Massachusetts | 04-2866152 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Large accelerated filer | þ | Accelerated filer | ¨ | Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |||
(Do not check if a smaller reporting company) |
Page Number | ||
Part I—FINANCIAL INFORMATION | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II—OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 6. | ||
ITEM 1. | UNAUDITED CONDENSED FINANCIAL STATEMENTS |
July 2, 2016 | September 30, 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 294,626 | $ | 273,417 | |||
Short term marketable securities | 11,380 | — | |||||
Accounts receivable, net of allowance for doubtful accounts of $999 and $998 at July 2, 2016 and September 30, 2015, respectively | 151,718 | 197,275 | |||||
Prepaid expenses | 56,986 | 56,365 | |||||
Other current assets | 120,576 | 140,819 | |||||
Deferred tax assets | — | 36,803 | |||||
Total current assets | 635,286 | 704,679 | |||||
Property and equipment, net | 62,909 | 65,162 | |||||
Goodwill | 1,169,660 | 1,069,041 | |||||
Acquired intangible assets, net | 323,382 | 291,301 | |||||
Long term marketable securities | 33,226 | — | |||||
Deferred tax assets | 71,467 | 38,936 | |||||
Other assets | 43,216 | 40,794 | |||||
Total assets | $ | 2,339,146 | $ | 2,209,913 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 16,250 | $ | 13,361 | |||
Accrued expenses and other current liabilities | 77,003 | 97,613 | |||||
Accrued compensation and benefits | 91,861 | 82,414 | |||||
Accrued income taxes | 7,784 | 4,010 | |||||
Deferred tax liabilities | — | 1,622 | |||||
Current portion of long term debt | — | 50,000 | |||||
Deferred revenue | 410,996 | 368,240 | |||||
Total current liabilities | 603,894 | 617,260 | |||||
Long term debt, net of current portion | 778,125 | 618,125 | |||||
Deferred tax liabilities | 20,342 | 42,361 | |||||
Deferred revenue | 14,436 | 18,610 | |||||
Other liabilities | 59,688 | 53,386 | |||||
Total liabilities | 1,476,485 | 1,349,742 | |||||
Commitments and contingencies (Note 13) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.01 par value; 5,000 shares authorized; none issued | — | — | |||||
Common stock, $0.01 par value; 500,000 shares authorized; 114,952 and 113,745 shares issued and outstanding at July 2, 2016 and September 30, 2015, respectively | 1,150 | 1,137 | |||||
Additional paid-in capital | 1,584,675 | 1,553,390 | |||||
Accumulated deficit | (628,606 | ) | (602,614 | ) | |||
Accumulated other comprehensive loss | (94,558 | ) | (91,742 | ) | |||
Total stockholders’ equity | 862,661 | 860,171 | |||||
Total liabilities and stockholders’ equity | $ | 2,339,146 | $ | 2,209,913 |
Three months ended | Nine months ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Revenue: | |||||||||||||||
Subscription | $ | 31,822 | $ | 17,155 | $ | 77,657 | $ | 47,143 | |||||||
Support | 161,881 | 165,687 | 494,262 | 516,042 | |||||||||||
Total recurring software revenue | 193,703 | 182,842 | 571,919 | 563,185 | |||||||||||
Perpetual license | 44,648 | 66,771 | 132,100 | 201,707 | |||||||||||
Total software revenue | 238,351 | 249,613 | 704,019 | 764,892 | |||||||||||
Professional services | 50,301 | 53,500 | 148,277 | 177,782 | |||||||||||
Total revenue | 288,652 | 303,113 | 852,296 | 942,674 | |||||||||||
Cost of revenue: | |||||||||||||||
Cost of software revenue | 38,864 | 33,282 | 114,291 | 102,525 | |||||||||||
Cost of professional services revenue | 43,606 | 46,094 | 128,518 | 155,847 | |||||||||||
Total cost of revenue | 82,470 | 79,376 | 242,809 | 258,372 | |||||||||||
Gross margin | 206,182 | 223,737 | 609,487 | 684,302 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 94,874 | 88,353 | 264,480 | 261,702 | |||||||||||
Research and development | 57,118 | 54,078 | 171,397 | 175,333 | |||||||||||
General and administrative | 35,485 | 46,201 | 107,968 | 113,725 | |||||||||||
Amortization of acquired intangible assets | 8,294 | 9,105 | 25,040 | 27,691 | |||||||||||
Restructuring charges | 2,815 | 4,393 | 44,541 | 42,625 | |||||||||||
Total operating expenses | 198,586 | 202,130 | 613,426 | 621,076 | |||||||||||
Operating income (loss) | 7,596 | 21,607 | (3,939 | ) | 63,226 | ||||||||||
Interest and other expense, net | (8,300 | ) | (3,668 | ) | (19,880 | ) | (10,492 | ) | |||||||
Income (loss) before income taxes | (704 | ) | 17,939 | (23,819 | ) | 52,734 | |||||||||
Provision (benefit) for income taxes | (3,777 | ) | 504 | 2,173 | (377 | ) | |||||||||
Net income (loss) | $ | 3,073 | $ | 17,435 | $ | (25,992 | ) | $ | 53,111 | ||||||
Earnings (loss) per share—Basic | $ | 0.03 | $ | 0.15 | $ | (0.23 | ) | $ | 0.46 | ||||||
Earnings (loss) per share—Diluted | $ | 0.03 | $ | 0.15 | $ | (0.23 | ) | $ | 0.46 | ||||||
Weighted average shares outstanding—Basic | 114,795 | 114,764 | 114,499 | 115,021 | |||||||||||
Weighted average shares outstanding—Diluted | 115,698 | 116,025 | 114,499 | 116,330 |
Three months ended | Nine months ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
Net income (loss) | $ | 3,073 | $ | 17,435 | $ | (25,992 | ) | $ | 53,111 | ||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Unrealized hedge gain (loss) arising during the period | 361 | — | (3,633 | ) | — | ||||||||||
Net hedge loss reclassified into earnings | (1,560 | ) | — | (727 | ) | — | |||||||||
Unrealized gain (loss) on hedging instruments | 1,921 | — | (2,906 | ) | — | ||||||||||
Foreign currency translation adjustment, net of tax of $0 for each period | (5,961 | ) | 1,201 | (1,219 | ) | (41,695 | ) | ||||||||
Unrealized gain on marketable securities | 7 | — | 7 | — | |||||||||||
Amortization of net actuarial pension loss included in net income, net of tax of $0.2 million and $0.1 million in the third quarter of 2016 and 2015, respectively, and $0.5 million and $0.4 million in the first nine months of 2016 and 2015, respectively | 417 | 1,003 | 1,220 | 3,081 | |||||||||||
Change in unamortized pension loss during the period related to changes in foreign currency | 413 | (190 | ) | 82 | 2,915 | ||||||||||
Total other comprehensive income (loss) | (3,203 | ) | 2,014 | (2,816 | ) | (35,699 | ) | ||||||||
Comprehensive income (loss) | $ | (130 | ) | $ | 19,449 | $ | (28,808 | ) | $ | 17,412 |
Nine months ended | |||||||
July 2, 2016 | July 4, 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | (25,992 | ) | $ | 53,111 | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 64,721 | 63,455 | |||||
Stock-based compensation | 51,821 | 38,135 | |||||
Excess tax benefits from stock-based awards | (94 | ) | 71 | ||||
Other non-cash items, net | 246 | (53 | ) | ||||
Changes in operating assets and liabilities, excluding the effects of acquisitions: | |||||||
Accounts receivable | 58,499 | 44,906 | |||||
Accounts payable, accrued expenses and other current liabilities | (17,303 | ) | 17,433 | ||||
Accrued compensation and benefits | 7,442 | (27,462 | ) | ||||
Deferred revenue | 44,592 | 51,393 | |||||
Accrued and deferred income taxes | (17,470 | ) | (25,608 | ) | |||
Other current assets and prepaid expenses | 4,249 | (5,109 | ) | ||||
Other noncurrent assets and liabilities | (1,115 | ) | (17,809 | ) | |||
Net cash provided by operating activities | 169,596 | 192,463 | |||||
Cash flows from investing activities: | |||||||
Additions to property and equipment | (16,632 | ) | (20,637 | ) | |||
Purchases of investments | (44,605 | ) | (11,000 | ) | |||
Acquisitions of businesses, net of cash acquired | (164,191 | ) | (98,411 | ) | |||
Net cash used by investing activities | (225,428 | ) | (130,048 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings | 670,000 | 135,000 | |||||
Repayments of borrowings under credit facility | (560,000 | ) | (122,500 | ) | |||
Repurchases of common stock | — | (49,962 | ) | ||||
Proceeds from issuance of common stock | 19 | 38 | |||||
Excess tax benefits from stock-based awards | 94 | (71 | ) | ||||
Credit facility origination costs | (6,759 | ) | — | ||||
Contingent consideration | (10,621 | ) | — | ||||
Payments of withholding taxes in connection with vesting of stock-based awards | (20,636 | ) | (29,117 | ) | |||
Net cash provided (used) by financing activities | 72,097 | (66,612 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 4,944 | (14,397 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 21,209 | (18,594 | ) | ||||
Cash and cash equivalents, beginning of period | 273,417 | 293,654 | |||||
Cash and cash equivalents, end of period | $ | 294,626 | $ | 275,060 |
July 2, 2016 | September 30, 2015 | ||||||
(in thousands) | |||||||
S&P bond rating BBB-1 and above-Tier 1 | $ | 9,447 | $ | 16,841 | |||
Internal Credit Assessment-Tier 2 | 2,623 | 10,593 | |||||
Internal Credit Assessment-Tier 3 | — | — | |||||
Total financing receivables | $ | 12,070 | $ | 27,434 |
Employee severance and related benefits | Facility closures and related costs | Total | |||||||||
(in thousands) | |||||||||||
October 1, 2015 | $ | 14,086 | $ | 1,168 | $ | 15,254 | |||||
Charge to operations | 44,010 | 531 | 44,541 | ||||||||
Cash disbursements | (49,059 | ) | (834 | ) | (49,893 | ) | |||||
Foreign exchange impact | 103 | (11 | ) | 92 | |||||||
Accrual, July 2, 2016 | $ | 9,140 | $ | 854 | $ | 9,994 |
Restricted stock unit activity for the nine months ended July 2, 2016 | Shares | Weighted Average Grant Date Fair Value (Per Share) | ||||
(in thousands) | ||||||
Balance of outstanding restricted stock units October 1, 2015 | 3,654 | $ | 33.64 | |||
Granted | 2,465 | $ | 37.20 | |||
Vested | (1,794 | ) | $ | 30.06 | ||
Forfeited or not earned | (500 | ) | $ | 36.53 | ||
Balance of outstanding restricted stock units July 2, 2016 | 3,825 | $ | 37.23 |
Restricted Stock Units | |||||
Grant Period | TSR Units (1) | Performance-based RSUs (2) | Service-based RSUs (2) | ||
(Number of Units in thousands) | |||||
First nine months of 2016 | 326 | 343 | 1,795 |
(1) | The TSR units were granted to our executive officers pursuant to the terms described below. |
(2) | The service-based RSUs were issued to employees, our executive officers and our directors. Executive officers may earn up to one or, for our CEO, two times the number of time-based RSUs (up to a maximum of 343,000 shares) if certain performance conditions are met. Of the service-based RSUs, approximately 64,000 shares will vest in one installment on or about the anniversary of the date of grant. Approximately 121,000 shares will vest in two substantially equal annual installments on or about the anniversary of the date of grant. All other service-based RSUs will vest in three substantially equal annual installments on or about the anniversary of the date of grant. The performance-based RSUs will vest in three substantially equal installments on the later of November 15, 2016, November 15, 2017 and November 15, 2018, or the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved. |
Average volatility of peer group | 28.1 | % |
Risk free interest rate | 1.05 | % |
Dividend yield | — | % |
Three months ended | Nine months ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
(in thousands) | |||||||||||||||
Cost of software revenue | $ | 1,158 | $ | 1,133 | $ | 4,163 | $ | 3,158 | |||||||
Cost of professional services revenue | 1,342 | 1,317 | 4,072 | 4,510 | |||||||||||
Sales and marketing | 3,195 | 4,075 | 11,254 | 10,821 | |||||||||||
Research and development | 2,531 | 2,928 | 7,578 | 9,015 | |||||||||||
General and administrative | 5,570 | 4,618 | 24,754 | 10,631 | |||||||||||
Total stock-based compensation expense | $ | 13,796 | $ | 14,071 | $ | 51,821 | $ | 38,135 |
Three months ended | Nine months ended | ||||||||||||||
Calculation of Basic and Diluted EPS | July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | |||||||||||
(in thousands, except per share data) | |||||||||||||||
Net income (loss) | $ | 3,073 | $ | 17,435 | $ | (25,992 | ) | $ | 53,111 | ||||||
Weighted average shares outstanding—Basic | 114,795 | 114,764 | 114,499 | 115,021 | |||||||||||
Dilutive effect of employee stock options, restricted shares and restricted stock units | 903 | 1,261 | — | 1,309 | |||||||||||
