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Accelrys Announces Third Quarter Calendar Year 2010 Financial Results

^{Published on 2010-11-05 05:15:40 - Market Wire}
 

SAN DIEGO--([ BUSINESS WIRE ])--Accelrys, Inc. (NASDAQ: ACCL) today reported financial results for the quarter ended September 30, 2010. GAAP revenue for the quarter ended September 30, 2010 increased $9.1 million to $29.1 million from $20.0 million for the same quarter of the previous year, or an increase of 45.7%. GAAP revenue for the six months ended September 30, 2010 increased $8.7 million to $48.9 million from $40.1 million for the same period of the previous year, or an increase of 21.8%.

GAAP net loss was $3.4 million or ($0.06) per diluted share, for the current quarter compared to GAAP net income of $1.8 million, or $0.07 per diluted share, for the same quarter of the previous year. GAAP net loss was $5.0 million or ($0.12) per diluted share, for the six months ended September 30, 2010 compared to GAAP net income of $2.6 million, or $0.09 per diluted share, for the same period of the previous year.

The GAAP results were impacted by the business combination accounting associated with the Symyx Technologies, Inc. (aSymyxa) merger completed on July 1, 2010. Revenue, operating income, other income and net income were negatively affected by fair value adjustments to deferred revenue ($12.6 million) and deferred royalty income ($0.2 million). Operating income was negatively affected by the additional costs for business consolidation and restructuring ($9.5 million), stock-based compensation expense ($2.4 million) and purchased intangible asset amortization ($3.7 million). Net income was also negatively impacted by additional purchased intangible asset amortization ($0.6 million). Conversely, net income was benefited by the release of valuation allowances ($16.5 million) against deferred tax assets associated with the net deferred tax liability that was recorded upon the consummation of the merger with Symyx.

Non-GAAP revenue for the quarter ended September 30, 2010 increased $21.7 million to $41.7 million from $20.0 million for the same quarter of the previous year, or an increase of 108.5%. Non-GAAP revenue for the six months ended September 30, 2010 increased $21.3 million to $61.4 million from the $40.1 million for the same period of the previous year, or an increase of 53.1%.

Non-GAAP net income was $5.7 million, or $0.10 per diluted share, for the current quarter compared to non-GAAP net income of $3.3 million, or $0.12 per diluted share, for the same quarter of the previous year. Non-GAAP net income was $6.6 million, or $0.16 per diluted share, for the six months ended September 30, 2010 compared to non-GAAP net income of $5.1 million, or $0.18 per diluted share, for the same period of the previous year.

"I am pleased with the progress we have made executing on our integration plans since our merger with Symyx Technologies on July 1, 2010. Through this period the team has stayed focused, delivering several important product releases and developing our go-forward product roadmap, while bringing our people, processes and systems together. We expect to complete our integration activities by end of year, putting us in a strong position to pursue the opportunity ahead of us as the leading provider of scientific informatics software and services,a said Max Carnecchia, Accelrysa™ President and Chief Executive Officer.

Recent Business Highlights:

• Released new versions in several major product lines, including:
  • Symyx Notebook 6.5 by Accelrys, delivering improvements supporting chemical process development, production scale-up, and administrative compliance in pharmaceutical, fine chemicals, agrochemical and consumer products markets.
  • Isentris 3.3 with new visualization and information access capabilities that advance cross-experiment data retrieval, analysis and reporting. Accelrys has made considerable progress in transitioning customers from the legacy ISIS system to Isentris.
  • Materials Studio 5.5, delivering key features that increase the accuracy of predicted material properties, reducing the number of time consuming and costly experiments it takes to engineer the next generation of materials in the electronics, chemical and alternative energy industries.
• Kicked-off a product integration roadshow for the combined customer base, introducing the go-forward product roadmap and demonstrating some of the early progress on key product integrations in the portfolio. The roadshow was conducted throughout North America, Europe and Asia and included the Accelrys Symposium in Tokyo, Japan and the European User Group Meeting in Barcelona, Spain, both of which experienced record attendance.
• Obtained board authorization tocommit up to $6 million during the next two fiscal quarters forthe repurchase of the Company's common stock pursuant to a program to be executed in accordance witha Rule 10b5-1 trading plan.

Q4 Calendar Year 2010 Outlook

For the quarter ending December 31, 2010, the company expects non-GAAP revenue to be between $42.0 and $43.0 million, and non-GAAP diluted earnings per share to be between $0.07 and $0.08 per diluted share.

Non-GAAP Financial Measures:

This press release describes financial measures for revenue, operating income, net income, and net income per diluted share that exclude deferred revenue fair value adjustments, stock-based compensation expense, purchased intangible assets amortization, business consolidation and restructuring costs (recoveries), non-GAAP income tax adjustments, and royalty income fair value adjustments. These financial measures are not calculated in accordance with generally accepted accounting principles (GAAP) and are not based on any comprehensive set of accounting rules or principles.

Management believes these non-GAAP financial measures provide a useful measure of the Companya™s operating results, a meaningful comparison with historical results and with the results of other companies, and insight into the Companya™s ongoing operating performance. Further, management and the Board of Directors utilize these measures, in addition to GAAP measures, when evaluating and comparing the Companya™s operating performance against internal financial forecasts and budgets. These non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.

