2016 Q4 Form 10-Q Financial Statement

#000108622216000392 Filed on November 08, 2016

View on sec.gov

Income Statement

Concept 2016 Q4 2016 Q3 2015 Q4
Revenue $616.1M $584.1M $579.2M
YoY Change 6.38% 6.0% 7.99%
Cost Of Revenue $203.5M $204.5M $193.2M
YoY Change 5.31% 11.61% 18.39%
Gross Profit $412.6M $379.6M $385.9M
YoY Change 6.92% 3.2% 3.44%
Gross Profit Margin 66.97% 64.99% 66.64%
Selling, General & Admin $217.4M $215.9M $202.8M
YoY Change 7.2% 4.34% 9.62%
% of Gross Profit 52.68% 56.89% 52.55%
Research & Development $46.80M $42.34M $37.70M
YoY Change 24.14% 10.27% 16.36%
% of Gross Profit 11.34% 11.15% 9.77%
Depreciation & Amortization $84.00M $84.50M $80.40M
YoY Change 4.48% 12.97% 18.58%
% of Gross Profit 20.36% 22.26% 20.83%
Operating Expenses $288.5M $258.3M $262.4M
YoY Change 9.95% 5.27% 10.76%
Operating Profit $124.1M $111.8M $123.5M
YoY Change 0.49% -3.39% -9.29%
Interest Expense -$500.0K $4.666M -$14.40M
YoY Change -96.53% 0.78% 19.01%
% of Operating Profit -0.4% 4.17% -11.66%
Other Income/Expense, Net $2.800M $778.0K $12.20M
YoY Change -77.05% 281.37% 23.23%
Pretax Income $125.8M $111.7M $120.5M
YoY Change 4.4% -2.02% -10.01%
Income Tax $34.20M $35.69M $32.10M
% Of Pretax Income 27.19% 31.95% 26.64%
Net Earnings $91.64M $76.00M $88.42M
YoY Change 3.64% -13.68% -8.95%
Net Earnings / Revenue 14.87% 13.01% 15.27%
Basic Earnings Per Share $0.53 $0.44 $0.50
Diluted Earnings Per Share $0.52 $0.43 $0.49
COMMON SHARES
Basic Shares Outstanding 173.3M shares 174.4M shares 177.9M shares
Diluted Shares Outstanding 175.6M shares

Balance Sheet

Concept 2016 Q4 2016 Q3 2015 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $837.0M $911.2M $749.6M
YoY Change 11.66% 36.43% -1.15%
Cash & Equivalents $324.2M $381.8M $289.5M
Short-Term Investments $512.8M $529.4M $460.1M
Other Short-Term Assets $19.73M $117.7M $48.43M
YoY Change -59.26% -33.58% 3.75%
Inventory
Prepaid Expenses $25.16M $31.05M
Receivables $368.6M $358.0M $380.4M
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $1.310B $1.387B $1.253B
YoY Change 4.53% 14.53% -0.74%
LONG-TERM ASSETS
Property, Plant & Equipment $801.0M $797.9M $753.2M
YoY Change 6.35% 8.63% 25.2%
Goodwill $1.229B $1.151B $1.150B
YoY Change 6.8% 1.38% 9.41%
Intangibles $149.5M $138.9M $156.1M
YoY Change -4.25% -12.65% 17.89%
Long-Term Investments $779.3M $767.7M $774.7M
YoY Change 0.59% -8.28% -10.95%
Other Assets $95.95M $89.82M $89.60M
YoY Change 7.09% -15.19% 9.61%
Total Long-Term Assets $3.063B $2.967B $2.928B
YoY Change 4.6% -0.24% 6.92%
TOTAL ASSETS
Total Short-Term Assets $1.310B $1.387B $1.253B
Total Long-Term Assets $3.063B $2.967B $2.928B
Total Assets $4.373B $4.354B $4.182B
YoY Change 4.58% 4.03% 4.5%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $76.12M $74.33M $61.98M
YoY Change 22.81% 22.05% -19.93%
Accrued Expenses $238.8M $291.1M $216.2M
YoY Change 10.46% 35.21% 5.61%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $374.6M $431.5M $332.4M
YoY Change 12.68% 29.98% -0.47%
LONG-TERM LIABILITIES
Long-Term Debt $640.1M $634.5M $618.0M
YoY Change 3.58% 2.44% 2.17%
Other Long-Term Liabilities $118.7M $105.6M $93.27M
YoY Change 27.26% 13.11% 25.66%
Total Long-Term Liabilities $118.7M $105.6M $93.27M
YoY Change 27.26% 13.11% 25.66%
TOTAL LIABILITIES
Total Short-Term Liabilities $374.6M $431.5M $332.4M
Total Long-Term Liabilities $118.7M $105.6M $93.27M
Total Liabilities $1.149B $1.185B $1.061B
YoY Change 8.29% 7.78% 0.44%
SHAREHOLDERS EQUITY
Retained Earnings -$960.7M -$1.052B -$1.277B
YoY Change -24.76% -22.92% -20.11%
Common Stock $1.733M $1.794M $1.772M
YoY Change -2.2% -0.94% -0.62%
Preferred Stock
YoY Change
Treasury Stock (at cost) $0.00 $294.9M $0.00
YoY Change 45.67%
Treasury Stock Shares 0.000 shares 5.736M shares 0.000 shares
Shareholders Equity $3.270B $3.169B $3.163B
YoY Change
Total Liabilities & Shareholders Equity $4.373B $4.354B $4.182B
YoY Change 4.58% 4.03% 4.5%