Weighted average shares outstanding—Diluted | 115,698 | 116,025 | 114,499 | 116,330 | |||||||||||
Earnings (loss) per share—Basic | $ | 0.03 | $ | 0.15 | $ | (0.23 | ) | $ | 0.46 | ||||||
Earnings (loss) per share—Diluted | $ | 0.03 | $ | 0.15 | $ | (0.23 | ) | $ | 0.46 |
July 2, 2016 | September 30, 2015 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Book Value | Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Goodwill (not amortized) | $ | 1,169,660 | $ | 1,069,041 | |||||||||||||||||||
Intangible assets with finite lives (amortized) (1): | |||||||||||||||||||||||
Purchased software | $ | 352,782 | $ | 192,509 | $ | 160,273 | $ | 284,257 | $ | 174,887 | $ | 109,370 | |||||||||||
Capitalized software | 22,877 | 22,877 | — | 22,877 | 22,877 | — | |||||||||||||||||
Customer lists and relationships | 355,504 | 198,335 | 157,169 | 349,938 | 174,017 | 175,921 | |||||||||||||||||
Trademarks and trade names | 19,012 | 13,151 | 5,861 | 18,534 | 12,759 | 5,775 | |||||||||||||||||
Other | 3,941 | 3,862 | 79 | 3,946 | 3,711 | 235 | |||||||||||||||||
$ | 754,116 | $ | 430,734 | $ | 323,382 | $ | 679,552 | $ | 388,251 | $ | 291,301 | ||||||||||||
Total goodwill and acquired intangible assets | $ | 1,493,042 | $ | 1,360,342 |
Software Products Segment | Services Segment | Total | |||||||||||||
(in thousands) | |||||||||||||||
Balance, October 1, 2015 | $ | 1,016,413 | $ | 52,628 | $ | 1,069,041 | |||||||||
Acquisition of Vuforia | 23,316 | — | 23,316 | ||||||||||||
Acquisition of Kepware | 77,081 | — | 77,081 | ||||||||||||
Foreign currency translation adjustments | 228 | (6 | ) | 222 | |||||||||||
Balance, July 2, 2016 prior to reallocation | $ | 1,117,038 | $ | 52,622 | $ | 1,169,660 | |||||||||
Solutions Group | Technology Platform Group | Professional Services | Total | ||||||||||||
(in thousands) | |||||||||||||||
Balance, July 2, 2016 after reallocation | $ | 1,050,013 | $ | 90,053 | $ | 29,594 | $ | 1,169,660 |
Three months ended | Nine months ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
(in thousands) | |||||||||||||||
Amortization of acquired intangible assets | $ | 8,294 | $ | 9,105 | $ | 25,040 | $ | 27,691 | |||||||
Cost of software revenue | 6,383 | 4,957 | 18,235 | 14,438 | |||||||||||
Total amortization expense | $ | 14,677 | $ | 14,062 | $ | 43,275 | $ | 42,129 |
• | Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; |
• | Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or |
• | Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
July 2, 2016 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in thousands) | |||||||||||||||
Financial assets: | |||||||||||||||
Cash equivalents | $ | 72,829 | $ | — | $ | — | $ | 72,829 | |||||||
Marketable securities | |||||||||||||||
Certificates of deposit | — | 680 | — | 680 | |||||||||||
Commercial paper | — | 9,930 | — | 9,930 | |||||||||||
Corporate notes/bonds | 31,590 | — | — | 31,590 | |||||||||||
U.S. government agency securities | — | 2,406 | — | 2,406 | |||||||||||
Forward contracts | — | 1,739 | — | 1,739 | |||||||||||
$ | 104,419 | $ | 14,755 | $ | — | $ | 119,174 | ||||||||
Financial liabilities: | |||||||||||||||
Contingent consideration related to acquisitions | $ | — | $ | — | $ | 19,497 | $ | 19,497 | |||||||
Forward contracts | — | 6,150 | — | 6,150 | |||||||||||
$ | — | $ | 6,150 | $ | 19,497 | $ | 25,647 |
September 30, 2015 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in thousands) | |||||||||||||||
Financial assets: | |||||||||||||||
Cash equivalents | $ | 91,216 | $ | — | $ | — | $ | 91,216 | |||||||
Forward contracts | — | 507 | — | 507 | |||||||||||
$ | 91,216 | $ | 507 | $ | — | $ | 91,723 | ||||||||
Financial liabilities: | |||||||||||||||
Contingent consideration related to acquisitions | $ | — | $ | — | $ | 13,000 | $ | 13,000 | |||||||
Forward contracts | — | 46 | — | 46 | |||||||||||
$ | — | $ | 46 | $ | 13,000 | $ | 13,046 |
Contingent Consideration | |||||||||||||||
(in thousands) | |||||||||||||||
ThingWorx | ColdLight | Kepware | Total | ||||||||||||
Balance, October 1, 2015 | $ | 9,000 | $ | 4,000 | $ | — | $ | 13,000 | |||||||
Addition to contingent consideration | — | — | 16,900 | 16,900 | |||||||||||
Change in present value of contingent consideration | — | 1,000 | 97 | 1,097 | |||||||||||
Payment of contingent consideration | (9,000 | ) | (2,500 | ) | (11,500 | ) | |||||||||
Balance, July 2, 2016 | $ | — | $ | 2,500 | $ | 16,997 | $ | 19,497 |
July 2, 2016 | |||||||||||||||
Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | ||||||||||||
(in thousands) | |||||||||||||||
Certificates of deposit | $ | 680 | $ | — | $ | — | $ | 680 | |||||||
Commercial paper | 9,934 | — | (4 | ) | 9,930 | ||||||||||
Corporate notes/bonds | 31,579 | 11 | — | 31,590 | |||||||||||
US government agency securities | 2,406 | — | — | 2,406 | |||||||||||
$ | 44,599 | $ | 11 | $ | (4 | ) | $ | 44,606 |
July 2, 2016 | |||||||
Amortized cost | Fair value | ||||||
(in thousands) | |||||||
Due in one year or less | $ | 11,387 | $ | 11,380 | |||
Due after one year through three years | 33,212 | 33,226 | |||||
$ | 44,599 | $ | 44,606 |
Currency Hedged | July 2, 2016 | September 30, 2015 | |||||
(in thousands) | |||||||
Canadian / U.S. Dollar | $ | 16,148 | $ | 17,448 | |||
Euro / U.S. Dollar | 145,317 | 82,917 | |||||
British Pound / Euro | — | 9,409 | |||||
Israeli New Sheqel / U.S. Dollar | 6,147 | 4,607 | |||||
Japanese Yen / Euro | 30,900 | 25,133 | |||||
Japanese Yen / U.S. Dollar | 6,716 | — | |||||
Swiss Franc / U.S. Dollar | 229 | 5,149 | |||||
Swedish Krona / U.S. Dollar | 5,111 | 3,128 | |||||
All other | 7,933 | 9,464 | |||||
Total | $ | 218,501 | $ | 157,255 |
Derivatives Not Designated as Hedging Instruments | Location of Gain or (Loss) Recognized in Income | Net realized and unrealized gain or (loss) (excluding the underlying foreign currency exposure being hedged) | ||||||||
Three months ended | ||||||||||
July 2, 2016 | July 4, 2015 | |||||||||
(in thousands) | ||||||||||
Forward Contracts | Other Income (Expense) | $ | (1,059 | ) | $ | (741 | ) | |||
Nine months ended | ||||||||||
July 2, 2016 | July 4, 2015 | |||||||||
(in thousands) | ||||||||||
Forward Contracts | Other Income (Expense) | $ | (1,645 | ) | $ | (1,122 | ) |
Currency Hedged | July 2, 2016 | September 30, 2015 | |||||
(in thousands) | |||||||
Euro / U.S. Dollar | $ | 60,742 | $ | — | |||
Japanese Yen / U.S. Dollar | 20,488 | — | |||||
SEK / U.S. Dollar | 9,267 | — | |||||
Total | $ | 90,497 | $ | — |
Derivatives Designated as Hedging Instruments | Gain or (Loss)Recognized in OCI-Effective Portion | Location of Gain or (Loss) Reclassified from OCI into Income-Effective Portion | Gain or (Loss) Reclassified from OCI into Income-Effective Portion | Location of Gain or (Loss) Recognized-Ineffective Portion | Gain or (Loss) Recognized-Ineffective Portion | |||||||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | |||||||||||||||||||||||
Forward Contracts | $ | 361 | $ | — | Software Revenue | $ | (1,560 | ) | $ | — | Other Income (Expense) | $ | 9 | $ | — | |||||||||||||
Nine months ended | Nine months ended | Nine months ended | ||||||||||||||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | |||||||||||||||||||||||
Forward Contracts | $ | (3,633 | ) | $ | — | Software Revenue | $ | (727 | ) | $ | — | Other Income (Expense) | $ | (28 | ) | $ | — |
Fair Value of Derivatives Designated As Hedging Instruments | Fair Value of Derivatives Not Designated As Hedging Instruments | ||||||||||||||
July 2, 2016 | September 30, 2015 | July 2, 2016 | September 30, 2015 | ||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Derivative assets (a): | |||||||||||||||
Forward Contracts | $ | 95 | $ | — | $ | 1,644 | $ | 507 | |||||||
Derivative liabilities (b): | |||||||||||||||
Forward Contracts | $ | 3,022 | $ | — | $ | 3,128 | $ | 46 | |||||||
(a) All derivative assets are recorded in “other current assets” in the Consolidated Balance Sheets. | |||||||||||||||
(b) All derivative liabilities are recorded in "accrued expenses and other current liabilities" in the Consolidated Balance Sheets. |
Gross Amounts Offset in the Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets | ||||||||||||||||||||||
As of July 2, 2016 | Gross Amount of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheets | Net Amounts of Assets Presented in the Consolidated Balance Sheets | Financial Instruments | Cash Collateral Received | Net Amount | |||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Forward Contracts | $ | 1,739 | $ | — | $ | 1,739 | $ | (1,739 | ) | $ | — | $ | — |
Gross Amounts Offset in the Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets | ||||||||||||||||||||||
As of July 2, 2016 | Gross Amount of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheets | Net Amounts of Liabilities Presented in the Consolidated Balance Sheets | Financial Instruments | Cash Collateral Pledged | Net Amount | |||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Forward Contracts | $ | 6,150 | $ | — | $ | 6,150 | $ | (1,739 | ) | $ | — | $ | 4,411 |
Three months ended | Nine months ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
(in thousands) | |||||||||||||||
Solutions Group | |||||||||||||||
Revenue | $ | 217,673 | $ | 229,157 | $ | 652,985 | $ | 726,679 | |||||||
Direct costs | 44,882 | 54,583 | 140,465 | 174,109 | |||||||||||
Profit | 172,791 | 174,574 | 512,520 | 552,570 | |||||||||||
Technology Platform Group | |||||||||||||||
Revenue | 20,678 | 20,456 | 51,034 | 38,213 | |||||||||||
Direct costs | 22,255 | 7,479 | 61,478 | 20,340 | |||||||||||
Profit (loss) | (1,577 | ) | 12,977 | (10,444 | ) | 17,873 | |||||||||
Professional Services | |||||||||||||||
Revenue | 50,301 | 53,500 | 148,277 | 177,782 | |||||||||||
Direct costs | 42,393 | 44,703 | 124,832 | 151,521 | |||||||||||
Profit | 7,908 | 8,797 | 23,445 | 26,261 | |||||||||||
Total segment revenue | 288,652 | 303,113 | 852,296 | 942,674 | |||||||||||
Total segment costs | 109,530 | 106,765 | 326,775 | 345,970 | |||||||||||
Total segment profit | 179,122 | 196,348 | 525,521 | 596,704 | |||||||||||
Other unallocated operating expenses | 168,711 | 170,348 | 484,919 | 490,853 | |||||||||||
Restructuring charges | 2,815 | 4,393 | 44,541 | 42,625 | |||||||||||
Total operating income (loss) | 7,596 | 21,607 | (3,939 | ) | 63,226 | ||||||||||
Interest and other expense, net | 8,300 | 3,668 | 19,880 | 10,492 | |||||||||||
Income (loss) before income taxes | $ | (704 | ) | $ | 17,939 | $ | (23,819 | ) | $ | 52,734 |
(1) | We recorded restructuring charges of $2.8 million and $44.5 million, respectively, in the third quarter and first nine months of 2016. Solutions Group included $1.4 million and $16.3 million, respectively; Technology Platform Group included $0.6 million and $1.3 million, respectively; Professional Services included $0.3 million and $4.8 million, respectively; and unallocated departments included $0.5 million and $22.1 million, respectively, of these restructuring charges. We recorded restructuring charges of $4.4 million and $42.6 million, respectively, in the third quarter and first nine months of 2015. Solutions Group included $1.0 million and $8.5 million, respectively; Technology Platform Group included $0.1 million and $0.3 million, respectively; Professional Services included $0.3 million and $10.9 million, and unallocated departments included $3.0 million and $22.9 million, respectively, of these restructuring charges. |
July 2, 2016 | September 30, 2015 | ||||||
(in thousands) | |||||||
6.000% Senior notes due 2024 | $ | 500,000 | $ | — | |||
Credit facility-revolver | 278,125 | 193,125 | |||||
Credit facility-term loan | — | 475,000 | |||||
Total debt | 778,125 | 668,125 | |||||
Unamortized debt issuance costs | (11,254 | ) | (7,587 | ) | |||
Total debt, net of issuance costs | $ | 766,871 | $ | 660,538 | |||
Reported as | |||||||
Current portion of long-term debt | $ | — | $ | 50,000 | |||
Long-term debt | 778,125 | 618,125 | |||||
Total debt | $ | 778,125 | $ | 668,125 |
