10-Q 1 tibx831201310q.htm 10-Q TIBX 8.31.2013 10Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _____________________________________________________________
FORM 10-Q
 _____________________________________________________________
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 1, 2013
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             
Commission File Number: 000-26579
 _____________________________________________________________
TIBCO SOFTWARE INC.
(Exact name of registrant as specified in its charter)
 _____________________________________________________________
Delaware
 
77-0449727
(State or other jurisdiction
of incorporation or organization)
 
(I.R.S. Employer
Identification No.)

3303 Hillview Avenue
Palo Alto, California 94304-1213
(Address of principal executive offices) (Zip code)
Registrant’s telephone number, including area code: (650) 846-1000
 _____________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer
 
x
 
Accelerated filer
 
¨
 
 
 
 
 
 
 
Non-accelerated filer
 
¨  (Do not check if a smaller reporting company)
 
Smaller reporting company
 
¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x
The number of shares outstanding of the registrant’s common stock, $0.001 par value, as of October 2, 2013 was 163,050,893 shares.




TIBCO SOFTWARE INC.
Table of Contents
 
 
 
Page No.
PART I.
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II.
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 4.
 
 
 
Item 6.
 
 
 
 


2


TIBCO SOFTWARE INC.
PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except par value per share)
 
 
 
August 31,
2013
 
November 30,
2012
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
666,211

 
$
727,309

Short-term investments
 
57,686

 
34,411

Accounts receivable, net of allowances of $4,828 and $5,606
 
183,131

 
234,100

Prepaid expenses and other current assets
 
66,750

 
61,174

Total current assets
 
973,778

 
1,056,994

Property and equipment, net
 
95,792

 
98,474

Goodwill
 
557,809

 
532,290

Acquired intangible assets, net
 
120,499

 
123,261

Long-term deferred income tax assets
 
90,222

 
64,549

Other assets
 
75,712

 
71,340

Total assets
 
$
1,913,812

 
$
1,946,908

Liabilities and Equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
28,827

 
$
22,809

Accrued liabilities
 
110,067

 
133,596

Accrued restructuring costs
 
5,314

 
893

Deferred revenue
 
253,357

 
263,476

Current portion of long-term debt
 

 
35,711

Total current liabilities
 
397,565

 
456,485

Accrued restructuring costs, less current portion
 
203

 
643

Long-term deferred revenue
 
26,323

 
25,543

Long-term deferred income tax liabilities
 
2,213

 
3,208

Long-term income tax liabilities
 
52,005

 
26,263

Other long-term liabilities
 
4,509

 
4,015

Convertible senior notes, net
 
536,062

 
524,466

Total liabilities
 
1,018,880

 
1,040,623

Commitments and contingencies (Note 10)
 

 

Equity:
 
 
 
 
Common stock, $0.001 par value; 1,200,000 shares authorized; 162,993 and 163,698 shares issued and outstanding
 
163

 
164

Additional paid-in capital
 
905,343

 
873,337

Accumulated other comprehensive income (loss)
 
(22,379
)
 
(17,411
)
Retained earnings
 
10,819

 
49,084

Total TIBCO Software Inc. stockholders’ equity
 
893,946

 
905,174

Noncontrolling interest
 
986

 
1,111

Total equity
 
894,932

 
906,285

Total liabilities and equity
 
$
1,913,812

 
$
1,946,908

See accompanying Notes to Condensed Consolidated Financial Statements

3


TIBCO SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
 
 
 
Three Months Ended
August 31,
 
Nine Months Ended
August 31,
 
 
2013
 
2012
 
2013
 
2012
Revenue:
 
 
 
 
 
 
 
 
License
 
$
105,209

 
$
99,103

 
$
265,738

 
$
273,999

Service and maintenance
 
165,650

 
155,918

 
488,757

 
454,087

Total revenue
 
270,859

 
255,021

 
754,495

 
728,086

Cost of revenue:
 
 
 
 
 
 
 
 
License
 
12,407

 
11,368

 
34,776

 
29,809

Service and maintenance
 
65,566

 
60,881

 
190,805

 
177,417

Total cost of revenue
 
77,973

 
72,249

 
225,581

 
207,226

Gross profit
 
192,886

 
182,772

 
528,914

 
520,860

Operating expenses:
 
 
 
 
 
 
 
 
Research and development
 
43,391

 
39,354

 
127,591

 
115,280

Sales and marketing
 
84,082

 
76,803

 
249,395

 
231,444

General and administrative
 
13,697

 
17,906

 
50,546

 
52,908

Amortization of acquired intangible assets
 
4,991

 
4,640

 
14,025

 
14,841

Acquisition related and other
 
630

 
845

 
1,525

 
2,170

Restructuring adjustments
 
8,886

 
72

 
8,871

 
(447
)
Total operating expenses
 
155,677

 
139,620

 
451,953

 
416,196

Income from operations
 
37,209

 
43,152

 
76,961

 
104,664

Interest income
 
249

 
366

 
672

 
842

Interest expense
 
(8,411
)
 
(8,713
)
 
(25,856
)
 
(14,573
)
Other income (expense), net
 
153

 
(1,306
)
 
(1,258
)
 
242

Income before provision for income taxes and noncontrolling interest
 
29,200

 
33,499

 
50,519

 
91,175

Provision for income taxes
 
7,900

 
7,400

 
10,900

 
17,900

Net income
 
21,300

 
26,099

 
39,619

 
73,275

Less: Net income attributable to noncontrolling interest
 
49

 
13

 
148

 
56

Net income attributable to TIBCO Software Inc.
 
$
21,251

 
$
26,086

 
$
39,471

 
$
73,219

Net income per share attributable to TIBCO Software Inc.:
 
 
Basic
 
$
0.13

 
$
0.16

 
$
0.25

 
$
0.46

Diluted
 
$
0.13

 
$
0.15

 
$
0.24

 
$
0.43

Shares used to compute net income per share attributable to TIBCO Software Inc.:
 
 
 
 
 
 
 
 
Basic
 
160,638

 
159,308

 
161,012

 
160,402

Diluted
 
166,999

 
169,165

 
167,879

 
169,836


See accompanying Notes to Condensed Consolidated Financial Statements

4


TIBCO SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)


 
 
Three Months Ended
August 31,
 
Nine Months Ended
August 31,
 
 
2013
 
2012
 
2013
 
2012
Net income
 
$
21,300

 
$
26,099

 
$
39,619

 
$
73,275

Cumulative translation adjustment
 
3,160

 
20,282

 
(5,337
)
 
(1,244
)
Net unrealized gain (loss) on available-for-sale securities
 
(22
)
 
(9
)
 
96

 
(16
)
Comprehensive income
 
24,438

 
46,372

 
34,378

 
72,015

Comprehensive income attributable to noncontrolling interest
 
30

 
(41
)
 
(125
)
 
(23
)
Comprehensive income attributable to TIBCO Software Inc.
 
$
24,408

 
$
46,413

 
$
34,503

 
$
72,038



See accompanying Notes to Condensed Consolidated Financial Statements


5


TIBCO SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
 
 
Nine Months Ended
August 31,
 
 
2013
 
2012
Operating activities:
 
 
 
 
Net income
 
$
39,619

 
$
73,275

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation of property and equipment
 
11,616

 
10,992

Amortization of acquired intangible assets
 
26,965

 
26,719

Amortization of debt discount and transaction costs
 
14,258

 
6,820

Stock-based compensation
 
39,245

 
45,130

Deferred income tax
 
(13,292
)
 
(20,183
)
Tax benefits related to stock benefit plans
 
9,691

 
14,455

Excess tax benefits from stock-based compensation
 
(13,442
)
 
(20,612
)
Other non-cash adjustments, net
 
1,179

 
905

Changes in assets and liabilities, net of acquisitions:
 
 
 
 
Accounts receivable
 
49,181

 
(12,079
)
Prepaid expenses and other assets
 
(19,568
)
 
(8,975
)
Accounts payable
 
7,207

 
159

Accrued liabilities and restructuring costs
 
4,864

 
(5,576
)
Deferred revenue
 
(11,119
)
 
54,285

Net cash provided by operating activities
 
146,404

 
165,315

Investing activities:
 
 
 
 
Purchases of short-term investments
 
(38,261
)
 

Maturities and sales of short-term investments
 
15,346

 

