UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 11, 2008
NUANCE COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation)
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000-27038
(Commission
File Number)
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94-3156479
(IRS Employer
Identification No.) |
1 Wayside Road
Burlington, Massachusetts 01803
(Address of Principal Executive Offices)
(Zip Code)
Registrant’s telephone number, including area code: (781) 565-5000
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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TABLE OF CONTENTS
ITEM
2.02 Results of Operations and Financial Condition
On August 11, 2008, Nuance Communications, Inc. announced its financial results for its third
quarter ended June 30, 2008. The press release and the reconciliation contained therein, which have
been attached as Exhibit 99.1 and incorporated herein, disclose certain financial measures that may
be considered non-GAAP financial measures.
Management utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing
and assessing the overall performance of our business, for making operating decisions and for
forecasting and planning for future periods. We consider the use of non-GAAP revenue helpful in
understanding the performance of our business, as it excludes the purchase accounting impact on
acquired deferred revenue and other acquisition-related adjustments to revenue. We also consider
the use of non-GAAP earnings per share helpful in assessing the organic performance of the
continuing operations of our business from a cash perspective. By organic performance we mean
performance as if we had not incurred certain costs and expenses associated with acquisitions. By
continuing operations we mean the ongoing results of the business excluding certain unplanned
costs. While our management uses these non-GAAP financial measures as a tool to enhance their
understanding of certain aspects of our financial performance, our management does not consider
these measures to be a substitute for, or superior to, the information provided by GAAP revenue and
earnings per share. Consistent with this approach, we believe that disclosing non-GAAP revenue and
non-GAAP earnings per share to the readers of our financial statements provides such readers with
useful supplemental data that, while not a substitute for GAAP revenue and earnings per share,
allows for greater transparency in the review of our financial and operational performance. In
assessing the overall health of our business during the fiscal quarters ended June 30, 2008 and
2007, and, in particular, in evaluating our revenue and earnings per share, our management has
either included or excluded items in three general categories, each of which are described below.
Acquisition Related Revenue and Expenses. We include revenue related to our acquisitions,
primarily from Tegic, Viecore and VoiceSignal, that we would otherwise recognize but
for the purchase accounting treatment of these transactions to allow for more accurate comparisons
to our financial results of our historical operations, forward looking guidance and the financial
results of our peer companies. We also excluded certain expense items resulting from acquisitions
to allow more accurate comparisons of our financial results to our historical operations, forward
looking guidance and the financial results of our peer companies. These items include the
following: (i) acquisition-related transition and integration costs; (ii) amortization of
intangible assets; and (iii) costs associated with the investigation of the financial results of
acquired entities. In recent years, we have completed a number of acquisitions, which result in
non-continuing operating expenses which would not otherwise have been incurred. For example, we
have incurred transition and integration costs such as retention and earnout bonuses for employees
from acquisitions. In addition, actions taken by an acquired company, prior to an acquisition,
could result in expenses being incurred by us, such as expenses incurred as a result of the
investigation and, if necessary, restatement of the financial results of acquired entities. We
believe that providing non-GAAP information for certain revenue and expenses related to material
acquisitions allows the users of our financial statements to review both the GAAP revenue and
expenses in the period, as well as the non-GAAP revenue and expenses, thus providing for enhanced
understanding of our historic and future financial results and facilitating comparisons to less
acquisitive peer companies. Additionally, had we internally developed the products acquired, the
amortization of intangible assets would have been expensed historically, and we believe the
assessment of our operations excluding these costs is relevant to our assessment of internal
operations and comparisons to industry performance.
Non-Cash Expenses. We provide non-GAAP information relative to the following non-cash expenses:
(i) stock-based compensation; (ii) certain accrued interest; and (iii) certain accrued income
taxes. Because of varying available valuation methodologies, subjective assumptions and the
variety of award types, we believe that the exclusion of share-based payments allows for more
accurate comparisons of our operating results to our peer companies. We believe that excluding
these non-cash expenses provides our senior management as well as other
users of our financial statements, with a valuable perspective on the cash based performance and
health of the business, including our current near-term projected liquidity.
Other Expenses. We exclude certain other expenses that are the result of other, unplanned events
to measure our operating performance as well as our current and future liquidity both with and
without these expenses. Included in these expenses are items such as non-acquisition-related
restructuring and other charges (credits), net. These events
are unplanned and arose outside of the ordinary course of our continuing operations. We assess our
operating performance with these amounts included, but also excluding these amounts; the amounts
relate to costs which are unplanned, and therefore by providing this information we believe our
management and the users of our financial statements are better able to understand the financial
results of what we consider to be our organic continuing operations.
We believe that providing the non-GAAP information to investors, in addition to the GAAP
presentation, allows investors to view our financial results in the way management views the
operating results. We further believe that providing this information allows investors to not only
better understand our financial performance but more importantly, to evaluate the efficacy of the
methodology and information used by management to evaluate and measure such performance.
The non-GAAP financial measures described above, and used in this press release, should not be
considered in isolation from, or as a substitute for, a measure of financial performance prepared
in accordance with GAAP. Further, investors are cautioned that there are material limitations
associated with the use of non-GAAP financial measures as an analytical tool. In particular, many
of the adjustments to our GAAP financial measures reflect the inclusion or exclusion of items that
are recurring and will be reflected in our financial results for the foreseeable future. In
addition, other companies, including other companies in our industry, may calculate non-GAAP net
income (loss) differently than we do, limiting its usefulness as a comparative tool. Management
compensates for these limitations by providing specific information regarding the GAAP amounts
included and excluded from the non-GAAP financial measures. In addition, as noted above, our
management evaluates the non-GAAP financial measures together with the most directly comparable
GAAP financial information.
ITEM 9.01 Financial Statements and Exhibits
(d) Exhibits
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99.1 |
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Press Release dated August 11, 2008 by Nuance Communications, Inc. |