• | a total leverage ratio, defined as consolidated total indebtedness to the consolidated trailing four quarters EBITDA, not to exceed 4.00 to 1.00 as of the last day of any fiscal quarter; |
• | a senior secured leverage ratio, defined as senior consolidated total indebtedness (which excludes unsecured indebtedness) to the consolidated trailing four quarters EBITDA, not to exceed 3.00 to 1.00 as of the last day of any fiscal quarter; and |
• | a fixed charge coverage ratio, defined as the ratio of consolidated trailing four quarters EBITDA less consolidated capital expenditures to consolidated fixed charges, of not less than 3.50 to 1.00 as of the last day of any fiscal quarter. |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | a higher mix of subscription revenue in 2016 compared to 2015 as we transition from selling perpetual licenses to a subscription-based licensing model; |
• | a decline in professional services revenue of 6%, consistent with our strategy to migrate more service engagements to our partners; |
• | a challenging macroeconomic environment; and |
• | the impact of foreign currency exchange rates on our reported revenue due to an increase in the strength of the U.S. Dollar relative to international currencies, most notably the Euro and the Yen. |
Three Months Ended | Constant Currency Change | Nine Months Ended | Constant Currency Change | |||||||||||||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | |||||||||||||||||||||||||
Revenue | Change | Change | ||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
Subscription | $ | 31.8 | $ | 17.2 | 85 | % | 84 | % | $ | 77.7 | $ | 47.1 | 65 | % | 68 | % | ||||||||||||
Support | 161.9 | 165.7 | (2 | )% | (3 | )% | 494.3 | 516.0 | (4 | )% | (1 | )% | ||||||||||||||||
Total recurring software revenue | 193.7 | 182.8 | 6 | % | 5 | % | 571.9 | 563.2 | 2 | % | 5 | % | ||||||||||||||||
Perpetual license | 44.6 | 66.8 | (33 | )% | (32 | )% | 132.1 | 201.7 | (35 | )% | (32 | )% | ||||||||||||||||
Total software revenue | 238.4 | 249.6 | (5 | )% | (5 | )% | 704.0 | 764.9 | (8 | )% | (5 | )% | ||||||||||||||||
Professional services | 50.3 | 53.5 | (6 | )% | (6 | )% | 148.3 | 177.8 | (17 | )% | (13 | )% | ||||||||||||||||
Total revenue | $ | 288.7 | $ | 303.1 | (5 | )% | (5 | )% | $ | 852.3 | $ | 942.7 | (10 | )% | (7 | )% |
Three Months Ended | Constant Currency Change | Nine Months Ended | Constant Currency Change | |||||||||||||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | |||||||||||||||||||||||||
Earnings Measures | Change | Change | ||||||||||||||||||||||||||
Operating Margin | 2.6 | % | 7.1 | % | (0.5 | )% | 6.7 | % | ||||||||||||||||||||
Earnings (Loss) Per Share | $ | 0.03 | $ | 0.15 | (82 | )% | (86 | )% | $ | (0.23 | ) | $ | 0.46 | (150 | )% | (139 | )% | |||||||||||
Non-GAAP Operating Margin(1) | 14.1 | % | 24.1 | % | 16.5 | % | 22.9 | % | ||||||||||||||||||||
Non-GAAP EPS(1) | $ | 0.26 | $ | 0.53 | (51 | )% | (52 | )% | $ | 1.00 | $ | 1.57 | (36 | )% | (31 | )% | ||||||||||||
(1) Non-GAAP measures are reconciled to GAAP results under Results of Operations - Non-GAAP Measures below. |
Three months ended | Percent Change 2015 to 2016 | Nine months ended | Percent Change 2015 to 2016 | ||||||||||||||||||||||||
July 2, 2016 | July 4, 2015 | Actual | Constant Currency | July 2, 2016 | July 4, 2015 | Actual | Constant Currency | ||||||||||||||||||||
(Dollar amounts in millions, except per share data) | |||||||||||||||||||||||||||
Subscription | $ | 31.8 | $ | 17.2 | 85 | % | 84 | % | $ | 77.7 | $ | 47.1 | 65 | % | 68 | % | |||||||||||
Support | 161.9 | 165.7 | (2 | )% | (3 | )% | 494.3 | 516.0 | (4 | )% | (1 | )% | |||||||||||||||
Total recurring software revenue | 193.7 | 182.8 | 6 | % | 5 | % | 571.9 | 563.2 | 2 | % | 5 | % | |||||||||||||||
Perpetual license | 44.6 | 66.8 | (33 | )% | (32 | )% | 132.1 | 201.7 | (35 | )% | (32 | )% | |||||||||||||||
Total software revenue | 238.4 | 249.6 | (5 | )% | (5 | )% | 704.0 | 764.9 | (8 | )% | (5 | )% | |||||||||||||||
Professional services | 50.3 | 53.5 | (6 | )% | (6 | )% | 148.3 | 177.8 | (17 | )% | (13 | )% | |||||||||||||||
Total revenue | 288.7 | 303.1 | (5 | )% | (5 | )% | 852.3 | 942.7 | (10 | )% | (7 | )% | |||||||||||||||
Total cost of revenue | 82.5 | 79.4 | 4 | % | 242.8 | 258.4 | (6 | )% | |||||||||||||||||||
Gross margin | 206.2 | 223.7 | (8 | )% | 609.5 | 684.3 | (11 | )% | |||||||||||||||||||
Operating expenses | 198.6 | 202.1 | (2 | )% | 613.4 | 621.1 | (1 | )% | |||||||||||||||||||
Total costs and expenses | 281.1 | 281.5 | — | % | — | % | 856.2 | 879.4 | (3 | )% | — | % | |||||||||||||||
Operating income (loss) | $ | 7.6 | $ | 21.6 | (65 | )% | (64 | )% | $ | (3.9 | ) | $ | 63.2 | (106 | )% | (98 | )% | ||||||||||
Non-GAAP operating income (1) | $ | 40.7 | $ | 73.2 | (44 | )% | (45 | )% | $ | 141.1 | $ | 216.8 | (35 | )% | (31 | )% | |||||||||||
Operating margin | 2.6 | % | 7.1 | % | (0.5 | )% | 6.7 | % | |||||||||||||||||||
Non-GAAP operating margin (1) | 14.1 | % | 24.1 | % | 16.5 | % | 22.9 | % | |||||||||||||||||||
Diluted earnings (loss) per share | $0.03 | $ | 0.15 | $ | (0.23 | ) | $ | 0.46 | |||||||||||||||||||
Non-GAAP diluted earnings per share (2) | $0.26 | $ | 0.53 | $ | 1.00 | $ | 1.57 | ||||||||||||||||||||
Cash flow from operations | $59.5 | $ | 86.8 | $ | 169.6 | $ | 192.5 | ||||||||||||||||||||
(1) See Non-GAAP Measures below for a reconciliation of our GAAP results to our non-GAAP measures. | |||||||||||||||||||||||||||
(2) We have recorded a full valuation allowance against our U.S. net deferred tax assets and a valuation allowance against net deferred tax assets in certain foreign jurisdictions. As we are profitable on a non-GAAP basis, the 2016 and 2015 non-GAAP tax provisions are calculated assuming there is no valuation allowance. Income tax adjustments for the three and nine months ended July 4, 2015 reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above. However, for the nine months ended July 2, 2016, because of low expected full year GAAP earnings combined with the relatively large year-to-date GAAP loss, the non-GAAP provision for the third quarter and first nine months of 2016 calculated based on our historical methodology is not reflective of our full year expected non-GAAP tax rate. As a result, in the second quarter we changed our methodology for calculating our non-GAAP tax provision. For the nine months ended July 2, 2016, our non-GAAP tax provision is based on our annual expected non-GAAP tax rate applied to our year-to-date non-GAAP earnings. |
Revenue by Line of Business | % of Total Revenue | ||||||||||
Three months ended | Nine months ended | ||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||
Subscription | 11 | % | 6 | % | 9 | % | 5 | % | |||
Support | 56 | % | 55 | % | 58 | % | 55 | % | |||
Perpetual license | 15 | % | 22 | % | 15 | % | 21 | % | |||
Professional services | 17 | % | 18 | % | 17 | % | 19 | % |
Revenue by Group | Three months ended | Nine months ended | |||||||||||||||||||||||||
Percent Change | Percent Change | ||||||||||||||||||||||||||
July 2, 2016 | July 4, 2015 | Actual | Constant Currency | July 2, 2016 | July 4, 2015 | Actual | Constant Currency | ||||||||||||||||||||
(Dollar amounts in millions) | |||||||||||||||||||||||||||
Solutions Group | |||||||||||||||||||||||||||
Subscription | $ | 20.8 | $ | 8.9 | 134 | % | 132 | % | $ | 45.8 | $ | 26.2 | 75 | % | 80 | % | |||||||||||
Support | 159.1 | 164.3 | (3 | )% | (4 | )% | 486.7 | 512.6 | (5 | )% | (2 | )% | |||||||||||||||
Total recurring software revenue | 179.9 | 173.2 | 4 | % | 3 | % | 532.5 | 538.8 | (1 | )% | 2 | % | |||||||||||||||
Perpetual license | 37.7 | 55.9 | (32 | )% | (31 | )% | 120.5 | 187.9 | (36 | )% | (33 | )% | |||||||||||||||
Total software revenue | 217.7 | 229.2 | (5 | )% | (5 | )% | 653.0 | 726.7 | (10 | )% | (7 | )% | |||||||||||||||
Professional services | 48.7 | 52.6 | (7 | )% | (8 | )% | 142.7 | 175.6 | (19 | )% | (15 | )% | |||||||||||||||
Total revenue | $ | 266.4 | $ | 281.7 | (5 | )% | (6 | )% | $ | 795.6 | $ | 902.3 | (12 | )% | (9 | )% | |||||||||||
Technology Platform Group | |||||||||||||||||||||||||||
Subscription | $ | 11.0 | $ | 8.3 | 33 | % | 32 | % | $ | 31.9 | $ | 20.9 | 52 | % | 53 | % | |||||||||||
Support | 2.8 | 1.3 | 109 | % | 109 | % | 7.6 | 3.5 | 119 | % | 121 | % | |||||||||||||||
Total recurring software revenue | 13.8 | 9.6 | 43 | % | 43 | % | 39.5 | 24.4 | 62 | % | 63 | % | |||||||||||||||
Perpetual license | 6.9 | 10.9 | (36 | )% | (36 | )% | 11.6 | 13.8 | (16 | )% | (16 | )% | |||||||||||||||
Total software revenue | 20.7 | 20.5 | 1 | % | 1 | % | 51.0 | 38.2 | 34 | % | 34 | % | |||||||||||||||
Professional services | 1.6 | 0.9 | 72 | % | 71 | % | 5.6 | 2.1 | 163 | % | 168 | % | |||||||||||||||
Total revenue | $ | 22.3 | $ | 21.4 | 4 | % | 4 | % | $ | 56.7 | $ | 40.3 | 40 | % | 41 | % |
Three months ended | Percent Change | Nine months ended | Percent Change | ||||||||||||||||||||||||
July 2, 2016 | July 4, 2015 | Actual | Constant Currency | July 2, 2016 | July 4, 2015 | Actual | Constant Currency | ||||||||||||||||||||
(Dollar amounts in millions) | |||||||||||||||||||||||||||
Software revenue by region: | |||||||||||||||||||||||||||
Americas | $ | 104.9 | $ | 111.9 | (6 | )% | (6 | )% | $ | 311.5 | $ | 325.3 | (4 | )% | (4 | )% | |||||||||||
Europe | $ | 83.1 | $ | 87.2 | (5 | )% | (5 | )% | $ | 249.5 | $ | 277.1 | (10 | )% | (4 | )% | |||||||||||
Pacific Rim | $ | 29.2 | $ | 28.5 | 2 | % | 7 | % | $ | 78.2 | $ | 86.9 | (10 | )% | (5 | )% | |||||||||||
Japan | $ | 21.2 | $ | 22.0 | (4 | )% | (10 | )% | $ | 64.7 | $ | 75.6 | (14 | )% | (13 | )% |
Three months ended | Nine months ended | ||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||
Total revenue by region as a % of total revenue: | |||||||||||
Americas | 42 | % | 44 | % | 43 | % | 43 | % | |||
Europe | 38 | % | 36 | % | 37 | % | 37 | % | |||
Pacific Rim | 12 | % | 11 | % | 11 | % | 11 | % | |||
Japan | 9 | % | 9 | % | 9 | % | 10 | % |
Gross Margin | Three months ended | Nine months ended | |||||||||||||||||||
July 2, 2016 | July 4, 2015 | Percent Change | July 2, 2016 | July 4, 2015 | Percent Change | ||||||||||||||||
(Dollar amounts in millions) | |||||||||||||||||||||
Gross margin | $ | 206.2 | $ | 223.7 | (8 | )% | $ | 609.5 | $ | 684.3 | (11 | )% | |||||||||
Non-GAAP gross margin | 216.0 | 231.8 | (7 | )% | 638.2 | 709.3 | (10 | )% | |||||||||||||
Gross margin as a % of revenue: | |||||||||||||||||||||
Software | 83.7 | % | 86.7 | % | 83.8 | % | 86.6 | % | |||||||||||||
Professional services | 13.3 | % | 13.8 | % | 13.3 | % | 12.3 | % | |||||||||||||
Gross margin as a % of total revenue | 71.4 | % | 73.8 | % | 71.5 | % | 72.6 | % | |||||||||||||
Non-GAAP gross margin as a % of total revenue | 74.6 | % | 76.3 | % | 74.7 | % | 75.0 | % |
Three months ended | Nine months ended | ||||||||||||||||||||
July 2, 2016 | July 4, 2015 | Percent Change | July 2, 2016 | July 4, 2015 | Percent Change | ||||||||||||||||
(Dollar amounts in millions) | |||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||
Cost of software revenue | $ | 38.9 | $ | 33.3 | 17 | % | $ | 114.3 | $ | 102.5 | 11 | % | |||||||||
Cost of professional services revenue | 43.6 | 46.1 | (5 | )% | 128.5 | 155.8 | (18 | )% | |||||||||||||
Sales and marketing | 94.9 | 88.4 | 7 | % | 264.5 | 261.7 | 1 | % | |||||||||||||
Research and development | 57.1 | 54.1 | 6 | % | 171.4 | 175.3 | (2 | )% | |||||||||||||
General and administrative | 35.5 | 46.2 | (23 | )% | 108.0 | 113.7 | (5 | )% | |||||||||||||
Amortization of acquired intangible assets | 8.3 | 9.1 | (9 | )% | 25.0 | 27.7 | (10 | )% | |||||||||||||
Restructuring charges | 2.8 | 4.4 | (36 | )% | 44.5 | 42.6 | 4 | % | |||||||||||||
Total costs and expenses (1) | $ | 281.1 | $ | 281.5 | — | % | $ | 856.2 | $ | 879.4 | (3 | )% | |||||||||
Total headcount at end of period | 5,761 | 5,965 | (3 | )% |
(1) | On a constant currency basis, compared to the year-ago period, total costs and expenses for both the third quarter and first nine months of 2016 remained flat. |
• | cost savings from restructuring actions in 2016 and 2015; |