Acquisition, net of cash acquired
 
(53,917
)
 
(132,209
)
Purchases of property and equipment
 
(10,695
)
 
(16,366
)
Restricted cash pledged as security
 
(835
)
 
(1,169
)
Other investing activities, net
 
(212
)
 
376

Net cash used in investing activities
 
(88,574
)
 
(149,368
)
Financing activities:
 
 
 
 
Proceeds from issuance of convertible debt, net
 

 
584,450

Proceeds from revolving credit facility, net
 

 
116,648

Principal payments on debt
 
(35,711
)
 
(151,785
)
Proceeds from issuance of common stock
 
23,089

 
25,390

Repurchases of the Company’s common stock
 
(105,289
)
 
(220,265
)
Withholding taxes related to restricted stock net share settlement
 
(12,467
)
 
(17,383
)
Excess tax benefits from stock-based compensation
 
13,442

 
20,612

Net cash provided by (used in) financing activities
 
(116,936
)
 
357,667

Effect of foreign exchange rate changes on cash and cash equivalents
 
(1,992
)
 
(6,488
)
Net increase (decrease) in cash and cash equivalents
 
(61,098
)
 
367,126

Cash and cash equivalents at beginning of period
 
727,309

 
308,148

Cash and cash equivalents at end of period
 
$
666,211

 
$
675,274

Supplemental disclosures:
 
 
 
 
Interest paid
 
$
7,712

 
$
2,714

Income taxes paid
 
$
19,670

 
$
4,234

See accompanying Notes to Condensed Consolidated Financial Statements

6


TIBCO SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
1.
BASIS OF PRESENTATION
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by TIBCO Software Inc. (“TIBCO,” the “Company,” “we” or “us”) in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in Consolidated Financial Statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted in accordance with such rules and regulations. The condensed consolidated balance sheet data as of November 30, 2012 was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of our financial position and our results of operations and cash flows. These Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in our 2012 Annual Report on Form 10-K for the fiscal year ended November 30, 2012.
Our fiscal year ends on November 30th of each year. For purposes of presentation, we have indicated the third quarter of fiscal years 2013 and 2012 as ended on August 31, 2013 and August 31, 2012, respectively; whereas in fact, the third quarter of fiscal years 2013 and 2012 actually ended on September 1, 2013 and September 2, 2012, respectively. There were 91 days in the third quarter of both fiscal years 2013 and 2012.
The Condensed Consolidated Financial Statements include the accounts of us and our wholly-owned and majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. For majority-owned subsidiaries, we reflect the noncontrolling interest of the portion we do not own on our Condensed Consolidated Balance Sheets in Equity and our Condensed Consolidated Statements of Operations.
The results of operations for the three and nine months ended August 31, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending November 30, 2013, or any other future period, and we make no representations related thereto.

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Our significant accounting policies and recent accounting pronouncements were described in Note 2 to our Consolidated Financial Statements included in our 2012 Annual Report on Form 10-K for the fiscal year ended November 30, 2012. There have been no significant changes in our accounting policies since November 30, 2012 other than as presented below.

The Company recorded an out-of-period adjustment during the quarter ended August 31, 2013 to reflect the correction of an immaterial error related to a tax benefit of $2.2 million that was not recorded during the fiscal year ended November 30, 2012.

Recent Accounting Pronouncements
In July 2013, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard that will require the presentation of certain unrecognized tax benefits as reductions to deferred tax assets rather than as liabilities in the Consolidated Condensed Balance Sheets when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. We will be required to adopt this new standard on a prospective basis in the first quarter of fiscal 2015; however, early adoption is permitted as is a retrospective application. We are currently evaluating the timing, transition method and impact of this new standard on our consolidated results of operations and financial condition.

In February 2013, the FASB issued an update to the reporting of reclassifications out of accumulated other comprehensive income. The guidance requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required under GAAP to be reclassified in their entirety from accumulated other comprehensive income to net income in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. The guidance is effective for us in our first quarter of fiscal year 2014 with earlier adoption permitted, which should be applied prospectively. We are currently evaluating the potential impact, if any, of the adoption of the guidance on our consolidated results of operations and financial condition.

7

TIBCO SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)


In June 2011, FASB issued an update to the accounting standards that requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The guidance eliminates the option to present the components of other comprehensive income as part of the statement of equity. We adopted this guidance in the first quarter of fiscal year 2013 by presenting separate Condensed Consolidated Statements of Comprehensive Income.


3.
BUSINESS COMBINATIONS
While we use our best estimates and assumptions as part of the purchase price allocation process to value assets acquired and liabilities assumed at the business combination date, our estimates and assumptions are subject to refinement. As a result, during the preliminary purchase price allocation period, which may be up to one year from the business combination date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. We record adjustments to assets acquired or liabilities assumed subsequent to the purchase price allocation period in our operating results in the period in which the adjustments were determined.
The total purchase price allocated to the tangible assets acquired is assigned based on the fair values as of the date of the acquisition. The fair value assigned to identifiable intangible assets acquired is determined using the income approach which discounts expected future cash flows to present value using estimated assumptions determined by management. We believe that these identified intangible assets will have no residual value after their estimated economic useful lives. The identifiable intangible assets are subject to amortization on a straight-line basis as this best approximates the benefit period related to these assets.
The excess of the purchase price over the identified tangible and intangible assets, less liabilities assumed, is recorded as goodwill and primarily reflects the value of the synergies expected to be generated from combining our and the acquired entities’ technology and operations. Generally none of the goodwill recorded in connection with the acquisitions is deductible for income tax purposes.
Acquisition of StreamBase Systems, Inc.
On June 3, 2013, we acquired StreamBase Systems, Inc. (“StreamBase”), a private company based in Massachusetts and incorporated in the State of Delaware. StreamBase is a provider of high performance event processing and real-time analytics software. We paid $49.7 million, net of cash acquired, to acquire all of the outstanding shares of capital stock of StreamBase. We have also incurred $0.5 million of transaction costs associated with the acquisition. As a result of the acquisition, we assumed facility leases, certain liabilities and commitments of StreamBase.

8

TIBCO SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

The preliminary allocation of the purchase price for the StreamBase acquisition is as follows (in thousands):
Cash
 
$
1,986

Accounts Receivable
 
1,504

Deferred income tax assets, net
 
7,292

Other assets
 
467

Identifiable intangible assets
 
19,600

Goodwill
 
26,211

Liabilities
 
(2,967
)
Deferred Revenue
 
(2,451
)
Total preliminary purchase price
 
$
51,642


Identifiable intangible assets (in thousands, except amortization period):
 
 
Gross Amount
at Acquisition
Date
 
Weighted
Average
Amortization
Period
Existing technology
 
$
12,300

 
7.0 years
Customer base
 
3,700

 
7.0 years
Maintenance agreements
 
3,600

 
7.0 years
 
 
$
19,600

 
7.0 years
Acquisition of Maporama Solutions
On March 25, 2013, we acquired Maporama Solutions (“Maporama”), a private company based in Paris, France and organized under the laws of France. Maporama is a provider of location intelligence and geospatial analytics solutions. We have incurred $0.3 million of transaction costs associated with the acquisition. As a result of the acquisition, we assumed facility leases, certain liabilities and commitments of Maporama.
The preliminary allocation of the purchase price for the Maporama acquisition is as follows (in thousands):
 
Cash
 
$
396

Other assets
 
302

Identifiable intangible assets
 
4,900

Goodwill
 
7,050

Liabilities
 
(4,160
)
Deferred Revenue
 
(351
)
Deferred income tax liabilities, net
 
(1,200
)
Total preliminary purchase price
 
$
6,937


Identifiable intangible assets (in thousands, except amortization period):
 
 
 
Gross Amount
at Acquisition
Date
 
Weighted
Average
Amortization
Period
Existing technology
 
$
3,600

 
5.0 years
Customer contracts
 
1,300

 
5.0 years
 
 
$
4,900

 
5.0 years

9

TIBCO SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

Acquisition of LogLogic, Inc.
On April 10, 2012, we acquired LogLogic, Inc. (“LogLogic”), a private company based in San Jose, California and incorporated in Delaware. LogLogic is a provider of scalable log and security management platforms. We paid $131.6 million, net of cash acquired, to acquire all of the outstanding shares of capital stock of LogLogic. In the first quarter of fiscal year 2013, we recorded a decrease in goodwill of $2.3 million as a result of a purchase price adjustment. In the second quarter of fiscal year 2013, we recorded an increase in goodwill of $0.4 million as a result of the adjustment of deferred income tax assets. We have also incurred $0.7 million of transaction costs associated with the acquisition. As a result of the acquisition, we assumed facility leases, certain liabilities and commitments of LogLogic.

