions in
the Porthus transaction; and other factors and assumptions discussed in
the section entitled, "Certain Factors That May Affect Future Results"
in documents filed with the Securities and Exchange Commission, the
Ontario Securities Commission and other securities commissions across
Canada, including Descartes' Annual Report on Form 40-F for FY09. If
any such risks actually occur, they could materially adversely affect
our business, financial condition or results of operations. In that
case, the trading price of our common shares could decline, perhaps
materially. Readers are cautioned not to place undue reliance upon any
such forward-looking statements, which speak only as of the date made.
Forward-looking statements are provided for the purpose of providing
information about management's current expectations and plans relating
to the future. Readers are cautioned that such information may not be
appropriate for other purposes. We do not undertake or accept any
obligation or undertaking to release publicly any updates or revisions
to any forward-looking statements to reflect any change in our
expectations or any change in events, conditions or circumstances on
which any such statement is based, except as required by law.
Reconciliation of Non-GAAP Financial Measure - Adjusted Net Income
We prepare and release quarterly unaudited and annual audited financial
statements prepared in accordance with GAAP. We also disclose and
discuss certain non-GAAP financial information, used to evaluate our
performance, in this and other earnings releases and investor
conference calls as a complement to results provided in accordance with
GAAP. We believe that current shareholders and potential investors in
our company use non-GAAP financial measures, such as Adjusted Net
Income, in making investment decisions about our company and measuring
our operational results.
The term "Adjusted Net Income" refers to a financial measure that we
define as earnings before interest, taxes, depreciation and
amortization (for which we include amortization of intangible assets,
contingent acquisition consideration, deferred compensation,
stock-based compensation and related taxes), acquisition-related
expenses and restructuring charges. For fiscal periods ended on or
before January 31, 2009, costs and expenses of acquisitions, as well as
certain costs of restructuring/integrating acquired companies, were
capitalized as part of the purchase price for each acquisition.
Effective for Descartes' fiscal year ended January 31, 2010, GAAP has
changed to require that such costs be expensed in the period incurred
rather than recorded as part of goodwill. Management considers
acquisition-related and restructuring activities to be outside the
scope of Descartes' ongoing operations and the related expenses are not
used by management to measure operations. Accordingly, these expenses
arising as a result of this accounting change are excluded from
Adjusted Net Income, which we reference to both measure our operations
and as a basis of comparison of our operations from period-to-period.
Adjusted Net Income per diluted share is determined by dividing
Adjusted Net Income by our shares outstanding on a diluted basis.
Management believes that investors and financial analysts measure our
business on the same basis, and we are providing the Adjusted Net
Income financial metric to assist in this evaluation and to provide a
higher level of transparency into how we measure our own business.
However, Adjusted Net Income is a non-GAAP financial measure and may
not be comparable to similarly titled measures reported by other
companies. Adjusted Net Income should not be construed as a substitute
for net income determined in accordance with GAAP and the use of
Adjusted Net Income does have limitations. In particular, we have
completed nine acquisition transactions over the past three fiscal
years (including two acquisition transactions in the first quarter of
FY10), have commenced our Bid to acquire Porthus, and may complete
acquisition transactions in the future that will result in
acquisition-related expenses and restructuring charges. As these
acquisition-related expenses and restructuring charges may continue,
some investors may consider these charges and expenses as a recurring
part of operations rather than non-recurring charges and expenses that
are not part of operations.
The table below reconciles Adjusted Net Income to net income reported
in our unaudited Consolidated Statements of Operations for Q4FY10,
Q3FY10, Q2FY10, Q1FY10 and Q4FY09, which we believe is the most
directly comparable GAAP measure.