• | acquisition and pension termination-related costs, which were $3.9 million and $10.9 million lower in the third quarter and first nine months of 2016, respectively, compared to the third quarter and first nine months of 2015; |
• | a $13.6 million accrual recorded in the third quarter of 2015 related to the SEC and DOJ investigation in China; and |
• | foreign currency rates which favorably impacted costs and expenses in the first nine months of 2016 by $23.6 million. |
• | cash-based incentive compensation expense (as a result of over performance on subscription mix in 2016 and because 2015 incentive targets were not achieved in full), which was higher by $9.5 million and $20.3 million in the third quarter of 2016 and first nine months of 2016, respectively, compared to the third quarter and first nine months of 2015; |
• | costs from acquired businesses (ColdLight, Vuforia, and Kepware added approximately 255 employees at the date of the acquisitions); |
• | an increase in stock-based compensation expense of $13.7 million for the first nine months of 2016 compared to the first nine months of 2015; |
• | company-wide merit pay increases that were effective July 1, 2015. |
Cost of Software Revenue | Three months ended | Nine months ended | |||||||||||||||||||
July 2, 2016 | July 4, 2015 | Percent Change | July 2, 2016 | July 4, 2015 | Percent Change | ||||||||||||||||
(Dollar amounts in millions) | |||||||||||||||||||||
Cost of software revenue | $ | 38.9 | $ | 33.3 | 17 | % | $ | 114.3 | $ | 102.5 | 11 | % | |||||||||
% of total revenue | 13 | % | 11 | % | 13 | % | 11 | % | |||||||||||||
% of total software revenue | 16 | % | 13 | % | 16 | % | 13 | % | |||||||||||||
Software headcount at end of period | 818 | 760 | 8 | % |
Cost of Professional Services Revenue | Three months ended | Nine months ended | |||||||||||||||||||
July 2, 2016 | July 4, 2015 | Percent Change | July 2, 2016 | July 4, 2015 | Percent Change | ||||||||||||||||
(Dollar amounts in millions) | |||||||||||||||||||||
Cost of professional services revenue | $ | 43.6 | $ | 46.1 | (5 | )% | $ | 128.5 | $ | 155.8 | (18 | )% | |||||||||
% of total revenue | 15 | % | 15 | % | 15 | % | 17 | % | |||||||||||||
% of total professional services revenue | 87 | % | 86 | % | 87 | % | 88 | % | |||||||||||||
Professional services headcount at end of period | 987 | 1,115 | (11 | )% |
Sales and Marketing | Three months ended | Nine months ended | |||||||||||||||||||
July 2, 2016 | July 4, 2015 | Percent Change | July 2, 2016 | July 4, 2015 | Percent Change | ||||||||||||||||
(Dollar amounts in millions) | |||||||||||||||||||||
Sales and marketing | $ | 94.9 | $ | 88.4 | 7 | % | $ | 264.5 | $ | 261.7 | 1 | % | |||||||||
% of total revenue | 33 | % | 29 | % | 31 | % | 28 | % | |||||||||||||
Sales and marketing headcount at end of period | 1,417 | 1,391 | 2 | % |
Research and Development | Three months ended | Nine months ended | |||||||||||||||||||
July 2, 2016 | July 4, 2015 | Percent Change | July 2, 2016 | July 4, 2015 | Percent Change | ||||||||||||||||
(Dollar amounts in millions) | |||||||||||||||||||||
Research and development | $ | 57.1 | $ | 54.1 | 6 | % | $ | 171.4 | $ | 175.3 | (2 | )% | |||||||||
% of total revenue | 20 | % | 18 | % | 20 | % | 19 | % | |||||||||||||
Research and development headcount at end of period | 1,862 | 2,010 | (7 | )% |
General and Administrative | Three months ended | Nine months ended | |||||||||||||||||||
July 2, 2016 | July 4, 2015 | Percent Change | July 2, 2016 | July 4, 2015 | Percent Change | ||||||||||||||||
(Dollar amounts in millions) | |||||||||||||||||||||
General and administrative | $ | 35.5 | $ | 46.2 | (23 | )% | $ | 108.0 | $ | 113.7 | (5 | )% | |||||||||
% of total revenue | 12 | % | 15 | % | 13 | % | 12 | % | |||||||||||||
General and administrative headcount at end of period | 677 | 689 | (2 | )% |
Amortization of Acquired Intangible Assets | Three months ended | Nine months ended | |||||||||||||||||||
July 2, 2016 | July 4, 2015 | Percent Change | July 2, 2016 | July 4, 2015 | Percent Change | ||||||||||||||||
(Dollar amounts in millions) | |||||||||||||||||||||
Amortization of acquired intangible assets | $ | 8.3 | $ | 9.1 | (9 | )% | $ | 25.0 | $ | 27.7 | (10 | )% | |||||||||
% of total revenue | 3 | % | 3 | % | 3 | % | 3 | % |
Restructuring Charges | Three months ended | Nine months ended | |||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
(in millions) | |||||||||||||||
Restructuring charges | $ | 2.8 | $ | 4.4 | $ | 44.5 | $ | 42.6 |
Interest and Other Expense, net | Three months ended | Nine months ended | |||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
(in millions) | |||||||||||||||
Interest income | $ | 0.8 | $ | 0.8 | $ | 2.4 | $ | 2.8 | |||||||
Interest expense | (8.2 | ) | (3.6 | ) | (19.5 | ) | (10.9 | ) | |||||||
Other expense, net | (0.9 | ) | (0.9 | ) | (2.8 | ) | (2.5 | ) | |||||||
Total interest and other expense, net | $ | (8.3 | ) | $ | (3.7 | ) | $ | (19.9 | ) | $ | (10.5 | ) |
Income Taxes | Three months ended | Nine months ended | |||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
(Dollar amounts in millions) | |||||||||||||||
Pre-tax income (loss) | $ | (0.7 | ) | $ | 17.9 | $ | (23.8 | ) | $ | 52.7 | |||||
Tax provision (benefit) | (3.8 | ) | 0.5 | 2.2 | (0.4 | ) | |||||||||
Effective income tax rate | 537 | % | 3 | % | (9 | )% | (1 | )% |
• | non-GAAP revenue—GAAP revenue |
• | non-GAAP gross margin—GAAP gross margin |
• | non-GAAP operating income—GAAP operating income |
• | non-GAAP operating margin—GAAP operating margin |
• | non-GAAP net income—GAAP net income |
• | non-GAAP diluted earnings per share—GAAP diluted earnings per share |
Three months ended | Nine months ended | ||||||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||||||
(in millions, except per share amounts) | |||||||||||||||
GAAP revenue | $ | 288.7 | $ | 303.1 | $ | 852.3 | $ | 942.7 | |||||||
Fair value of acquired deferred revenue | 1.0 | 0.8 | 2.6 | 3.3 | |||||||||||
Non-GAAP revenue | $ | 289.7 | $ | 303.9 | $ | 854.9 | $ | 946.0 | |||||||
GAAP gross margin | $ | 206.2 | $ | 223.7 | $ | 609.5 | $ | 684.3 | |||||||
Fair value of acquired deferred revenue | 1.0 | 0.8 | 2.6 | 3.3 | |||||||||||
Fair value of acquired deferred costs | (0.1 | ) | (0.1 | ) | (0.4 | ) | (0.4 | ) | |||||||
Stock-based compensation | 2.5 | 2.5 | 8.2 | 7.7 | |||||||||||
Amortization of acquired intangible assets included in cost of revenue | 6.4 | 5.0 | 18.2 | 14.4 | |||||||||||
Non-GAAP gross margin | $ | 216.0 | $ | 231.8 | $ | 638.2 | $ | 709.3 | |||||||
GAAP operating income (loss) | $ | 7.6 | $ | 21.6 | $ | (3.9 | ) | $ | 63.2 | ||||||
Fair value of acquired deferred revenue | 1.0 | 0.8 | 2.6 | 3.3 | |||||||||||
Fair value of acquired deferred costs | (0.1 | ) | (0.1 | ) | (0.4 | ) | (0.4 | ) | |||||||
Stock-based compensation | 13.8 | 14.1 | 51.8 | 38.1 | |||||||||||
Amortization of acquired intangible assets included in cost of revenue | 6.4 | 5.0 | 18.2 | 14.4 | |||||||||||
Amortization of acquired intangible assets | 8.3 | 9.1 | 25.0 | 27.7 | |||||||||||
Acquisition-related charges included in general and administrative expenses | 0.9 | 2.8 | 3.2 | 8.7 | |||||||||||
US pension plan termination-related costs | — | 2.0 | — | 5.4 | |||||||||||
Legal settlement accrual | — | 13.6 | — | 13.6 | |||||||||||
Restructuring charge | 2.8 | 4.4 | 44.5 | 42.6 | |||||||||||
Non-GAAP operating income | $ | 40.7 | $ | 73.2 | $ | 141.1 | $ | 216.8 | |||||||
GAAP net income (loss) | $ | 3.1 | $ | 17.4 | $ | (26.0 | ) | $ | 53.1 | ||||||
Fair value of acquired deferred revenue | 1.0 | 0.8 | 2.6 | 3.3 | |||||||||||
Fair value of acquired deferred costs | (0.1 | ) | (0.1 | ) | (0.4 | ) | (0.4 | ) | |||||||
Stock-based compensation | 13.8 | 14.1 | 51.8 | 38.1 | |||||||||||
Amortization of acquired intangible assets included in cost of revenue | 6.4 | 5.0 | 18.2 | 14.4 | |||||||||||
Amortization of acquired intangible assets | 8.3 | 9.1 | 25.0 | 27.7 | |||||||||||
Acquisition-related charges included in general and administrative expenses | 0.9 | 2.8 | 3.2 | 8.7 | |||||||||||
U.S. pension plan termination-related costs | — | 2.0 | — | 5.4 | |||||||||||
Legal settlement accrual | — | 13.6 | — | 13.6 | |||||||||||
Restructuring charges | 2.8 | 4.4 | 44.5 | 42.6 | |||||||||||
Non-operating credit facility refinancing costs | — | — | 2.4 | — | |||||||||||
Income tax adjustments (1) | (6.2 | ) | (7.3 | ) | (6.5 | ) | (24.6 | ) | |||||||
Non-GAAP net income | $ | 30.0 | $ | 61.7 | $ | 114.9 | $ | 182.1 | |||||||
GAAP diluted earnings (loss) per share | $ | 0.03 | $ | 0.15 | $ | (0.23 | ) | $ | 0.46 | ||||||
Fair value of acquired deferred revenue | 0.01 | 0.01 | 0.02 | 0.03 | |||||||||||
Fair value of acquired deferred costs | — | — | — | — | |||||||||||
Stock-based compensation | 0.12 | 0.12 | 0.45 | 0.33 | |||||||||||
Amortization of acquired intangible assets | 0.13 | 0.12 | 0.38 | 0.36 | |||||||||||
Acquisition-related charges included in general and administrative expenses | 0.01 | 0.02 | 0.03 | 0.07 | |||||||||||
U.S. pension plan termination-related costs | — | 0.02 | — | 0.05 | |||||||||||
Legal settlement accrual | — | 0.12 | — | 0.12 | |||||||||||
Restructuring charges | 0.02 | 0.04 | 0.39 | 0.37 |
Non-operating credit facility refinancing costs | — | — | 0.02 | — | |||||||||||
Income tax adjustments (1) | (0.05 | ) | (0.06 | ) | (0.06 | ) | (0.21 | ) | |||||||
Non-GAAP diluted earnings per share | $ | 0.26 | $ | 0.53 | $ | 1.00 | $ | 1.57 |
Three months ended | Nine months ended | ||||||||||
July 2, 2016 | July 4, 2015 | July 2, 2016 | July 4, 2015 | ||||||||
GAAP operating margin | 2.6 | % | 7.1 | % | (0.5 | )% | 6.7 | % | |||
Fair value of acquired deferred revenue | 0.4 | % | 0.3 | % | 0.3 | % | 0.4 | % | |||
Fair value of acquired deferred costs | — | % | — | % | — | % | — | % | |||
Stock-based compensation | 4.8 | % | 4.6 | % | 6.1 | % | 4.0 | % | |||
Amortization of acquired intangible assets | 5.1 | % | 4.6 | % | 5.1 | % | 4.5 | % | |||
Acquisition-related charges included in general and administrative expenses | 0.3 | % | 0.9 | % | 0.4 | % | 0.9 | % | |||
U.S. pension plan termination-related costs | — | % | 0.7 | % | — | % | 0.6 | % | |||
Legal settlement accrual | — | % | 4.5 | % | — | % | 1.4 | % | |||
Restructuring charges | 1.0 | % | 1.4 | % | 5.2 | % | 4.5 | % | |||
Non-GAAP operating margin | 14.1 | % | 24.1 | % | 16.5 | % | 22.9 | % |
(1) | We have recorded a full valuation allowance against our U.S. net deferred tax assets and a valuation allowance against net deferred tax assets in certain foreign jurisdictions. As we are profitable on a non-GAAP basis, the 2016 and 2015 non-GAAP tax provisions are calculated assuming there is no valuation allowance. Income tax adjustments for the three and nine months ended July 4, 2015 reflect the tax effects of non-GAAP adjustments which are calculated by applying the applicable tax rate by jurisdiction to the non-GAAP adjustments listed above. However, for the nine months ended July 2, 2016, because of low expected full year GAAP earnings combined with the relatively large year-to-date GAAP loss, the non-GAAP provision for the third quarter and first nine months of 2016 calculated based on our historical methodology is not reflective of our full year expected non-GAAP tax rate. As a result, in the second quarter we changed our methodology for calculating our non-GAAP tax provision. For the nine months ended July 2, 2016, our non-GAAP tax provision is based on our annual expected non-GAAP tax rate applied to our year-to-date non-GAAP earnings. |
July 2, 2016 | July 4, 2015 | ||||||
(in thousands) | |||||||
Cash and cash equivalents | $ | 294,626 | $ | 275,060 | |||
Marketable securities | 44,606 | — | |||||
Total | $ | 339,232 | $ | 275,060 | |||
Amounts below are for the nine months ended: | |||||||
Cash provided by operating activities | $ | 169,596 | $ | 192,463 | |||
Cash used by investing activities | (225,428 | ) | (130,048 | ) | |||
Cash provided (used) by financing activities | 72,097 | (66,612 | ) |