Cashflow Statement

Concept 2016 Q4 2016 Q3 2015 Q4
OPERATING ACTIVITIES
Net Income $91.64M $76.00M $88.42M
YoY Change 3.64% -13.68% -8.95%
Depreciation, Depletion And Amortization $84.00M $84.50M $80.40M
YoY Change 4.48% 12.97% 18.58%
Cash From Operating Activities $184.2M $251.9M $247.1M
YoY Change -25.46% 37.95% 26.33%
INVESTING ACTIVITIES
Capital Expenditures -$75.90M -$79.90M -$78.90M
YoY Change -3.8% -39.92% -14.52%
Acquisitions
YoY Change
Other Investing Activities -$88.70M -$30.60M -$8.100M
YoY Change 995.06% -263.64% -81.63%
Cash From Investing Activities -$164.7M -$110.5M -$86.90M
YoY Change 89.53% -3.49% -36.29%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -68.70M -86.10M -124.5M
YoY Change -44.82% 32.26% 320.61%
NET CHANGE
Cash From Operating Activities 184.2M 251.9M 247.1M
Cash From Investing Activities -164.7M -110.5M -86.90M
Cash From Financing Activities -68.70M -86.10M -124.5M
Net Change In Cash -49.20M 55.30M 35.70M
YoY Change -237.82% 1743.33% 20.61%
FREE CASH FLOW
Cash From Operating Activities $184.2M $251.9M $247.1M
Capital Expenditures -$75.90M -$79.90M -$78.90M
Free Cash Flow $260.1M $331.8M $326.0M
YoY Change -20.21% 5.13% 13.23%

Facts In Submission

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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Commitments and Contingencies</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Commitments</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;"></font><font style="font-family:inherit;font-size:10pt;">In November 2016, the Company executed a lease for new headquarters space in Cambridge, Massachusetts. The lease is for approximately </font><font style="font-family:inherit;font-size:10pt;">480,000</font><font style="font-family:inherit;font-size:10pt;"> square feet and is expected to commence at the termination of the Company's current leases in Cambridge, the majority of which expire on December 31, 2019. The initial lease term is </font><font style="font-family:inherit;font-size:10pt;">15</font><font style="font-family:inherit;font-size:10pt;"> years. In addition to the new lease, the Company also executed an arrangement obligating it to lease at least </font><font style="font-family:inherit;font-size:10pt;">150,000</font><font style="font-family:inherit;font-size:10pt;"> square feet of additional space in Cambridge. The total minimum obligation under these arrangements is </font><font style="font-family:inherit;font-size:10pt;">$698.4 million</font><font style="font-family:inherit;font-size:10pt;">. For the year ended December 31, 2020, the Company's minimum obligation is </font><font style="font-family:inherit;font-size:10pt;">$42.2 million</font><font style="font-family:inherit;font-size:10pt;">.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Contingencies</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">During the three months ended June 30, 2016, the Company completed an internal investigation, with the assistance of outside counsel, relating to improper sales practices by a former employee. The internal investigation included a review of compliance with the requirements of the U.S. Foreign Corrupt Practices Act ("FCPA") and other applicable laws and regulations. In February 2015, the Company voluntarily contacted the Commission and Department of Justice to advise both agencies of this internal investigation. In June 2016, the Company signed a non-prosecution agreement with the Commission and agreed to disgorge </font><font style="font-family:inherit;font-size:10pt;">$0.7 million</font><font style="font-family:inherit;font-size:10pt;"> to resolve this matter, including interest. </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-style:italic;"></font><font style="font-family:inherit;font-size:10pt;">In July 2016, as part of the resolution of a patent infringement lawsuit filed by the Company against Limelight Networks, Inc. (&#8220;Limelight&#8221;) in 2006, the Company agreed to license to Limelight technology covered by certain of the Company&#8217;s patents.&#160; The terms of the agreement require Limelight to pay the Company </font><font style="font-family:inherit;font-size:10pt;">$54.0 million</font><font style="font-family:inherit;font-size:10pt;"> in </font><font style="font-family:inherit;font-size:10pt;">12</font><font style="font-family:inherit;font-size:10pt;"> equal installments over </font><font style="font-family:inherit;font-size:10pt;">three years</font><font style="font-family:inherit;font-size:10pt;">, beginning in August 2016. During the third quarter of 2016, the Company received the first installment of </font><font style="font-family:inherit;font-size:10pt;">$4.5 million</font><font style="font-family:inherit;font-size:10pt;">, which was recorded as a reduction to general and administrative expenses in the consolidated statement of income, with an insignificant amount recorded as interest income.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In November 2015, Limelight filed a complaint in the U.S. District Court for the Eastern District of Virginia against the Company and XO Communications LLC (&#8220;XO&#8221;), alleging patent infringement by the </font><font style="font-family:inherit;font-size:10pt;">two</font><font style="font-family:inherit;font-size:10pt;"> companies.&#160; The complaint alleges that the Company and XO infringed </font><font style="font-family:inherit;font-size:10pt;">six</font><font style="font-family:inherit;font-size:10pt;"> of Limelight&#8217;s content delivery patents.&#160; The complaint seeks to recover from the Company and XO monetary damages based upon lost revenue due to infringing technology used by the companies.&#160; The Company has made counterclaims in the action against Limelight alleging that Limelight has infringed five of the Company&#8217;s content delivery patents, and the Company is seeking monetary damages based upon lost revenue due to the infringing technology used by Limelight.&#160; The case is scheduled for trial in January 2017.&#160; </font><font style="font-family:inherit;font-size:10pt;">No</font><font style="font-family:inherit;font-size:10pt;"> provision with respect to this matter has been made in the Company&#8217;s consolidated financial statements.&#160; An estimate of the possible loss or range of loss cannot be made.</font></div></div>

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