Pro Forma Adjusted Summary
The results of operations of StreamBase, Maporama and LogLogic have been included in the Consolidated Financial Statements subsequent to the acquisition dates. The following unaudited pro forma adjusted summary assumes StreamBase and LogLogic had been acquired at the beginning of fiscal year 2012 (in thousands, except per share data):
 
 
 
Three Months Ended
August 31,
 
Nine Months Ended
August 31,
 
 
2013
 
2012
 
2013
 
2012
Pro forma adjusted total revenue
 
$
270,859

 
$
258,580

 
$
760,375

 
$
751,567

Pro forma adjusted net income attributable to TIBCO Software Inc.
 
$
21,251

 
$
25,821

 
$
35,879

 
$
67,325

Pro forma adjusted net income per share attributable to TIBCO Software Inc.:
 
 
 
 
 
 
 
 
Basic
 
$
0.13

 
$
0.16

 
$
0.22

 
$
0.42

Diluted
 
$
0.13

 
$
0.15

 
$
0.21

 
$
0.40


The pro forma results presented include amortization charges for acquired intangible assets, adjustments for incremental compensation expense related to the post-combination service arrangements entered into with the continuing employees and related tax effects. The pro forma adjusted summary combines the historical results for TIBCO for those periods with the historical results for StreamBase and LogLogic for the same periods. For pro forma adjusted summary purposes, the financial impact of Maporama was not included as it was not significant. The summary is presented for informational purposes only and is not intended to be indicative of future results of operations or whether similar results would have been achieved if the acquisition had taken place at the beginning of fiscal year 2012.


10

TIBCO SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

4.
INVESTMENTS
Short-term investments and cash equivalents, which are classified as available-for-sale, are summarized below as of August 31, 2013 and November 30, 2012 (in thousands):
 
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Aggregate
Fair Value
As of August 31, 2013
 
 
 
 
 
 
 
 
Money market funds
 
$
329,428

 
$

 
$

 
$
329,428

Corporate bonds and commercial paper
 
52,861

 

 
(10
)
 
52,851

U.S. Government debt and agency securities
 
4,503

 
1

 

 
4,504

Term deposits
 
521

 

 

 
521

Mortgage-backed securities
 
201

 
130

 

 
331

 
 
$
387,514

 
$
131

 
$
(10
)
 
$
387,635

As of November 30, 2012
 
 
 
 
 
 
 
 
Money market funds
 
$
376,480

 
$

 
$

 
$
376,480

Corporate bonds and commercial paper
 
24,558

 
9

 
(9
)
 
24,558

U.S. Government debt and agency securities
 
9,646

 

 
(1
)
 
9,645

Term deposits
 
595

 

 

 
595

Mortgage-backed securities
 
182

 
78

 
(52
)
 
208

 
 
$
411,461

 
$
87

 
$
(62
)
 
$
411,486


Fixed income securities included in short-term investments above are summarized by their contractual maturities as follows (in thousands):
 
 
August 31,
2013
 
November 30,
2012
Contractual maturities:
 
 
 
 
Less than one year
 
$
23,783

 
$
22,733

One to three years
 
33,903

 
11,678

 
 
$
57,686

 
$
34,411


Realized and unrealized gains and losses on our investments were primarily due to changes in interest rates and market and credit conditions of the underlying securities and were insignificant for any period presented.

5.
FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS
Fair Value Measurements
FASB guidance for fair value measurements clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require us to develop our own assumptions. This hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. On a recurring basis, we measure certain financial assets and liabilities at fair value, including our marketable securities and foreign currency contracts.
Our cash equivalents and investment instruments are classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The types of instruments valued based on quoted market prices in active markets include money market securities. Such instruments are generally classified within Level 1 of the fair value hierarchy.

11

TIBCO SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

The types of instruments valued based on other observable inputs include U.S. government and agency securities, sovereign government obligations, investment-grade corporate bonds, mortgage-backed and asset-backed securities, term deposits and state, municipal and provincial obligations. Such instruments are generally classified within Level 2 of the fair value hierarchy.
We execute our foreign currency contracts primarily in the retail market in an over-the-counter environment with a relatively high level of price transparency. The market participants usually are large multi-national and regional banks. Our foreign currency contracts valuation inputs are based on quoted prices and quoted pricing intervals from public data sources and do not involve management judgment. These contracts are typically classified within Level 2 of the fair value hierarchy. There were no transfers between Level 1, Level 2 and Level 3 during the nine months ended August 31, 2013.
The fair value hierarchy of our cash equivalents, short-term investments and foreign currency contracts is as follows (in thousands):
 
 
 
 
 
Fair Value Measurements at
Reporting Date using
Description
 
Total Fair
Value
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
other
Observable
Inputs
(Level 2)
As of August 31, 2013
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
Money market funds
 
$
329,428

 
$
329,428

 
$

Corporate bonds and commercial paper
 
52,851

 

 
52,851

U.S. Government debt and agency securities
 
4,504

 

 
4,504

Term deposits
 
521

 

 
521

Mortgage-backed securities
 
331

 

 
331

Foreign currency forward contracts
 
388

 

 
388

Liabilities:
 
 
 
 
 
 
Foreign currency forward contracts
 
$
120

 
$

 
$
120

As of November 30, 2012
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
Money market funds
 
$
376,480

 
$
376,480

 
$

Corporate bonds and commercial paper
 
24,558

 

 
24,558

U.S. Government debt and agency securities
 
9,645

 

 
9,645

Term deposits
 
595

 

 
595

Mortgage-backed securities
 
208

 

 
208

Foreign currency forward contracts
 
101

 

 
101

Liabilities:
 
 
 
 
 
 
Foreign currency forward contracts
 
$
130

 
$

 
$
130


Derivative Instruments
We conduct business in the Americas; Europe, the Middle East and Africa (“EMEA”); and Asia Pacific and Japan (“APJ”). As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or changes in economic conditions in foreign markets. The U.S. dollar is our major transaction currency; we also transact business in approximately 25 foreign currencies worldwide, of which the most significant to our operations are the Euro, British pound, Australian dollar, and Japanese yen. We enter into forward contracts with financial institutions to manage our currency exposure related to net assets and liabilities denominated in foreign currencies, and these forward contracts are generally settled monthly. Our forward contracts reduce, but do not eliminate, the impact of currency exchange rate movements. Gains and losses on forward contracts are included in Other Income (Expense) in our Condensed Consolidated Statements of Operations.

12

TIBCO SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

We had the following forward contracts outstanding as of August 31, 2013 (in thousands):
 
 
 
Notional
Value Local  Currency
 
Notional
Value
USD
 
Fair Value
Gain (Loss)
USD
Forward contracts sold:
 
 
 
 
 
 
Australian dollar
 
10,400

 
$
9,254

 
$
55

Brazilian real
 
2,300

 
965

 
31

British pound
 
6,320

 
9,791

 
(8
)
Euro
 
27,100

 
35,813

 
231

Hong Kong dollar
 
4,100

 
529

 

Japanese yen
 
780,000

 
7,946

 
(14
)
Korean won
 
648,000

 
583

 
(9
)
Polish zloty
 
1,600

 
495

 
6

Singapore dollar
 
3,300

 
2,588

 
(1
)
South African rand
 
4,800

 
467

 
15

Swedish krona
 
8,000

 
1,207

 
19

New Taiwan dollar
 
31,000

 
1,035

 
1

Forward contracts bought:
 
 
 
 
 
 
Brazilian real
 
650

 
273

 
(9
)
Hong Kong dollar
 
8,500

 
1,096

 

South African rand
 
14,000

 
1,361

 
(47
)
Swedish krona
 
4,300

 
649

 
(9
)
 
 
 
 
 
 
$
261

 
 
 
Notional
Value Local  Currency
 
Notional
Value
EURO
 
Fair Value
Gain (Loss)
USD
Forward contracts bought:
 
 
 
 
 
 
United States dollar
 
1,300

 
984

 
7

 
 
 
 
 
 
$
7

 
 
 
Derivatives not Designated
as Hedging Instruments
 
 
August 31,
2013
 
November 30,
2012
Foreign currency forward contracts, fair value included in:
 
 
 
 
Other Current Assets
 
$
388

 
$
101

Accrued Liabilities
 
120

 
130

 
 
 
 
 
Amount of Gain or (Loss) Recognized
In Income on Derivative
 
 
 
 
Three Months Ended
August 31,
 
Nine Months Ended
August 31,
Derivatives not Designated as Hedging Instruments
 
Location
 
2013
 
2012
 
2013
 
2012
Foreign Currency Contracts
 
Other income/(exp.)
 