Nine months ended | |||||||
July 2, 2016 | July 4, 2015 | ||||||
(in thousands) | |||||||
Cash used by investing activities included the following: | |||||||
Additions to property and equipment | $ | (16,632 | ) | $ | (20,637 | ) | |
Purchases of investments | (44,605 | ) | (11,000 | ) | |||
Acquisitions of businesses, net of cash acquired | (164,191 | ) | (98,411 | ) | |||
$ | (225,428 | ) | $ | (130,048 | ) |
Nine months ended | |||||||
July 2, 2016 | July 4, 2015 | ||||||
(in thousands) | |||||||
Cash used by financing activities included the following: | |||||||
Net borrowings (repayments) of debt | $ | 110,000 | $ | 12,500 | |||
Payments of withholding taxes in connection with vesting of stock-based awards | (20,636 | ) | (29,117 | ) | |||
Repurchases of common stock | — | (49,962 | ) | ||||
Proceeds from issuance of common stock | 19 | 38 | |||||
Excess tax benefits from stock-based awards | 94 | (71 | ) | ||||
Contingent consideration | (10,621 | ) | — | ||||
Credit facility origination costs | (6,759 | ) | — | ||||
$ | 72,097 | $ | (66,612 | ) |
Ratio as of July 2, 2016 | |
Total Leverage Ratio Ratio of consolidated total indebtedness to the consolidated trailing four quarters EBITDA, not to exceed 4.00 to 1.00 as of the last day of any fiscal quarter. | 3.15 to 1.00 |
Fixed Charge Coverage Ratio Ratio of consolidated trailing four quarters EBITDA less consolidated capital expenditures to consolidated fixed charges as of the last day of any fiscal quarter, to be not less than 3.50 to 1.00. | 8.45 to 1.00 |
Senior Secured Leverage Ratio Ratio of senior consolidated total indebtedness (which excludes unsecured indebtedness) to consolidated trailing four quarters EBITDA as of the last day of any fiscal quarter, not to exceed 3.00 to 1.00. | 1.09 to 1.00 |
Payments due by period | |||||||||||||||||||
Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||
(in millions) | |||||||||||||||||||
Credit facility (1) | $ | 719.0 | $ | 64.2 | $ | 150.7 | $ | 504.0 | $ | — | |||||||||
Operating leases (2) | 144.1 | 35.8 | 48.3 | 33.3 | 26.7 | ||||||||||||||
Purchase obligations (3) | 28.0 | 21.6 | 5.8 | 0.7 | — | ||||||||||||||
Pension liabilities (4) | 20.2 | 0.8 | 1.5 | 1.5 | 16.4 | ||||||||||||||
Unrecognized tax benefits (5) | 14.1 | — | — | — | — | ||||||||||||||
Total | $ | 925.4 | $ | 122.4 | $ | 206.3 | $ | 539.5 | $ | 43.1 |
(1) | Credit facility amounts above include required principal repayments and interest and commitment fees based on the balance outstanding as of September 30, 2015 and the interest rate in effect as of September 30, 2015, 1.875%. Pursuant to our amended and restated credit facility signed November 4, 2015, the term loan was converted into a revolving loan. The credit facility matures on September 15, 2019, when all remaining amounts outstanding will be due and payable in full. |
(2) | The future minimum lease payments above include minimum future lease payments for excess facilities under noncancelable operating leases. These leases qualify for operating lease accounting treatment and, as such, are not included on our balance sheet. See Note I Commitments and Contingencies of “Notes to Consolidated Financial Statements” in our 2015 Annual Report on Form 10-K for additional information regarding our operating leases. |
(3) | Purchase obligations represent minimum commitments due to third parties, including royalty contracts, research and development contracts, telecommunication contracts, information technology maintenance contracts in support of internal-use software and hardware and other marketing and consulting contracts. Contracts for which our commitment is variable, based on volumes, with no fixed minimum quantities, and contracts that can be canceled without payment penalties have been excluded. The purchase obligations included above are in addition to amounts included in current liabilities and prepaid expenses recorded on our September 30, 2015 consolidated balance sheet. |
(4) | These obligations relate to our international pension plans. These liabilities are not subject to fixed payment terms. Payments have been estimated based on the plans’ current funded status, planned employer contributions and actuarial assumptions. In addition, we may, at our discretion, make additional voluntary contributions to the plans. See Note M Pension Plans of “Notes to Consolidated Financial Statements” in our 2015 Annual Report on Form 10-K for further discussion. |
(5) | As of September 30, 2015, we had recorded total unrecognized tax benefits of $14.1 million. This liability is not subject to fixed payment terms and the amount and timing of payments, if any, which we will make related to this liability, are not known. See Note G Income Taxes of “Notes to Consolidated Financial Statements” in our 2015 Annual Report on Form 10-K for additional information. |
Payments due by period | |||||||||
Contractual Obligations | Total | Remainder of 2016 | 1-3 years | 3-5 years | More than 5 years | ||||
(in millions) | |||||||||
Debt | $1,044.7 | $2.1 | $76.6 | $346.0 | $620.0 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
• | making it more difficult for us to satisfy our debt obligations and other ongoing business obligations, which may result in defaults; |
• | events of default if we fail to comply with the financial and other covenants contained in the agreements governing our debt instruments, which could result in all of our debt becoming immediately due and payable or require us to negotiate an amendment to financial or other covenants that could cause us to incur additional fees and expenses; |
• | limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; |
• | reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes and limiting our ability to obtain additional financing for these purposes; |
• | increasing our vulnerability to the impact of adverse economic and industry conditions; |
• | exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under the senior credit facility, are at variable rates of interest; |
• | limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industries in which we operate, and the overall economy; |
• | placing us at a competitive disadvantage compared to other, less leveraged competitors; and |
• | increasing our cost of borrowing. |
1.1 | Underwriting Agreement, dated May 4, 2016, by and between PTC Inc. and J.P. Morgan Securities LLC, as the representative of the several underwriters named therein (filed as Exhibit 1.1 to our Current Report on Form 8-K filed on May 5, 2016 (File No. 0-18059) and incorporated herein by reference). | |
3.1 | Restated Articles of Organization of PTC Inc. adopted August 4, 2015 (filed as Exhibit 3.1 to our Annual Report on Form 10-K for the fiscal year ended September 30, 2015 (File No. 0-18059) and incorporated herein by reference). | |
3.2 | By-Laws, as amended and restated, of PTC Inc. (filed as Exhibit 3.2 to our Quarterly Report in Form 10-Q for the fiscal quarter ended March 29, 2014 (File No. 0-18059) and incorporated herein by reference). | |
4.1 | Indenture, dated as of May 12, 2016, by and between the Company and The Bank of New York Mellon, as Trustee (filed as Exhibit 4.1 to our Current Report on Form 8-K filed on May 18, 2016 (File No. 0-18059) and incorporated herein by reference). | |
4.2 | First Supplemental Indenture, dated as of May 12, 2016, by and between the Company and The Bank of New York Mellon, as Trustee (filed as Exhibit 4.2 to our Current Report on Form 8-K filed on May 18, 2016 (File No. 0-18059) and incorporated herein by reference). | |
4.3 | 6.000% Senior Notes due 2024 (filed as Exhibit 4.3 to our Current Report on Form 8-K filed on May 18, 2016 (File No. 0-18059) and incorporated herein by reference). | |
10.1 | Amendment No. 1 dated April 18, 2016 to Credit Agreement dated as of November 4, 2015 by and among PTC Inc., JP Morgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto (filed as Exhibit 99.3 to our Current Report on Form 8-K filed on April 20, 2016 (File No. 0-18059) and incorporated herein by reference). | |
10.2 | Amendment No. 2 dated June 1, 2016 to Credit Agreement dated as of November 4, 2015 by and among PTC Inc., JP Morgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto. | |
31.1 | Certification of the Chief Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a). | |
31.2 | Certification of the Chief Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a). | |
32* | Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350. | |
101 | The following materials from PTC Inc.'s Quarterly Report on Form 10-Q for the quarter ended April 2, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of April 2, 2016 and September 30, 2015; (ii) Condensed Consolidated Statements of Operations for the three and six months ended April 2, 2016 and April 4, 2015; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended April 2, 2016 and April 4, 2015; (iv) Condensed Consolidated Statements of Cash Flows for the three and six months ended April 2, 2016 and April 4, 2015; and (v) Notes to Condensed Consolidated Financial Statements. |
* | Indicates that the exhibit is being furnished, not filed, with this report. |
PTC Inc. | ||
By: | /S/ ANDREW MILLER | |
Andrew Miller Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
PTC INC., as the Parent | |
By: /s/Stephen Bouchard | |
Name: Stephen Bouchard | |
Title: Treasurer | |
PTC (IFSC) LIMITED, as the Irish Borrower | |
By: /s/Eamonn Clarke | |
Name: Eamonn Clarke | |
Title: Director |
JPMORGAN CHASE BANK, N.A., individually as a Lender, as the Swingline Lender, as an Issuing Bank and as Administrative Agent | |
By: /s/Daglas P. Panchal | |
Name: Daglas P. Panchal | |
Title: Vice President | |
KEYBANK NATIONAL ASSOCIATION | |
By: /s/David A. Wild | |
Name: David A. Wild | |
Title: Senior Vice President | |
Name of Lender: | |
FIFTH THIRD BANK | |
By: /s/Colin Murphy | |
Name: Colin Murphy | |
Title: Director | |
Name of Lender: | ||
HSBC Bank USA, National Association | ||
By: /s/Elise M. Russo | ||
Name: Elise M. Russo | ||
Title: Senior Vice President | ||
For any Lender requiring a second signature line: | ||
By: | ||
Name: | ||
Title: |
Name of Lender: | ||
CITIZENS BANK, N.A. | ||
By: /s/William M. Clossey | ||
Name: William M. Clossey | ||
Title: Sr. Vice President | ||
For any Lender requiring a second signature line: | ||
By: | ||
Name: | ||
Title: |
Name of Lender: | |
ROYAL BANK OF CANADA | |
By: /s/Nicholas Heslip | |
Name: Nicholas Heslip | |
Title: Authorized Signatory | |
Name of Lender: | |
SANTANDER BANK, N.A. | |
By: /s/William Maag | |
Name: William Maag | |
Title: Managing Director | |
Name of Lender: | ||
TD BANK, N.A. | ||
By: /s/Christopher Matheson | ||
Name: Christopher Matheson | ||
Title: Director | ||
For any Lender requiring a second signature line: | ||
By: | ||
Name: | ||
Title: |
Name of Lender: | |
Barclays Bank PLC | |
By: /s/Sean Duggan | |
Name: Sean Duggan | |
Title: Assistant Vice President | |
Name of Lender: | ||
SunTrust Bank | ||
By: /s/Jason Crowley | ||
Name: Jason Crowley | ||
Title: Vice President | ||
For any Lender requiring a second signature line: | ||
By: | ||
Name: | ||
Title: |
Name of Lender: | |
U.S. BANK NATIONAL ASSOCIATION | |
By: /s/Brian Seipke | |
Name: Brian Seipke | |
Title: Vice President | |
Name of Lender: | ||
WELLS FARGO BANK, NATIONAL ASSOCIATION | ||
By: /s/David Mallett | ||
Name: David Mallett | ||
Title: Managing Director | ||
For any Lender requiring a second signature line: | ||
By: | ||
Name: | ||
Title: |
Name of Lender: | ||
SILICON VALLEY BANK | ||
By: /s/Kristy Vlahos | ||
Name: Kristy Vlahos | ||
Title: Director | ||
For any Lender requiring a second signature line: | ||
By: | ||
Name: | ||
Title: |
Name of Lender: | |
The Huntington National Bank | |
By: /s/Jared Shaner | |
Name: Jared Shaner | |
Title: Vice President | |
Name of Lender: BANK OF AMERICA, N.A. | |
By: /s/My-Linh Yoshiike | |
Name: My-Linh Yoshiike | |
Title: Vice President | |
Name of Lender: PEOPLE’S UNITED BANK, NATIONAL ASSOCIATION | |
By: /s/Kathryn M. Williams | |