(US dollars in millions) Q4FY10 Q3FY10 Q2FY10 Q1FY10 Q4FY09
Net income, as reported on
Consolidated Statements of
Operations 10.3 1.0 0.8 2.2 15.4
Adjustments to reconcile to
Adjusted Net Income:
Investment income (0.1) (0.1) (0.1) (0.1) (0.2)
Income tax expense (recovery) (11.0) 1.8 2.0 (0.4) (13.1)
Depreciation expense 0.6 0.5 0.4 0.4 0.6
Amortization of intangible assets 1.7 1.7 1.8 1.8 1.3
Amortization of deferred
compensation, stock-based
compensation and related taxes 3.0 0.2 0.1 0.1 0.2
Acquisition-related expenses 0.4 -- 0.2 0.3 0.3
Restructuring charges 0.3 0.1 -- 0.4 0.1
------ ------ ------ ------ --------------
Adjusted Net Income 5.2 5.2 5.2 4.7 4.6
------ ------ ------ ------ --------------
The table below reconciles Adjusted Net Income to net income reported
in our unaudited Consolidated Statements of Operations for the years
ended January 31, 2010 and January 31, 2009, which we believe is the
most directly comparable GAAP measure.
(US dollars in millions) FY10 FY09
Net income, as reported on
Consolidated Statements of
Operations 14.3 20.2
Adjustments to reconcile to
Adjusted Net Income:
Investment income (0.4) (1.0)
Income tax recovery (7.6) (11.5)
Depreciation expense 1.9 2.2
Amortization of intangible
assets and contingent
acquisition consideration 7.0 6.0
Amortization of deferred
compensation, stock-based
compensation and related taxes 3.4 0.5
Acquisition-related expenses 0.9 0.3
Restructuring charges 0.8 0.3
----- ------
Adjusted Net Income 20.3 17.0
----- ------
THE DESCARTES SYSTEMS GROUP INC.
CONSOLIDATED BALANCE SHEETS
(US DOLLARS IN THOUSANDS; US GAAP; FY10
UNAUDITED)
-----------------------------------------------
--------- ---------
January January
31, 2010 31, 2009
--------- ---------
ASSETS
CURRENT ASSETS
Cash and cash
equivalents 89,554 47,422
Short-term investments 5,071 10,210
Accounts receivable
Trade 9,840 8,702
Other 2,231 985
Prepaid expenses and
other 1,146 855
Deferred income taxes 4,414 5,490
Deferred tax charge 197 197
--------- ---------
112,453 73,861
CAPITAL ASSETS 5,482 4,888
GOODWILL 34,456 26,381
INTANGIBLE ASSETS 21,058 15,475
DEFERRED INCOME TAXES 34,346 24,665
DEFERRED TAX CHARGE 395 592
--------- ---------
208,190 145,862
--------- ---------
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 2,603 1,938
Accrued liabilities 7,509 5,526
Income taxes payable 975 589
Deferred revenue 5,454 3,317
--------- ---------
16,541 11,370
DEFERRED REVENUE 1,172 --
INCOME TAX LIABILITY 2,605 2,325
--------- ---------
20,318 13,695
SHAREHOLDERS' EQUITY
Common shares --
unlimited shares
authorized; Shares
issued and outstanding
totalled 61,410,877 at
January 31, 2010 (
January 31, 2009 --
53,013,227) 86,609 44,986
Additional paid-in
capital 451,591 449,462
Accumulated other
comprehensive (loss)
income (2,034) 363
Accumulated deficit (348,294) (362,644)
--------- ---------
187,872 132,167
--------- ---------
208,190 145,862
--------- ---------
THE DESCARTES SYSTEMS GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(US DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS; US GAAP;
FY10 AND QUARTERLY DATA UNAUDITED)
---------------------------------------------------------------
------------------ -----------------
Twelve Months
Three Months Ended Ended
------------------ -----------------
January January January January
31, 31, 31, 31,
2010 2009 2010 2009
-------- -------- ------- --------
REVENUES 18,874 15,680 73,768 66,044
COST OF REVENUES 6,123 4,994 23,172 22,353
-------- -------- ------- --------
GROSS MARGIN 12,751 10,686 50,596 43,691
-------- -------- ------- --------
EXPENSES
Sales and marketing 3,232 2,086 10,794 8,992
Research and
development 3,871 2,718 14,499 11,458