$
166

 
$
628

 
$
80

 
$
(1,167
)



13

TIBCO SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

6.
GOODWILL AND ACQUIRED INTANGIBLE ASSETS
The change in the carrying value of goodwill for the nine months ended August 31, 2013 is as follows (in thousands):
 
Balance as of November 30, 2012
 
$
532,290

Goodwill recorded for the Maporama acquisition
 
7,050

Goodwill recorded for the StreamBase acquisition
 
$
26,211

Post-acquisition goodwill adjustment for the LogLogic acquisition
 
(1,920
)
Foreign currency translation
 
(5,822
)
Balance as of August 31, 2013
 
$
557,809

 
Certain of our intangible assets were recorded in foreign currencies, and therefore, the gross carrying amount and accumulated amortization are subject to foreign currency translation adjustments. The carrying values of our amortized acquired intangible assets as of August 31, 2013 and November 30, 2012 are as follows (in thousands):
 
 
 
August 31, 2013
 
November 30, 2012
 
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Developed technologies
 
$
197,105

 
$
(131,090
)
 
$
66,015

 
$
182,152

 
$
(118,992
)
 
$
63,160

Maintenance agreements
 
87,075

 
(55,675
)
 
31,400

 
83,762

 
(48,481
)
 
35,281

Customer base
 
64,435

 
(48,028
)
 
16,407

 
59,525

 
(43,328
)
 
16,197

Patents/core technologies
 
27,917

 
(24,966
)
 
2,951

 
28,295

 
(24,198
)
 
4,097

Trademarks
 
12,646

 
(8,920
)
 
3,726

 
12,777

 
(8,251
)
 
4,526

Non-compete agreements
 
580

 
(580
)
 

 
580

 
(580
)
 

Total intangible assets
 
$
389,758

 
$
(269,259
)
 
$
120,499

 
$
367,091

 
$
(243,830
)
 
$
123,261



7.
ACCRUED RESTRUCTURING COSTS
2013 Restructuring Plan
Our Board of Directors approved a restructuring plan initiated by management in June 2013 (“2013 Restructuring Plan”). The restructuring charges are primarily intended to increase efficiencies and reduce redundancies, including those arising from recent acquisitions. The total restructuring costs associated with the 2013 Restructuring Plan are estimated to be $14.0 million, of which $8.9 million are presented as restructuring charges in our Condensed Consolidated Statements of Operations for the fiscal quarter ended August 31, 2013 and the remaining restructuring charges are expected to be incurred in our fourth fiscal quarter ending November 30, 2013. Changes in estimates, if any, will be reflected in our future results of operations. We expect to fulfill most of the obligations associated with this restructuring no later than 2014.
The following is a summary of activities in accrued restructuring costs for the nine months ended August 31, 2013 under the 2013 and prior years restructuring plans (in thousands):
 
 
 
Accrued
Facilities
Restructuring
 
Accrued
Severance
and Other
 
Total
As of November 30, 2012
 
$
1,331

 
$
205

 
$
1,536

Restructuring charges
 
404

 
8,467

 
8,871

Cash utilized
 
(679
)
 
(4,211
)
 
(4,890
)
As of August 31, 2013
 
$
1,056

 
$
4,461

 
$
5,517


The remaining accrued excess facilities costs represent the estimated loss on abandoned excess facilities, net of estimated sublease income, which is expected to be paid over the next two years.


14

TIBCO SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

8.
DEBT AND CREDIT FACILITIES
Credit Facility
In December 2011, we and one of our subsidiaries entered into an Amended and Restated Credit Agreement (the “2011 Credit Facility”). In May 2012, we amended certain covenants and other terms of the 2011 Credit Facility. The 2011 Credit Facility matures on December 19, 2016 and provides for borrowings of up to $250.0 million with a sublimit for swing line loans of up to $10.0 million and standby letters of credit in a face amount of up to $50.0 million. We have an option to request that the lenders increase the available commitments by up to an additional $100.0 million for total borrowings of up to $350.0 million.
Revolving loans accrue interest at a per annum rate based on, at our option, either (i) the base rate plus a margin ranging from 0.25% to 1.25%, depending on TIBCO’s consolidated leverage ratio or (ii) the London Interbank Offered Rate (“LIBOR”) rate plus a margin ranging from 1.25% to 2.25%, depending on TIBCO’s consolidated leverage ratio, for various interest periods. The base rate is defined as the highest of (i) the administrative agent’s prime rate, (ii) the federal funds rate plus a margin equal to 0.50%, and (iii) the LIBOR rate for a one month interest period plus a margin of 1.00%. We are also obligated to pay commitment fees for the unused amount of the 2011 Credit Facility, letter of credit fees and other customary fees. Loan origination fees and issuance costs of approximately $3.4 million were incurred since consummation of the 2011 Credit Facility which will be amortized through interest expense over a period of 5 years. Under certain circumstances, a default interest rate of 2.00% above the applicable interest rate will apply on all obligations during the existence of an event of default under the 2011 Credit Facility.
We are currently required to maintain a minimum consolidated interest coverage ratio of 3.5:1.0 and a maximum consolidated leverage ratio of 3.00:1.00 in addition to other customary affirmative and negative covenants. The maximum consolidated leverage ratio will decrease to 2.75:1.00 at the beginning of the second fiscal quarter of our fiscal year 2014. As of August 31, 2013, we were in compliance with all covenants under the 2011 Credit Facility and we had no outstanding borrowings under the 2011 Credit Facility.
Line of Credit
We have a $10.0 million revolving line of credit (the “Line of Credit”) that matures in June 2014. The Line of Credit was amended in June 2013 to lower the total available credit amount from $20.0 million. The Line of Credit is available for cash borrowings and for the issuance of letters of credit up to $10.0 million. The Line of Credit contains financial covenants substantially identical to those of the 2011 Credit Facility, as well as other customary affirmative and negative covenants. As of August 31, 2013, we were in compliance with all covenants under the Line of Credit.
As of August 31, 2013, we had a total of $1.0 million outstanding under the Line of Credit with respect to letters of credit in connection with sales and lease transactions.
Guarantee Credit Line and Restricted Cash
We have a revolving guarantee credit line of approximately $15.9 million available for the issuance of bank guarantees denominated in foreign currency. Issued bank guarantees were approximately $13.5 million and $12.5 million as of August 31, 2013 and November 30, 2012, respectively, and were collateralized by pledging the equivalent amount under restricted cash as required under our guarantee credit line. Various other contractual commitments also require us to pledge cash as security and record this cash under restricted cash. As of August 31, 2013 and November 30, 2012, we had restricted cash of $15.6 million and $14.6 million, respectively, which is included in Other Assets on our Condensed Consolidated Balance Sheets.