Name: Kathryn M. Williams | |
Title: Vice President | |
LENDER | COMMITMENT | ||
JPMORGAN CHASE BANK, N.A. | $78,000,000.00 | ||
KEYBANK NATIONAL ASSOCIATION | $78,000,000.00 | ||
FIFTH THIRD BANK | $66,000,000.00 | ||
HSBC BANK USA, NATIONAL ASSOCIATION | $66,000,000.00 | ||
CITIZENS BANK, N.A. | $66,000,000.00 | ||
ROYAL BANK OF CANADA | $66,000,000.00 | ||
SANTANDER BANK, N.A. | $66,000,000.00 | ||
TD BANK, N.A. | $66,000,000.00 | ||
BARCLAYS BANK PLC | $54,000,000.00 | ||
SUNTRUST BANK | $54,000,000.00 | ||
U.S. BANK NATIONAL ASSOCIATION | $54,000,000.00 | ||
WELLS FARGO BANK, NATIONAL ASSOCIATION | $45,000,000.00 | ||
SILICON VALLEY BANK | $45,000,000.00 | ||
THE HUNTINGTON NATIONAL BANK | $36,000,000.00 | ||
BANK OF AMERICA, N.A. | $36,000,000.00 | ||
PEOPLE’S UNITED BANK | $24,000,000.00 | ||
AGGREGATE COMMITMENTS | $900,000,000.00 |
Date: | August 11, 2016 | /S/ JAMES HEPPELMANN | |||
James Heppelmann | |||||
President and Chief Executive Officer |
Date: | August 11, 2016 | /S/ ANDREW MILLER | |||
Andrew Miller | |||||
Executive Vice President and Chief Financial Officer |
Date: | August 11, 2016 | /S/ JAMES HEPPELMANN | |||
James Heppelmann President and Chief Executive Officer | |||||
Date: | August 11, 2016 | /S/ ANDREW MILLER | |||
Andrew Miller | |||||
Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Jul. 02, 2016 |
Aug. 08, 2016 |
|
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jul. 02, 2016 | |
Entity Registrant Name | PTC Inc. | |
Entity Central Index Key | 0000857005 | |
Current Fiscal Year End Date | --09-30 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 114,951,938 | 114,956,077 |
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Jul. 02, 2016 |
Sep. 30, 2015 |
---|---|---|
Current assets: | ||
Allowance for doubtful accounts | $ 999 | $ 998 |
Stockholders’ equity: | ||
Preferred stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 114,952,000 | 113,745,000 |
Common stock, shares outstanding | 114,952,000 | 113,745,000 |
Consolidated Statements Of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Revenues [Abstract] | ||||
Subscription | $ 31,822 | $ 17,155 | $ 77,657 | $ 47,143 |
Support | 161,881 | 165,687 | 494,262 | 516,042 |
Total recurring software revenue | 193,703 | 182,842 | 571,919 | 563,185 |
Perpetual license | 44,648 | 66,771 | 132,100 | 201,707 |
Total software revenue | 238,351 | 249,613 | 704,019 | 764,892 |
Professional services | 50,301 | 53,500 | 148,277 | 177,782 |
Total revenue | 288,652 | 303,113 | 852,296 | 942,674 |
Cost of revenue: | ||||
Cost of software revenue | 38,864 | 33,282 | 114,291 | 102,525 |
Cost of professional services revenue | 43,606 | 46,094 | 128,518 | 155,847 |
Total cost of revenue | 82,470 | 79,376 | 242,809 | 258,372 |
Gross margin | 206,182 | 223,737 | 609,487 | 684,302 |
Operating expenses: | ||||
Sales and marketing | 94,874 | 88,353 | 264,480 | 261,702 |
Research and development | 57,118 | 54,078 | 171,397 | 175,333 |
General and administrative | 35,485 | 46,201 | 107,968 | 113,725 |
Amortization of acquired intangible assets | 8,294 | 9,105 | 25,040 | 27,691 |
Restructuring charges | 2,815 | 4,393 | 44,541 | 42,625 |
Total operating expenses | 198,586 | 202,130 | 613,426 | 621,076 |
Operating income (loss) | 7,596 | 21,607 | (3,939) | 63,226 |
Interest and other expense, net | (8,300) | (3,668) | (19,880) | (10,492) |
Income (loss) before income taxes | (704) | 17,939 | (23,819) | 52,734 |
Provision (benefit) for income taxes | (3,777) | 504 | 2,173 | (377) |
Net income (loss) | $ 3,073 | $ 17,435 | $ (25,992) | $ 53,111 |
Earnings(loss) per share—Basic (in USD per share) | $ 0.03 | $ 0.15 | $ (0.23) | $ 0.46 |
Earnings(loss) per share—Diluted (in USD per share) | $ 0.03 | $ 0.15 | $ (0.23) | $ 0.46 |
Weighted average shares outstanding—Basic (in shares) | 114,795 | 114,764 | 114,499 | 115,021 |
Weighted average shares outstanding—Diluted (in shares) | 115,698 | 116,025 | 114,499 | 116,330 |
Consolidated Statements Of Comprehensive Income (Parentheticals) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Tax related to other comprehensive income, pension tax | $ 0.2 | $ 0.1 | $ 0.5 | $ 0.4 |
Basis of Presentation |
9 Months Ended |
---|---|
Jul. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation General The accompanying unaudited condensed consolidated financial statements include the accounts of PTC Inc. and its wholly owned subsidiaries and have been prepared by management in accordance with accounting principles generally accepted in the United States of America and in accordance with the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. While we believe that the disclosures presented are adequate in order to make the information not misleading, these unaudited quarterly financial statements should be read in conjunction with our annual consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary for a fair statement of our financial position, results of operations and cash flows at the dates and for the periods indicated. Unless otherwise indicated, all references to a year mean our fiscal year, which ends on September 30. The September 30, 2015 Consolidated Balance Sheet included herein is derived from our audited consolidated financial statements. The results of operations for the three and nine months ended July 2, 2016 are not necessarily indicative of the results expected for the remainder of the fiscal year. Income Statement Presentation In 2015, we classified revenue in three categories: 1) license and subscription solutions; 2) support; and 3) professional services. Effective with the beginning of the first quarter of 2016, we are reporting perpetual license revenue separately from subscription revenue and are presenting revenue in four categories: 1) subscription; 2) support; 3) perpetual license; and 4) professional services. Effective with the beginning of the first quarter of 2016, we reclassified certain expenses related to management of our product lines from general and administrative to marketing. Revenue and costs and expenses in the accompanying Consolidated Statements of Operations have been reclassified to conform to the current period presentation. Segments Through the second quarter of 2016, we had two operating and reportable segments: (1) Software Products, which included license and related support revenue (including updates and technical support) for all our products except training-related products; and (2) Services, which included consulting, implementation, training, cloud services, computer-based training products, including support on these products, and other services revenue. With a change in our organizational structure in an effort to create more effective and efficient operations and to improve customer and product focus, during the three months ended July 2, 2016, we revised the information that our chief executive officer, who is also our chief operating decision maker (“CODM”), regularly reviews for purposes of allocating resources and assessing performance. As a result, effective with the beginning of the third quarter of 2016, we changed our operating and reportable segments from two to three: (1) the Solutions Group, which includes license, subscription, support and cloud services revenue for our core CAD, SLM and ePLM products; (2) the Technology Platform Group, which includes license, subscription, support and cloud services revenue for our IoT, analytics and augmented reality solutions; and (3) Professional Services, which includes consulting, implementation and training revenue. Revenue and operating income in Note 11. Segment Information have been reclassified to conform to the current period presentation. Recent Accounting Pronouncements Financial Instruments - Credit Losses In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This update introduces a current expected credit loss model for measuring expected credit losses for certain types of financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. ASU 2016-13 replaces the current incurred loss model for measuring expected credit losses, requires expected losses on available-for-sale debt securities to be recognized through an allowance for credit losses rather than as reductions in the amortized cost of the securities, and provides for additional disclosure requirements. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, our fiscal 2021, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2018. We are currently evaluating the impact of the new guidance on our consolidated financial statements. Stock Compensation In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments, including accounting for income taxes, earnings per share, and forfeitures, as well as certain practical expedients for nonpublic entities. The ASU is effective for public companies in annual periods beginning after December 15, 2016, our fiscal 2018, and interim periods within those years. Early adoption is permitted in any interim period, with all adjustments applied as of the beginning of the fiscal year of adoption. We are currently evaluating the impact of the new guidance on our consolidated financial statements. Leases In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), which will replace the existing guidance in ASC 840, Leases. The updated standard aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and to disclose important information about leasing arrangements. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, our fiscal 2020, and interim periods within those annual periods. Early adoption is permitted and modified retrospective application is required. We are currently evaluating the impact of the new guidance on our consolidated financial statements. Financial Instruments In January 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, which requires equity investments to be measured at fair value with changes in fair value recognized in net income and simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. Entities may choose a practical expedient, to estimate the fair value of certain equity securities that do not have readily determinable fair values. If the practical expedient is elected, these investments would be recorded at cost, less impairment and subsequently adjusted for observable price changes. The guidance also updates certain presentation and disclosure requirements. ASU 2016-01 is effective for financial statements issued for fiscal years beginning after December 15, 2017, our fiscal 2019, and interim periods within those fiscal years. We are currently evaluating the impact of the new guidance on our consolidated financial statements. Deferred Taxes In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740), to simplify the presentation of deferred income taxes. The amendments in this Update require that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. The guidance does not change the existing requirement that permits offsetting only within a jurisdiction and companies are still prohibited from offsetting deferred tax liabilities from one jurisdiction against deferred tax assets of another jurisdiction. ASU 2015-17 is effective for public companies for fiscal years beginning after December 15, 2016, with early adoption permitted for all entities as of the beginning of an interim or annual reporting period. This guidance may be applied either prospectively or retrospectively (by reclassifying the comparative balance sheet). We adopted this new guidance in our first quarter ended January 2, 2016 and applied this guidance prospectively. As a result, the deferred tax assets and deferred tax liabilities on the Consolidated Balance Sheet as of September 30, 2015 have not been reclassified to conform to the July 2, 2016 presentation. Revenue Recognition In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In July 2015, the FASB approved a one-year delay in the effective date. ASU 2014-09 is effective for us in our first quarter of fiscal 2019 using either of two methods: (i) retrospective to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospective with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09. Subsequently, the FASB has issued the following standards to provide additional clarification and implementation guidance on ASU 2014-09: ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations; ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. We are currently evaluating the impact of these new standards on our consolidated financial statements. Debt Issuance Costs In April 2015, the FASB issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30), to simplify the required presentation of debt issuance costs. The amended guidance requires that debt issuance costs be presented in the balance sheet as a direct reduction from the carrying amount of the related debt liability rather than as an asset. It is effective for financial statements issued for fiscal years beginning after December 15, 2015, our fiscal 2017, with early adoption permitted. The new guidance will be applied retrospectively to each prior period presented. We are currently evaluating the impact of the new guidance on our consolidated financial statements. |