General and
administrative 4,694 2,408 11,991 9,546
Amortization of
intangible assets 1,673 1,319 6,929 5,133
Contingent acquisition
consideration -- -- -- 833
-------- -------- ------- --------
13,470 8,531 44,213 35,962
-------- -------- ------- --------
INCOME (LOSS) FROM
OPERATIONS (719) 2,155 6,383 7,729
INVESTMENT INCOME 74 187 342 1,002
-------- -------- ------- --------
INCOME (LOSS) BEFORE
INCOME TAXES (645) 2,342 6,725 8,731
INCOME TAX EXPENSE
(RECOVERY)
Current (40) (4) 855 256
Deferred (10,947) (13,100) (8,480) (11,735)
-------- -------- ------- --------
(10,987) (13,104) (7,625) (11,479)
-------- -------- ------- --------
NET INCOME 10,342 15,446 14,350 20,210
-------- -------- ------- --------
EARNINGS PER SHARE
Basic 0.17 0.29 0.26 0.38
Diluted 0.17 0.29 0.25 0.38
-------- -------- ------- --------
WEIGHTED AVERAGE SHARES
OUTSTANDING (thousands)
Basic 61,326 53,002 55,389 52,961
Diluted 62,519 53,683 56,437 53,659
-------- -------- ------- --------
THE DESCARTES SYSTEMS GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US DOLLARS IN THOUSANDS; US GAAP; FY10 AND QUARTERLY DATA UNAUDITED)
---------------------------------------------------------------------------------
------------------ ---------------------
Three Months Ended Twelve Months Ended
------------------ ---------------------
January January January January
31, 2010 31, 2009 31, 2010 31, 2009
-------- -------- -------- --------
OPERATING ACTIVITIES
Net income 10,342 15,446 14,350 20,210
Adjustments to reconcile net income to
cash provided by operating
activities:
Depreciation 566 584 1,870 2,231
Amortization of intangible assets 1,673 1,319 6,929 5,133
Amortization of deferred compensation 34 1 38 7
Stock-based compensation expense 2,981 144 3,371 527
Deferred income taxes (10,947) (13,100) (8,480) (11,735)
Deferred tax charge 50 50 197 (216)
Changes in operating assets and
liabilities:
Accounts receivable
Trade 86 (228) 788 772
Other 247 (356) 219 234
Prepaid expenses and other 51 347 364 81
Deferred contingent acquisition
consideration -- -- -- 833
Accounts payable 59 (87) 478 (617)
Accrued liabilities (1,697) 427 (3,253) 1,379
Income taxes payable 1,418 187 1,665 (285)
Deferred revenue (317) 43 (2,001) 131
-------- -------- -------- --------
Cash provided by operating activities 4,546 4,777 16,535 18,685
-------- -------- -------- --------
INVESTING ACTIVITIES
Maturities of short-term investments 30,307 -- 40,501 --
Purchase of short-term investments -- (10,210) (35,362) (10,210)
Additions to capital assets (306) (371) (1,626) (1,343)
Business acquisitions, net of cash
acquired -- (320) (14,964) (2,231)
Acquisition-related costs -- (13) (58) (928)
-------- -------- -------- --------
Cash provided by (used in) investing
activities 30,001 (10,914) (11,509) (14,712)
-------- -------- -------- --------
FINANCING ACTIVITIES
Issuance of common shares for cash,
net of issue costs (199) 79 40,293 177
-------- -------- -------- --------
Cash provided by (used in) financing
activities (199) 79 40,293 177
-------- -------- -------- --------
Effect of foreign exchange rate on
cash and cash equivalents (3,311) (39) (3,187) (819)
-------- -------- -------- --------
Increase (decrease) in cash and cash
equivalents 31,037 (6,097) 42,132 3,331
Cash and cash equivalents at beginning
of period 58,517 53,519 47,422 44,091
-------- -------- -------- --------
Cash and cash equivalents at end of
period 89,554 47,422 89,554 47,422
-------- -------- -------- --------
CONTACT: Descartes Systems Group
Investor Contact:
Laurie McCauley
(519) 746-6114 x 2358
investor@descartes.com
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