9.
CONVERTIBLE SENIOR NOTES
Description of Convertible Senior Notes
In April 2012, we issued convertible senior notes (the “Notes”) in an aggregate principal amount of $600.0 million due May 1, 2032. The Notes bear interest at a rate of 2.25% per annum. The Notes do not contain any financial covenants or any restrictions on the payment of dividends, the incurrence of senior debt or other indebtedness, or the issuance or repurchase of securities by us. Each $1,000 principal amount of Notes is initially convertible, at the option of the holders, at a rate of 19.7750 shares of our common stock, which represents an initial conversion price of approximately $50.57 per share, which is subject to adjustment upon the occurrence of certain events specified in the indenture. On conversion of a Note, we will deliver cash in an amount generally equal to the lesser of the conversion value and the principal amount of each Note and, for any

15

TIBCO SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

conversion value greater than the principal amount, we will deliver shares of common stock. Holders may convert Notes prior to February 1, 2032, and other than during the period from February 1, 2017 to May 5, 2017, under the following circumstances: (1) if the Notes are called for redemption, at any time prior to the redemption date; (2) during any fiscal quarter, if our last reported sale price of a share of common stock for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (3) during any five consecutive trading day period when the trading price per $1,000 principal amount of Notes is less than 98% of the product of the last reported sale price of a share of common stock and the conversion rate; and (4) upon the occurrence of certain distributions or corporate events as specified in the indenture governing the Notes. From February 1, 2017 to May 5, 2017, and from February 1, 2032 until the maturity date, holders may convert Notes at any time, regardless of the foregoing circumstances.
After May 5, 2017, we may redeem for cash all or part of the Notes. The redemption price will be equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest. Holders may require us to repurchase all or a portion of their Notes on May 5, 2017, May 1, 2022 and May 1, 2027 in cash at a price equal to the principal amount, plus accrued and unpaid interest.
Upon the occurrence of a fundamental change under the indenture for the Notes such as in the event of a change in control, the holders may require us to repurchase all or a portion of their Notes at the principal amount of the Notes plus accrued and unpaid interest. Following certain corporate transactions that constitute a fundamental change, the conversion rate may increase for a holder who elects to convert the Notes. Upon conversion, we will deliver an amount of cash and a number of shares of common stock, if any, equal to the sum of the daily settlement amounts for each daily volume weighted average price in the 35 day observation period for such Note as determined pursuant to the indenture for the Notes.
We used approximately $121.0 million of the net proceeds from the offering to repurchase 3.6 million shares of our common stock concurrently with the offering of the Notes in April 2012.
Accounting of Convertible Senior Notes
Accounting guidance requires that convertible debt that can be settled for cash, such as the Notes, be separated into the liability and equity component at issuance and each be assigned a value. The value assigned to the liability component is the estimated fair value, as of the issuance date, of a similar debt without the conversion feature. The difference between the cash proceeds and estimated fair value of the liability component, representing the value of the conversion premium assigned to the equity component, is recorded as a debt discount on the issuance date. This debt discount is amortized to interest expense using the effective interest method over the period from the issuance date through the first stated repurchase date on May 5, 2017. We estimated the straight debt borrowing rates at debt origination to be 5.50% for the Notes and determined the debt discount to be $84.6 million. As a result, a conversion premium after tax of $52.6 million was recorded in additional paid-in capital.
As of August 31, 2013, the carrying value of the Notes was $536.1 million, which consisted of $600.0 million outstanding principal amount net of $63.9 million unamortized debt discount.
In connection with the issuance of the Notes, we incurred $15.6 million of issuance costs, which primarily consisted of investment banker fees and legal and other professional service fees. Deferred issuance costs of $13.4 million attributable to the liability component are being amortized to interest expense through May 5, 2017, and $2.2 million ($1.4 million net of tax) of transaction costs attributable to the equity component were netted with the equity component in additional paid-in capital at the issuance date. The deferred debt issuance costs are recorded within other assets in accordance with short- and long-term classification. If the holders require conversion of some or all of the Notes when the conversion requirements are met, we would accelerate amortization of the pro rata share of the unamortized balance of the issuance cost to additional paid-in capital on such date.
For the third quarter ended August 31, 2013, we recognized interest expense of $8.0 million related to the Notes, comprised of $3.4 million for the contractual coupon interest, $3.9 million related to the amortization of debt discount and $0.7 million related to the amortization of deferred debt issuance costs.
The Notes are carried at face value less any unamortized debt discount and also require disclosure of an estimate of fair value (Level 2 of the three-tier value hierarchy). The fair value of the Notes at each balance sheet date is determined based on recent quoted market prices or dealer quotes for the Notes, if available. Otherwise, the fair value is determined using cash-flow models of the scheduled payments discounted at market interest rates for comparable debt without the conversion feature. As of August 31, 2013, the estimated fair value of the Notes was approximately $606.8 million.

16

TIBCO SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)


10.
COMMITMENTS AND CONTINGENCIES
Prepaid Land Lease
In June 2003, we entered into a 51-year lease of the land upon which our corporate headquarters is located. The lease was paid in advance for a total of $28.0 million. This prepaid land lease is being amortized using the straight-line method over the life of the lease.
Commitments
At various locations worldwide, we lease office space and equipment under non-cancelable operating leases with various expiration dates through March 2032. Rental expense was $4.0 million and $3.6 million for the three months ended August 31, 2013 and 2012, respectively, and $12.1 million and $10.7 million for the nine months ended August 31, 2013 and 2012, respectively.
As of August 31, 2013, contractual commitments associated with indebtedness, lease obligations and restructuring were as follows (in thousands):
 
 
 
Total
 
Remainder of
2013
 
2014
 
2015
 
2016
 
2017
 
Thereafter
Commitments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt principal
 
$
600,000

 
$

 
$

 
$

 
$

 
$
600,000

 
$

Debt interest
 
54,000

 
6,750

 
13,500

 
13,500

 
13,500

 
6,750

 

Operating leases (1)
 
42,513

 
2,079

 
10,729

 
6,980

 
7,029

 
6,205

 
9,491

Total commitments
 
$
696,513

 
$
8,829

 
$
24,229

 
$
20,480

 
$
20,529

 
$
612,955

 
$
9,491


(1)
Operating leases included future minimum rent payments, net of estimated sublease income, for facilities that we have vacated pursuant to our restructuring activities, as discussed in Note 7.
Future minimum lease payments under restructured non-cancelable operating leases are included in Accrued Restructuring Costs on our Condensed Consolidated Balance Sheets.
The above commitment table does not include approximately $52.0 million of long-term uncertain income tax liabilities due to the fact that we are unable to reasonably estimate the timing of these potential future payments.
Indemnification
Our software license agreements typically provide for indemnification of customers for intellectual property infringement claims. We also warrant to customers that software products operate substantially in accordance with the software product’s specifications. Historically, we have incurred minimal costs related to product warranties, and, as such, no accruals for warranty costs have been made. In addition, we indemnify our officers and directors under the terms of indemnity agreements entered into with them, as well as pursuant to our certificate of incorporation, bylaws and applicable Delaware law.

11.
LEGAL PROCEEDINGS

From time to time, we are involved in or subject to legal, administrative and regulatory proceedings, claims, demands and investigations arising in the ordinary course of business, including direct claims brought by or against us with respect to intellectual property, contracts, employment and other matters, as well as claims brought against our customers for whom we have a contractual indemnification obligation. We accrue for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. After we determine the probability of a loss and whether that loss is reasonably estimable, we then analyze whether the litigation, based on that determination, could have a material and adverse effect on our financial statements, taken as a whole and including our statement of cash flows. The accruals or estimates, if any, resulting from the foregoing analysis, are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. To the extent there is a reasonable possibility that the losses could exceed the amounts already accrued, we will, as applicable, adjust the accrual in the period the determination is made, disclose an estimate of the additional loss or range of loss, indicate that the estimate is immaterial with respect to our

17

TIBCO SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made.

JuxtaComm v. TIBCO, et al.
 On January 21, 2010, JuxtaComm-Texas Software, LLC (“JuxtaComm”) filed a complaint for patent infringement against us and other defendants in the United States District Court for the Eastern District of Texas, Case No. 6:10-CV-00011-LED. On April 22, 2010, JuxtaComm filed an amended complaint in which it alleges that certain TIBCO offerings, including TIBCO ActiveMatrix Business Works™, TIBCO iProcess™ Suite, TIBCO Business Studio™ and TIBCO ActiveMatrix® Service Bus infringe U.S. Patent No. 6,195,662 (“’662 patent”). JuxtaComm seeks injunctive relief and unspecified damages. On May 6, 2010, we filed an answer and counterclaims in which we denied JuxtaComm's claims and asserted counterclaims for declaratory relief that the asserted patent is invalid and not infringed.
On May 12, 2011, the U.S. Patent & Trademark Office (“PTO”) issued a Final Office Action rejecting all asserted claims of the ’662 patent in a separate re-examination proceeding before the PTO. On September 9, 2011, JuxtaComm filed a Notice of Appeal to the Board of Patent Appeals and Interferences (“BPAI”), challenging the Final Office Action. On January 31, 2013, the BPAI reversed the PTO's rejection of the asserted claims.
 