Deferred Revenue and Financing Receivables |
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Deferred Revenue and Financing Receivables | Deferred Revenue and Financing Receivables Deferred Revenue Deferred revenue primarily relates to software agreements billed to customers for which the services have not yet been provided. The liability associated with performing these services is included in deferred revenue and, if not yet paid, the related customer receivable is included in prepaid expenses and other current assets. Billed but uncollected support and subscription-related amounts included in other current assets at July 2, 2016 and September 30, 2015 were $111.1 million and $129.3 million, respectively. Financing Receivables We periodically provide extended payment terms to credit-worthy customers for software purchases with payment terms up to 24 months. The determination of whether to offer such payment terms is based on the size, nature and credit-worthiness of the customer, and the history of collecting amounts due, without concession, from the customer and customers generally. This determination is based on an internal credit assessment. In making this assessment, we use the Standard & Poor's (S&P) credit rating as our primary credit quality indicator, if available. If a customer, whether commercial or the U.S. Federal government, has an S&P bond rating of BBB- or above, we designate the customer as Tier 1. If a customer does not have an S&P bond rating, or has an S&P bond rating below BBB-, we base our assessment on an internal credit assessment which considers selected balance sheet, operating and liquidity measures, historical payment experience, and current business conditions within the industry or region. We designate these customers as Tier 2 or Tier 3, with Tier 3 being lower credit quality than Tier 2. As of July 2, 2016 and September 30, 2015, amounts due from customers for contracts with original payment terms greater than twelve months (financing receivables) totaled $12.1 million and $27.4 million, respectively. Accounts receivable and prepaid expenses and other current assets in the accompanying Consolidated Balance Sheets included current receivables from such contracts totaling $9.1 million and $21.8 million at July 2, 2016 and September 30, 2015, respectively, and other assets in the accompanying Consolidated Balance Sheets included long-term receivables from such contracts totaling $3.0 million and $5.6 million at July 2, 2016 and September 30, 2015, respectively. As of July 2, 2016 and September 30, 2015, $2.1 million and $0.5 million, respectively, of these receivables were past due. Our credit risk assessment for financing receivables was as follows:
We evaluate the need for an allowance for doubtful accounts for estimated losses resulting from the inability of these customers to make required payments. As of July 2, 2016 and September 30, 2015, we concluded that all financing receivables were collectible and no reserve for credit losses was recorded. We did not provide a reserve for credit losses or write off any uncollectible financing receivables in the nine months ended July 2, 2016 or July 4, 2015. We write off uncollectible trade and financing receivables when we have exhausted all collection avenues. We periodically transfer future payments under certain of these contracts to third-party financial institutions on a non-recourse basis. We record such transfers as sales of the related accounts receivable when we surrender control of such receivables. We did not sell any financing receivables to third-party financing institutions in the nine months ended July 2, 2016. We sold $3 million of financing receivables to third-party financial institutions in the nine months ended July 4, 2015. |
Restructuring Charges |
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Restructuring [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges | Restructuring Charges On October 23, 2015, we initiated a plan to restructure our workforce and consolidate select facilities in order to reduce our cost structure and to realign our investments with what we believe to be our higher growth opportunities. The restructuring is expected to result in a charge of $50 million to $70 million, the upper range of which has increased from our original estimate of $50 million. In the first three quarters of 2016, we recorded charges of $37.0 million, $4.4 million and $2.6 million respectively, attributable to termination benefits associated with 518 employees. The majority of the remaining charges are expected to be recorded in the fourth quarter of 2016. Additionally, in the first nine months of 2016, we recorded charges of $0.5 million related to the closure of excess facilities. In the first, second and third quarters of 2016, we made cash disbursements of $16.7 million, $25.1 million and $8.1 million, respectively, associated with restructuring charges. On April 4, 2015, we committed to a plan to restructure our workforce and consolidate select facilities to realign our global workforce to increase investment in our Internet of Things business and to reduce our cost structure through organizational efficiencies in the face of significant foreign currency depreciation relative to the U.S. Dollar and a more cautious outlook on global macroeconomic conditions. In the second and third quarter of 2015, we recorded charges of $38.5 million and $3.3 million, respectively, attributable to termination benefits associated with 411 employees and in the first nine months of 2015, we recorded charges of $1.1 million related to the closure of excess facilities. In the first, second and third quarters of 2015, we made cash disbursements of $17.3 million, $5.5 million and $25.0 million, respectively, associated with restructuring charges. Additionally, in the first nine months of 2015, we recorded a credit of $0.3 million related to prior year restructuring actions. The following table summarizes restructuring accrual activity for the nine months ended July 2, 2016:
The accrual for facility closures and related costs is included in accrued expenses and other liabilities in the Consolidated Balance Sheets, and the accrual for employee severance and related benefits is included in accrued compensation and benefits in the Consolidated Balance Sheets. |
Stock-based Compensation |
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Share-based Compensation, Allocation and Classification in Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-based Compensation We measure the cost of employee services received in exchange for restricted stock unit (RSU) awards based on the fair value of RSU awards on the date of grant. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. Our equity incentive plan provides for grants of nonqualified and incentive stock options, common stock, restricted stock, RSUs and stock appreciation rights to employees, directors, officers and consultants. We award RSUs as the principal equity incentive awards, including certain performance-based awards that are earned based on achievement of performance criteria established by the Compensation Committee of our Board of Directors. Each RSU represents the contingent right to receive one share of our common stock.
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In the first quarter of 2016, we granted the target performance-based TSR units ("target RSUs") shown in the table above to our executive officers. These RSUs are eligible to vest based upon our total shareholder return relative to a peer group (the “TSR units”), measured annually over a three year period. The number of TSR units to vest over the three year period will be determined based on the performance of PTC stock relative to the stock performance of an index of PTC peer companies established as of the grant date, as determined at the end of three measurement periods ending on September 30, 2016, 2017 and 2018, respectively. The shares earned for each period will vest on November 15 following each measurement period, up to a maximum of two times the number of target RSUs (up to a maximum of 652,000 shares). No vesting will occur in a period unless an annual threshold requirement is achieved. The employee must remain employed by PTC through the applicable vest date for any RSUs to vest. If the return to PTC shareholders is negative but still meets or exceeds the peer group indexed return, a maximum of 100% of the target RSUs will vest for the measurement period. TSR units not earned in either of the first two measurement periods are eligible to be earned in the third measurement period. The weighted average fair value of the TSR units was $46.96 per target RSU on the grant date. The fair value of the TSR units was determined using a Monte Carlo simulation model, a generally accepted statistical technique used to simulate a range of possible future stock prices for PTC and the peer group. The method uses a risk-neutral framework to model future stock price movements based upon the risk-free rate of return, the volatility of each entity, and the pairwise correlations of each entity being modeled. The fair value for each simulation is the product of the payout percentage determined by PTC’s TSR rank against the peer group, the projected price of PTC stock, and a discount factor based on the risk-free rate. The significant assumptions used in the Monte Carlo simulation model were as follows:
Compensation expense recorded for our stock-based awards was classified in our Consolidated Statements of Operations as follows:
The stock-based compensation expense in the first quarter of 2016 included $10 million of expense related to modifications of certain performance-based RSUs previously granted under our long-term incentive programs. The Compensation Committee of our Board of Directors amended these equity awards due to the impact of changes in our business model and strategy and foreign currency on our financial results. |
Earnings per Share (EPS) and Common Stock |
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Earnings(loss) per Share (EPS) and Common Stock | Earnings per Share (EPS) and Common Stock EPS Basic EPS is calculated by dividing net income by the weighted average number of shares outstanding during the period. Unvested restricted stock, although legally issued and outstanding, is not considered outstanding for purposes of calculating basic EPS. Diluted EPS is calculated by dividing net income by the weighted average number of shares outstanding plus the dilutive effect, if any, of outstanding stock options, restricted shares and RSUs using the treasury stock method. The calculation of the dilutive effect of outstanding equity awards under the treasury stock method includes consideration of proceeds from the assumed exercise of stock options, unrecognized compensation expense and any tax benefits as additional proceeds.