For additional information on the items excluded by the Company from its non-GAAP financial measures please refer to the Form8-K regarding this release that was furnished today to the Securities and Exchange Commission.

The following table contains a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures (unaudited, amounts in thousands, except per share amounts, including footnotes):

¹ Deferred revenue fair value adjustment relates to our merger with Symyx, and adds back the impact of writing down the acquired historical deferred revenue to fair value as required in purchase accounting.

² Business consolidation and restructuring costs (recoveries) are included in the business consolidation and restructuring costs (recoveries) line in our condensed consolidated statements of operations and consist of accounting, legal, and other fees incurred in connection with our merger with Symyx, as well as costs incurred to integrate Symyx, including consultant and employee related costs incurred during integration and transition periods. Also included are lease obligation exit costs, facility closure costs and severance and other related costs incurred in connection with the various restructuring activities commenced by the Company.

³ Stock-based compensation expense is included in our condensed consolidated statements of operations as follows:

⁴ Purchased intangible asset amortization is included in our condensed consolidated statements of operations as follows:

⁵ Royalty income fair value adjustment relates to our merger with Symyx, and adds back the impact of writing down deferred royalty income to fair value as required in purchase accounting.

⁶ Income tax adjustments relate to adjusting our Non-GAAP operating results to reflect an effective tax rate that would be applied if the Company was in a taxable income position and was not able to utilize its net operating loss carryforwards. The income tax adjustment also excludes any impact of a release of our valuation allowance against deferred tax assets.

⁷ Earnings per share amounts for the three and six months ended September 30, 2010 and six months ended September 30, 2009 do not add due to rounding.

Conference Call Details:

At 5:00 p.m. ET, November 4, 2010, Accelrys will conduct a conference call to discuss its financial results. To participate, please dial (866) 393-7459 (+ (706) 643-4624 outside the United States) and enter the access code, 21483138, approximately 15 minutes before the scheduled start of the call. The conference call will also be accessible live on the Investor Relations section of the Accelrys website at [ www.accelrys.com ].

A replay of the conference call will be available online at [ www.accelrys.com ] and via telephone by dialing (800) 642-1687 (+1 (706) 645-9291 outside the United States) and entering access code, 21483138, beginning 7:00 p.m. ET on November 4, 2010 through 11:59 p.m. ET on December 4, 2010.

About Accelrys:

Headquartered in San Diego, California, Accelrys develops scientific informatics software and solutions for the life sciences, energy, chemicals, aerospace, and consumer products industries. Customers include many Fortune 500 companies and other commercial entities, as well as academic and government entities. Accelrys has a vast portfolio of computer-aided design modeling and simulation offerings which assist customers in conducting scientific experiments 'in silico' in order to reduce the duration and cost of discovering and developing new drugs and materials. Its scientific informatics platform underlies the company's computer-aided design modeling and simulation offerings. The Accelrys platform can be used with both Accelrys and competitive products, as well as with customers' proprietary predictive science products. Its flexibility, ease-of-use and advanced chemical, text and image analysis and reporting capabilities enable customers to mine, aggregate, analyze and report scientific data from disparate sources, thereby better utilizing scientific data within their organizations. In July 2010, Accelrys and Symyx Technologies, Inc. merged, combining the market-leading Symyx electronic laboratory notebook, decision support software, and chemical informatics and sourcing databases with the Accelrys portfolio of scientific informatics solutions. For more information about the Accelrys and Symyx solutions, visit [ www.accelrys.com ] and [ www.symyx.com ].

Forward-Looking Statements:

Statements contained in this press release relating to the Companya™s or managementa™s intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. Such forward-looking statements including, but not limited to, statements relating to the Companya™s long-term prospects and integration plans following the merger with Symyx Technologies are subject to a number of risks and uncertainties. These include risks that the Company will not achieve its anticipated results or growth plans, and/or that such growth will not occur due to, among other possibilities, an inability to withstand negative conditions in the global economy or a lack of demand for or market acceptance of the Companya™s products, as well as the risks and uncertainties that are contained from time to time in the Companya™s filings with the U.S. Securities and Exchange Commission, including, but not limited to, the Companya™s Annual Report on Form 10-K for the year ended March 31, 2010, quarterly reports on Form 10-Q and current reports on Form 8-K. The Companya™s actual results could differ materially from those projected in such forward-looking statements due to these risks and uncertainties, and the Company disclaims any intention or obligation to revise any forward-looking statements whether as a result of new information, future events or otherwise.

¹Cash, cash equivalents, and marketable securities consist of the following line items in our consolidated balance sheet: Cash and cash equivalents; Marketable securities; and Restricted cash

²Other assets, net, consists of the following line items in our consolidated balance sheet: Prepaid expenses, deferred tax assets and other current assets; Property and equipment, net; Goodwill; Purchased intangible assets, net; and Other assets.

³Total deferred revenue consists of the following line items in our consolidated balance sheet: Current portion of deferred revenue; and Deferred revenue, net of current portion