 On May 15, 2012, the Court in the Eastern District of Texas granted the defendants' motion for summary judgment on invalidity of the asserted claims. On May 16, 2012, the Court issued an order staying all deadlines and vacating the trial date in light of the Court's grant of summary judgment of invalidity. On July 6, 2012, the Court issued its order granting summary judgment. On September 19, 2012, the Court issued an order of final judgment against JuxtaComm and taxed the defendants' costs of court against JuxtaComm. JuxtaComm filed a notice of appeal on September 28, 2012. On September 30, 2013, the United States Court of Appeals for the Federal Circuit affirmed the District Court's grant of summary judgment of invalidity (JuxtaComm-Texas Software, LLC v. TIBCO Software Inc., et al., No. 2013-1004, -1025).

We will continue to defend the action vigorously. While we believe that we have valid defenses to JuxtaComm's claims and while the Court of Appeals affirmed the District Court's entry of judgment in our favor, litigation is inherently unpredictable and we cannot make any predictions as to the outcome of this litigation. It is possible that our business, financial position, results of operations, cash position or cash flow could be negatively affected by an unfavorable resolution of this action, however, we are unable to estimate a range of potential loss at this time.
InvestPic, LLC v. TIBCO, et al.
On November 24, 2010, InvestPic, LLC (“InvestPic”) filed a complaint for patent infringement against us and fourteen other defendants in the United States District Court for the District of Delaware, Case No. 1:10cv1028-SLR. The complaint alleges that TIBCO Spotfire® S+® “and other similar products” infringe U.S. Patent No. 6,349,291 (the “’291 patent”). On March 29, 2011, defendant SAS Institute Inc. (“SAS”) filed a motion to dismiss the complaint for failure to state a claim for relief on the basis that all the asserted claims of the ’291 patent are invalid as being directed to unpatentable subject matter. On May 13, 2011, TIBCO, along with other defendants, filed a motion to dismiss the complaint on the same grounds as SAS’ motion. On September 30, 2011, the Court denied this motion to dismiss. However, the Court declined to address the merits of defendants’ arguments that the claims of the ’291 patent are directed to unpatentable subject matter, in the absence of discovery or claim construction. On May 3, 2012, defendants SAS, Algorithmics (U.S.), Inc. and International Business Machines Corp. filed a motion to stay the litigation pending the reexamination of the ’291 patent. On July 10, 2012, the Court entered an order to stay the litigation and administratively close the case during the pendency of the reexamination of the ’291 patent.

InvestPic seeks injunctive relief and unspecified damages. We intend to defend the action vigorously. While we believe that we have valid defenses to InvestPic's claims, litigation is inherently unpredictable and we cannot make any predictions as to the outcome of this litigation. It is possible that our business, financial position, results of operations, cash position or cash flow could be negatively affected by an unfavorable resolution of this action. As InvestPic has made no specific demand for damages in this matter other than injunctive relief, we cannot currently estimate a reasonably possible range of loss for this action.

18

TIBCO SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

Vasudevan Software, Inc. v. TIBCO, et al.

On December 23, 2011, Vasudevan Software, Inc. (“Vasudevan) filed a complaint for patent infringement against us and Spotfire Inc. in the United States District Court for the Northern District of California, Case No. 3:11-cv-06638-RS. The complaint alleges that TIBCO directly, indirectly, and willfully infringes U.S. Patent No. 7,167,864 B1 based on “Spotfire Analytics and other products.” Vasudevan further alleges in its infringement contentions that the accused products “include at least the TIBCO Spotfire Platform (e.g., TIBCO Spotfire Professional, TIBCO Spotfire Server, TIBCO Spotfire Web Player, TIBCO Spotfire Enterprise Player, TIBCO Spotfire for the Apple iPad, TIBCO Spotfire Application Data Services, TIBCO Spotfire Developer, TIBCO Spotfire Metrics, TIBCO Spotfire Network Analytics, TIBCO Spotfire Operations Analytics Bundle, and TIBCO Silver Spotfire) at least versions 4.0 to 2.1, as well as any TIBCO products and services that utilize the TIBCO Spotfire Platform.” Vasudevan amended its complaint on March 6, 2012, but continues to accuse the same products of infringement. On May 18, 2012, the Court granted our motion to dismiss Vasudevan's indirect and willful infringement claims. Vasudevan filed a second amended complaint on July 24, 2012, adding a claim for inducement of infringement for alleged acts of indirect infringement occurring after the filing of the original complaint. On September 19, 2012, the Court issued a claim construction order, followed by an order on September 19, 2013, clarifying the prior claim construction. Fact discovery closed on February 15, 2013. Expert discovery closed on June 7, 2013.

On May 30, 2013, the Court heard oral argument regarding our motion for summary judgment of invalidity of U.S. Patent No. 7,167,864 for lack of written description and enablement. The Court heard further argument on August 29, 2013, regarding our motions for summary judgment of noninfringement and invalidity and pretrial motions regarding the admission of expert testimony.
 
Vasudevan seeks injunctive relief and damages in the amount of a “royalty rate of 8% [applied] to the software license, maintenance, and services revenue generated by us (and Spotfire) from U.S. sales of the accused products since January 23, 2007.” A jury trial is scheduled to begin January 27, 2014. 

We intend to defend the action vigorously. While we believe that we have valid defenses to Vasudevan's claims, litigation is inherently unpredictable and we cannot make any predictions as to the outcome of this litigation. It is possible that our business, financial position, results of operations, cash position or cash flow could be negatively affected by an unfavorable resolution of this action. We cannot currently estimate a reasonably possible range of loss for this action.


12.
STOCK-BASED COMPENSATION
Stock-based compensation cost for the three months ended August 31, 2013 and 2012 was $7.9 million and $15.4 million, respectively. The stock-based compensation expense recorded to date of $6.9 million that related to performance-based restricted stock units granted in 2012 and 2013 was reversed in the third quarter, as it is improbable that certain performance criteria for vesting of these awards will be achieved. Stock-based compensation cost for the nine months ended August 31, 2013 and 2012 was $39.2 million and $45.1 million, respectively. The deferred tax benefit from stock-based compensation expenses for the three months ended August 31, 2013 and 2012 was $1.9 million and $5.0 million, respectively. The deferred tax benefit from stock-based compensation expenses for the nine months ended August 31, 2013 and 2012 was $11.3 million and $14.9 million, respectively.

19


The following table summarizes additional information pertaining to our stock-based compensation from stock options and stock awards which are comprised of restricted stock, restricted stock units and performance-based restricted stock units (in thousands, except grant-date fair value and recognition period):
 
 
 
Three Months Ended
August 31,
 
Nine Months Ended
August 31,
 
 
2013
 
2012
 
2013
 
2012
Stock options:
 
 
 
 
 
 
 
 
Weighted-average grant-date fair value
 
$
8.24

 
$
10.96

 
$
7.84

 
$
9.93

Options granted
 
5

 
17

 
23

 
189

Options exercised
 
(1,395
)
 
(697
)
 
(2,382
)
 
(2,334
)
Total intrinsic value of stock options exercised
 
$
20,059

 
$
14,627

 
$
36,114

 
$
46,491

Total unrecognized compensation expense at period-end
 
$
7,623

 
$
20,723

 
$
7,623

 
$
20,723

Weighted-average remaining recognition period at period-end
 
1.7 years

 
2.3 years

 
1.7 years

 
2.3 years

Stock awards:
 
 
 
 
 
 
 
 
Weighted-average grant-date fair value
 
$
23.67

 
$
27.32

 
$
22.49

 
$
28.29

Stock awards granted
 
214

 
1,638

 
2,961

 
2,602

Stock awards vested
 
(361
)
 
(241
)
 
(1,835
)
 
(1,929
)
Total unrecognized compensation expense at period-end
 
$
88,184

 
$
115,794

 
$
88,184

 
$
115,794

Weighted-average remaining recognition period at period-end
 
1.8 years

 
1.9 years

 
1.8 years

 
1.9 years


 
13.
PROVISION FOR INCOME TAXES
The effective tax rate was 27% and 22% for the three months ended August 31, 2013 and 2012, respectively, and 22% and 20% for the nine months ended August 31, 2013 and 2012, respectively.
In the three months ended August 31, 2013, we recognized a discrete benefit of $1.4 million to adjust taxes provided for prior U.S. and foreign tax returns and to accrue withholding taxes in jurisdictions where we do not expect to benefit from a foreign tax credit. This included an out-of-period adjustment of $2.2 million related to a tax benefit that was not recorded during the fiscal year ended November 30, 2012.
We recognize the withholding taxes as discrete items because of the high variability of withholding tax rates by country and the difficulty in forecasting the exact country of future revenue.
In the nine months ended August 31, 2013, we recognized certain discrete items of tax expense and benefit of a net of $1.3 million primarily related to adjust taxes provided for prior year U.S. and foreign tax returns, to accrue withholding taxes, and to record tax benefits from retroactive legislative reinstatement of the federal research and development credit.
In the three months ended August 31, 2012, we recognized a discrete tax provision of $1.6 million to adjust taxes provided for prior year U.S. and foreign tax returns and to accrue withholding taxes in jurisdictions where we do not expect to benefit from a foreign tax credit.
In the nine months ended August 31, 2012, we recognized a discrete tax provision of $3.1 million primarily related to estimated withholding taxes.
The provision for the nine month periods ended August 31, 2013 and 2012 reflects a forecasted annual tax rate of 24% and 17%, respectively, offset by discrete items which are booked in the period they occur. The forecasted tax rate reflects the benefits resulting from the reorganization of certain foreign entities, lower foreign taxes, domestic manufacturing incentives, and federal and state research and development credits, partially offset by the impact of certain stock compensation charges and state income taxes.
On January 2, 2013, the American Taxpayer Relief Act of 2012 (H.R. 8, as amended) was signed into law. This Act extends the federal research and development credit through December 31, 2013. The federal research and development credit was reinstated retroactively to January 1, 2012. The retroactive tax benefit of the federal research and development credit for the eleven months ended November 30, 2012 was recognized as a discrete tax benefit of $3.3 million in the first quarter of fiscal year 2013, the period in which the reinstatement was enacted into law.

20

TIBCO SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

We expect to use the single sales factor apportionment for California state taxation, which is expected to lower our future taxable state income. This reduction in taxable income may affect the extent to which we can benefit from $13.5 million (net of reserve for uncertain tax positions) research and development credit carryforwards and $4.8 million net operating loss carryforwards. If we determine that it is more likely than not that we will not be able to fully utilize these carryforwards, we will recognize a valuation allowance against the related deferred tax assets.
During the three months ended August 31, 2013, the amount of gross unrecognized tax benefits increased by approximately $24.2 million primarily due to current period transfer pricing exposures. The total amount of gross unrecognized tax benefits was $85.4 million as of August 31, 2013, of which $66.7 million would benefit tax expense if realized. We elected to include interest expense and penalties accrued on unrecognized tax benefits as a component of our income tax expense. We do not expect any significant changes to the amount of unrecognized tax benefit within the next twelve months. 

14.
NET INCOME PER SHARE
The following table sets forth the computation of basic and diluted net income per share for the periods indicated (in thousands, except per share data):
 
 
 
Three Months Ended
August 31,
 
Nine Months Ended
August 31,
 
 
2013
 
2012
 
2013
 
2012
Net income attributable to TIBCO Software Inc.
 
$
21,251

 
$
26,086

 
$
39,471

 
$
73,219

Weighted-average shares of common stock used to compute basic net income per share
 
160,638

 
159,308

 
161,012

 
160,402

Effect of dilutive common stock equivalents:
 
 
 
 
 
 
 
 
Stock options
 
4,392

 
6,600

 
4,738

 
7,016

Stock awards
 
1,961

 
3,257

 
2,122

 
2,412

Employee stock purchase program
 
8

 

 
7

 
6

Weighted-average shares of common stock used to compute diluted net income per share
 
166,999

 
169,165

 
167,879

 
169,836

Net income per share attributable to TIBCO Software Inc.:
 
 
 
 
 
 
 
 
Basic
 
$
0.13

 
$
0.16

 
$
0.25

 
$
0.46

Diluted
 
$
0.13

 
$
0.15

 
$
0.24

 
$
0.43


The following potential common stock equivalents are not included in the diluted net income per share calculation above because their effect was anti-dilutive for the periods indicated (in thousands):
 
 
 
Three Months Ended
August 31,
 
Nine Months Ended
August 31,
 
 
2013
 
2012
 
2013
 
2012
Stock options
 
1,594

 
1,762

 
1,741

 
1,762

Stock awards
 
1,637

 
556

 
1,294

 
199

Convertible senior notes
 
11,865

 
11,865

 
11,865

 
6,526

Total anti-diluted common stock equivalents
 
15,096

 
14,183

 
14,900

 
8,487

Anti-dilutive potential common stock equivalents for the three and nine months ended August 31, 2013 include the 11.9 million shares that could be issued under the Notes if we experience substantial increases in our stock price. Under the treasury stock method, the Notes will generally have a dilutive impact on net income per share if our average stock price for the period exceeds the conversion price for the Notes. On conversion of a Note, however, we will deliver cash in an amount generally equal to the lesser of the conversion value and the principal amount of each Note and, only for any conversion value greater than the principal amount, we will deliver shares of common stock.


21

TIBCO SOFTWARE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Unaudited)

15.
SEGMENT INFORMATION
We operate our business in one operating segment: the development and marketing of a suite of infrastructure software. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance.
Our revenue, organized by the following geographic regions: (i) Americas; (ii) EMEA; and (iii) APJ, based on the location at which each sale originates, is summarized as follows (in thousands):
 
 
 
Three Months Ended
August 31,
 
Nine Months Ended
August 31,
 
 
2013
 
2012
 
2013
 
2012
Americas:
 
 
 
 
 
 
 
 
United States
 
$
147,170

 
$
129,001

 
$
395,274

 
$
358,193

Other Americas
 
10,802

 
17,177

 
32,743

 
36,563

Total Americas
 
157,972

 
146,178

 
428,017

 
394,756

EMEA:
 
 
 
 
 
 
 
 
United Kingdom
 
26,973

 
19,640

 
67,056

 
65,974

Other EMEA
 
59,995

 
63,037

 
182,860

 
190,098

Total EMEA
 
86,968

 
82,677

 
249,916

 
256,072

APJ
 
25,919

 
26,166

 
76,562

 
77,258

 
 
$
270,859

 
$
255,021

 
$
754,495

 
$
728,086


Our property and equipment by major country are summarized as follows (in thousands):
 
 
 
August 31,
2013
 
November 30,
2012
Property and equipment, net:
 
 
 
 
United States
 
$
83,888

 
$
83,516

United Kingdom
 
1,055

 
1,191

Other
 
10,849

 
13,767

 
 
$
95,792

 
$
98,474



16.
STOCK REPURCHASE PROGRAMS
On April 26, 2013, we announced that our Board of Directors approved a stock repurchase program pursuant to which we may repurchase up to $300.0 million of our outstanding common stock from time to time in the open market or through privately negotiated transactions. During the nine months ended August 31, 2013, we repurchased 5.0 million shares for $105.3 million.
In connection with the repurchase activities during the nine months ended August 31, 2013, we classified $77.7 million of the excess purchase price over the par value of our common stock to retained earnings.

17.
SUBSEQUENT EVENT
Acquisition of Extended Results, Inc
On September 13, 2013, we acquired Extended Results, Inc (“Extended Results”), a private company based and incorporated in the State of Washington. Extended Results is a provider of mobile business intelligence software and services. We paid approximately $21.0 million to acquire all of the outstanding shares of capital stock of Extended Results. We have also incurred transaction costs associated with the acquisition. As a result of the acquisition, we assumed all facility leases, certain liabilities and commitments of Extended Results. Management is currently evaluating the purchase price allocation for this transaction.

22


ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements relate to expectations concerning future events or matters that are not historical facts. Words such as “projects,” “believes,” “anticipates,” “plans,” “expects,” “intends,” “strategy,” “continue,” “will,” “estimate,” “forecast,” and similar words and expressions are intended to identify forward-looking statements, although these words are not the only means of identifying these statements. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, these expectations or any of the forward-looking statements could prove to be incorrect, and actual results could differ materially from those projected or assumed in the forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to risks and uncertainties, including, but not limited to, the factors set forth in Part II, Item 1A. “Risk Factors.” This discussion should be read in conjunction with our Consolidated Financial Statements and accompanying notes and with our Annual Report on Form 10-K for the year ended November 30, 2012 and with our quarterly Condensed Consolidated Financial Statements and notes thereto which appear elsewhere in this Quarterly Report on Form 10-Q. All forward-looking statements and reasons why results may differ included in this Quarterly Report on Form 10-Q are made as of the date hereof, and we assume no obligation to update any such forward-looking statements or reasons why actual results may differ.
Executive Overview
Our products are currently licensed by companies worldwide in diverse industries such as financial services, telecommunications, government, energy, life sciences, insurance, logistics, manufacturing, retail, and transportation. We sell our products through a direct sales force and through alliances with leading software vendors and system integrators.
Our revenue consists primarily of license and maintenance fees from our customers, distributors and partners (including system integrators, resellers, professional service organizations and business partners) who embed our software in their products. In addition, we receive fees from our customers for providing consulting services. Our revenue is generally derived from a diverse customer base. No single customer represented greater than 10% of our total revenue for the first nine months of fiscal year 2013. As of August 31, 2013, no single customer had a balance in excess of 10% of our net accounts receivable.
For the third quarter of fiscal year 2013, we recorded total revenue of $270.9 million, an increase of 6% from the third quarter of fiscal year 2012. License revenue was $105.2 million, an increase of 6% from the third quarter of fiscal year 2012. In addition, we generated cash flow from operations of $58.3 million in the third quarter of fiscal year 2013. Diluted earnings per share under generally accepted accounting principles in the United States of America (“GAAP”) was $0.13 in the third quarter of fiscal year 2013 as compared to $0.15 for the third quarter of fiscal year 2012. We ended the quarter with $723.9 million in cash, cash equivalents and short-term investments.
We intend to grow our business by pursuing key initiatives to: broaden our product platform through internal development and acquisitions; increase our sales capacity by expanding our direct sales organization and developing our channel partnerships; expand our product offerings to new vertical markets; and employ marketing programs to increase awareness of us and our products among existing and prospective customers. Whether or not we are successful depends on our ability to: appropriately manage our expenses as we grow our organization; identify or acquire companies or assets at attractive valuations; enter into beneficial channel relationships; develop new products; and successfully execute our marketing and sales strategies.
Critical Accounting Policies, Judgments and Estimates
The discussion and analysis of our financial condition and results of operations is based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates, assumptions and judgments that can have significant impact on the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our financial statements. We base our estimates, assumptions and judgments on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On a regular basis we evaluate our estimates, assumptions and judgments and make changes accordingly. We also discuss our critical accounting estimates on a regular basis with the Audit Committee of our Board of Directors.
We believe that the estimates, assumptions and judgments involved in revenue recognition, allowances for doubtful accounts, returns and discounts, stock-based compensation, business combination, impairment of goodwill, intangible and long-lived assets, and accounting for income taxes have the greatest potential impact on our Condensed Consolidated Financial

23


Statements, so we consider these to be our critical accounting policies. Historically, our estimates, assumptions and judgments relative to our critical accounting policies have not differed materially from actual results. The critical accounting estimates associated with these policies are described in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2012 Annual Report on Form 10-K for the fiscal year ended November 30, 2012.
Recent Accounting Pronouncements
Recent accounting pronouncements are detailed in Note 2 to our Condensed Consolidated Financial Statements.
Results of Operations
For purposes of presentation, we have indicated the third quarter of fiscal years 2013 and 2012 as ended on August 31, 2013 and August 31, 2012, respectively; whereas in fact, the third quarter of fiscal years 2013 and 2012 actually ended on September 1, 2013 and September 2, 2012, respectively. There were 91 days in the third quarter of both fiscal years 2013 and 2012. All amounts presented in the tables in the following sections of our Results of Operations are stated in thousands of dollars, except for percentages and unless otherwise stated.
The following table sets forth the components of our Results of Operations as percentages of total revenue for the periods indicated:
 
 
 
Three Months Ended
August 31,
 
Nine Months Ended
August 31,
 
 
2013
 
2012
 
2013
 
2012
Revenue:
 
 
 
 
 
 
 
 
License
 
39
 %
 
39
 %
 
35
 %
 
38
 %
Service and maintenance
 
61

 
61

 
65

 
62

Total revenue
 
100

 
100

 
100

 
100

Cost of revenue:
 
 
 
 
 
 
 
 
License
 
5

 
4

 
5

 
4

Service and maintenance
 
24

 
24

 
25

 
24

Total cost of revenue
 
29

 
28

 
30

 
28

Gross profit
 
71

 
72

 
70

 
72

Operating expenses:
 
 
 
 
 
 
 
 
Research and development
 
16

 
16

 
17

 
16

Sales and marketing
 
31

 
30

 
33

 
32

General and administrative
 
5

 
7

 
7

 
7

Amortization of acquired intangible assets
 
2

 
2

 
2

 
2

Acquisition related and other
 

 

 

 

Restructuring adjustment
 
3

 

 
1

 

Total operating expenses
 
57

 
55

 
60

 
57

Income from operations
 
14

 
17

 
10

 
15

Interest income
 

 

 

 

Interest expense
 
(3
)
 
(3
)
 
(3
)
 
(2
)
Other income (expense), net
 

 
(1
)
 

 

Income before provision for income taxes and noncontrolling interest
 
11

 
13

 
7

 
13

Provision for (benefit from) income taxes
 
3

 
3

 
2

 
3

Net income
 
8

 
10

 
5

 
10

Less: Net income (loss) attributable to noncontrolling interest
 

 

 

 

Net income attributable to TIBCO Software Inc.
 
8
 %
 
10
 %
 
5
 %
 
10
 %

Our Results of Operations include incremental revenue and costs related to the acquisitions of StreamBase, Maporama and LogLogic. In connection with this acquisition, we have incurred additional expenses, including amortization of intangible assets and acquired technology; stock-based compensation; personnel and related costs; facility and infrastructure costs; and other charges.

24


Total Revenue
Our total revenue consisted primarily of license, service and maintenance fees from our customers, distributors and partners.
 
 
 
Three Months Ended
August 31,
 
Nine Months Ended
August 31,
 
 
2013
 
2012
 
Change
 
2013
 
2012
 
Change
Total revenue
 
$
270,859

 
$
255,021

 
6
%
 
$
754,495

 
$
728,086

 
4
%

Total revenue in the third quarter of fiscal year 2013 increased by $15.8 million, or 6%, compared to the same quarter last year. The increase was comprised of a $6.1 million, or 6%, increase in license revenue and a $9.7 million, or 6%, increase in service and maintenance revenue. Total revenue for the nine months ended August 31, 2013 increased by $26.4 million, or 4%, compared to the same period last year.
For the nine months ended August 31, 2013, we experienced an increase in total revenue in the Americas and a decrease in total revenue in each of Asia Pacific and Japan (“APJ”) and Europe, the Middle East and Africa (“EMEA”) compared to the same period last year. See Note 15 to our Condensed Consolidated Financial Statements for total revenue by region. The percentages of total revenue from the geographic regions are summarized as follows:
 
 
 
Three Months Ended
August 31,
 
Nine Months Ended
August 31,
 
 
2013
 
2012
 
2013
 
2012
Americas
 
58
%
 
57
%
 
57
%
 
54
%
EMEA
 
32
%
 
33
%
 
33
%
 
35
%
APJ
 
10
%
 
10
%
 
10
%
 
11
%
 
 
100
%
 
100
%
 
100
%
 
100
%

License Revenue
 
 
 
Three Months Ended
August 31,
 
Nine Months Ended
August 31,
 
 
2013
 
2012
 
Change
 
2013
 
2012
 
Change
License revenue
 
$
105,209

 
$
99,103

 
6
%
 
$
265,738

 
$
273,999

 
(3
)%
Percentage of total revenue
 
39
%
 
39
%
 
 
 
35
%
 
38
%
 
 

Our license revenue was derived from the following three product lines: service oriented architecture (“SOA”) and core infrastructure; business optimization; and process automation and collaboration. The percentages of license revenue from the three product lines are summarized as follows:
 
 
 
Three Months Ended
August 31,
 
Nine Months Ended
August 31,
 
 
2013
 
2012
 
2013
 
2012
SOA and core infrastructure
 
43
%
 
47
%
 
47
%
 
53
%
Business optimization
 
46
%
 
44
%
 
44
%
 
36
%
Process automation and collaboration
 
11
%