For the nine months ended July 2, 2016, diluted net loss per share is the same as basic net loss per share as the effects of our potential common stock equivalents are antidilutive. Total antidilutive shares were 1.7 million for the nine months ended July 2, 2016. Common Stock Repurchases Our Articles of Organization authorize us to issue up to 500 million shares of our common stock. Our Board of Directors has periodically authorized the repurchase of shares of our common stock. On August 4, 2014, our Board of Directors authorized us to repurchase up to $600 million of our common stock through September 30, 2017. In the third quarter and first nine months of 2016, we did not repurchase any shares. In the first quarter of 2015, we received 1.1 million shares as the final settlement of the accelerated share repurchase ("ASR") agreement described below. In the third quarter of 2015, we repurchased 1.2 million shares at a cost of $50.0 million. All shares of our common stock repurchased are automatically restored to the status of authorized and unissued. On August 14, 2014, we entered into an accelerated share repurchase (“ASR”) agreement with a major financial institution (“Bank”). The ASR allowed us to buy a large number of shares immediately at a purchase price determined by an average market price over a period of time. Under the ASR, we agreed to purchase $125 million of our common stock, in total, with an initial delivery to us in August 2014 of 2.3 million shares. |
Acquisition |
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Business Combinations [Abstract] | |
Acquisition | Acquisitions Acquisition-related costs were $0.9 million and $3.2 million for the third quarter and first nine months of 2016, respectively and $2.8 million and $8.7 million for the third quarter and first nine months of 2015, respectively. Acquisition-related costs include direct costs of potential and completed acquisitions (e.g., investment banker fees, professional fees, including legal and valuation services) and expenses related to acquisition integration activities (e.g., professional fees and severance). In addition, subsequent adjustments to our initial estimated amount of contingent consideration associated with specific acquisitions are included within acquisition-related charges. These costs have been classified in general and administrative expenses in the accompanying Consolidated Statements of Operations. Kepware On January 12, 2016, we acquired all of the ownership interest in Kepware, Inc., for $99.4 million in cash (net of cash acquired of $0.6 million) and, $16.9 million representing the fair value of contingent consideration payable upon achievement of targets described below. We borrowed $100.0 million under our existing credit facility in January of 2016 to fund the acquisition. The results of operations of Kepware have been included in our consolidated financial statements beginning on the acquisition date. Our results of operations prior to this acquisition, if presented on a pro forma basis, would not differ materially from our reported results. The acquisition of Kepware has been accounted for as a business combination. Assets acquired and liabilities assumed have been recorded at their estimated fair values as of January 12, 2016, the acquisition date. The fair values of intangible assets were based on valuations using an income approach, with estimates and assumptions provided by management of Kepware and PTC. The process for estimating the fair values of identifiable intangible assets and the contingent consideration liability requires the use of significant estimates and assumptions, including estimating future cash flows and developing appropriate discount rates. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The former shareholders of Kepware are eligible to receive additional consideration of up to $18.0 million, which is contingent on the achievement of certain Financial Performance, Product Integration and Business Integration targets (as defined in the Stock Purchase Agreement) within 24 months from April 3, 2016 to April 2, 2018. If such targets are achieved within the defined 12 month, 18 month and 24 month earn-out periods, the consideration corresponding to each target will be earned and payable in cash. Up to $9.6 million of the total contingent consideration will become payable in 2017, and the remainder, if subsequently earned, will become payable in 2018. In connection with accounting for the business combination, we recorded a liability of $16.9 million representing the fair value of the contingent consideration. The liability was valued using a discounted cash flow method and a probability weighted estimate of achievement of the targets. The estimated undiscounted range of outcomes for the contingent consideration is $16.9 million to $18.0 million. We assess the probability that the targets will be met and at what level each reporting period. Subsequent changes in the estimated fair value of the liability are reflected in earnings until the liability is fully settled. The purchase price allocation resulted in $77.1 million of goodwill, which will be deductible for income tax purposes. All of the acquired goodwill was allocated to our software products segment. Intangible assets of $34.5 million includes purchased software of $28.7 million, customer relationships of $5.2 million and trademarks of $0.6 million, which are being amortized over weighted average useful lives of 10 years, 10 years and 6 years, respectively, based upon the pattern in which economic benefits related to such assets are expected to be realized. The resulting amount of goodwill reflects our expectations of the following benefits: 1) Kepware’s protocol translators and connectivity platform strengthen the ThingWorx technology platform and accelerate our entry into the factory setting and Industrial IoT (IIoT); 2) cross-selling opportunities for our integrated technology platforms in the critical infrastructure markets to drive revenue growth; and 3) Kepware’s 20 years of manufacturing experience strengthens our manufacturing talent and domain expertise and provides support for our manufacturing strategy initiatives. Vuforia On November 3, 2015, pursuant to an Asset Purchase Agreement, PTC acquired the Vuforia business from Qualcomm Connected Experiences, Inc., a subsidiary of Qualcomm Incorporated, for $64.8 million in cash (net of cash acquired of $4.5 million). We borrowed $50 million under our credit facility to finance this acquisition. At the time of the acquisition, Vuforia had approximately 80 employees and historical annualized revenues were not material. The acquisition of Vuforia has been accounted for as a business combination. Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the acquisition date. The fair values of intangible assets were based on valuations using a cost approach which requires the use of significant estimates and assumptions, including estimating costs to reproduce an asset. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The purchase price allocation resulted in $23.3 million of goodwill, $41.2 million of technology and $4.7 million of net tangible assets. The acquired technology is being amortized over a useful life of 6 years. All of the acquired goodwill was allocated to our software products segment and will be deductible for income tax purposes. The resulting amount of goodwill reflects the value of the synergies created by integrating Vuforia’s augmented technology platform into PTC’s Technology Platform solutions. ColdLight In the third quarter of 2015, we acquired ColdLight Solutions, LLC, for approximately $98.6 million in cash (net of cash acquired of $1.3 million). The former shareholders of ColdLight are eligible to receive additional consideration (the earn-out) of up to $5 million which is contingent upon achievement of certain technology milestones within two years of the acquisition. If an earn-out milestone is achieved, a portion of the contingent consideration becomes earned and payable in cash after each six-month period. In connection with accounting for the business combination, we recorded a liability $3.8 million, representing the fair value of the contingent consideration. The liability was valued using a discounted cash flow method and a probability weighted estimate of achievement of the technology milestones. The estimated undiscounted range of outcomes for the contingent consideration was $3.8 million to $5.0 million at the acquisition date. Changes in the estimated liability are reflected in earnings until the liability is fully settled. As of July 2, 2016, our estimate of the liability was $2.5 million, after a total of $2.5 million payments made in December 2015 and May 2016. $1.9 million of the total payments represents the fair value of the liability recorded at acquisition date and is included in financing activities in the Consolidated Statements of Cash Flows. The remaining $0.6 million of the total payments represents changes in the estimated liability recorded at acquisition date and is included in operating activities in the Consolidated Statements of Cash Flow. ThingWorx The ThingWorx contingent earn-out second year payment criteria were attained in the first quarter of fiscal 2016. We paid the remaining $9.0 million of the total contingent consideration in April 2016. Of this payment, $8.7 million represents the fair value of the liability recorded at the acquisition date and is included in financing activities in the Consolidated Statements of Cash Flows. The remaining $0.3 million of this payment represents changes in the estimated liability recorded since the acquisition date and is included in operating activities in the Consolidated Statements of Cash Flows. |
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Through the second quarter of 2016, we had two operating and reportable segments: (1) Software Products and (2) Services. Effective with the beginning of the third quarter of 2016, we changed our operating and reportable segments from two to three: (1) Solutions Group, (2) Technology Platform Group and (3) Professional Services. We assess goodwill for impairment at the reporting unit level. Our reporting units are determined based on the components of our operating segments that constitute a business for which discrete financial information is available and for which operating results are regularly reviewed by segment management. Our reporting units are the same as our operating segments. As of July 2, 2016, goodwill and acquired intangible assets in the aggregate attributable to our solutions group, technology platform group and professional services segment were $1,206.4 million, $255.8 million and $30.9 million, respectively. As of September 30, 2015, goodwill and acquired intangible assets in the aggregate attributable to our software products segment and services segment were $1,297.9 million, and $62.4 million, respectively. Acquired intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. We evaluate goodwill for impairment in the third quarter of our fiscal year, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of a reporting segment below its carrying value. Factors we consider important, on an overall company basis and segment basis, when applicable, that could trigger an impairment review include significant under-performance relative to historical or projected future operating results, significant changes in our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends, a significant decline in our stock price for a sustained period and a reduction of our market capitalization relative to net book value. We completed our annual goodwill impairment review as of July 2, 2016 and concluded that no impairment charge was required as of that date. To conduct these tests of goodwill, the fair value of the reporting unit is compared to its carrying value. If the reporting unit’s carrying value exceeds its fair value, we record an impairment loss equal to the difference between the carrying value of goodwill and its implied fair value. We estimate the fair values of our reporting units using discounted cash flow valuation models. Those models require estimates of future revenues, profits, capital expenditures, working capital, terminal values based on revenue multiples, and discount rates for each reporting unit. We estimate these amounts by evaluating historical trends, current budgets, operating plans and industry data. The estimated fair value of each reporting unit was at least approximately twice its carrying value as of July 2, 2016. Goodwill and acquired intangible assets consisted of the following:
(1) The weighted average useful lives of purchased software, customer lists and relationships, trademarks and trade names and other intangible assets with a remaining net book value are 7 years, 10 years, 9 years, and 3 years, respectively. Goodwill Changes in goodwill presented by reportable segments were as follows:
Amortization of Intangible Assets The aggregate amortization expense for intangible assets with finite lives was classified in our Consolidated Statements of Operations as follows:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. Generally accepted accounting principles prescribe a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs that may be used to measure fair value:
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Money market funds, time deposits and corporate notes/bonds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. Certificates of deposit, commercial paper and certain U.S. government agency securities are classified within Level 2 of the fair value hierarchy. These instruments are valued based on quoted prices in markets that are not active or based on other observable inputs consisting of market yields, reported trades and broker/dealer quotes. The principal market in which we execute our foreign currency contracts is the institutional market in an over-the-counter environment with a relatively high level of price transparency. The market participants usually are large financial institutions. 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. The fair value of our contingent consideration arrangements are determined based on our evaluation as to the probability and amount of any earn-out that will be achieved based on expected future performances by the acquired entities. These arrangements are classified within Level 3 of the fair value hierarchy. Our significant financial assets and liabilities measured at fair value on a recurring basis as of July 2, 2016 and September 30, 2015 were as follows:
Changes in the fair value of Level 3 contingent consideration liability associated with our acquisitions of ThingWorx, ColdLight and Kepware were as follows:
Of the total, $11.8 million of the contingent consideration liabilities is included in accrued expenses and other current liabilities, with the remaining $7.7 million in other liabilities in the Consolidated Balance Sheet as of July 2, 2016. |
Marketable Securities |
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Marketable Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities | Marketable Securities The amortized cost and fair value of marketable securities as of July 2, 2016 were as follows:
Our investment portfolio consists of certificates of deposit, commercial paper, corporate notes/bonds and government securities that have a maximum maturity of three years. The longer the duration of these securities, the more susceptible they are to changes in market interest rates and bond yields. All unrealized losses are due to changes in market interest rates, bond yields and/or credit ratings. The following table presents our available-for-sale marketable securities by contractual maturity date, as of July 2, 2016.
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Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments Our earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. Our most significant foreign currency exposures relate to Western European countries, Japan, China and Canada. Our foreign currency risk management strategy is principally designed to mitigate the future potential financial impact of changes in the U.S. dollar value of anticipated transactions and balances denominated in foreign currency, resulting from changes in foreign currency exchange rates. We enter into derivative transactions, specifically foreign currency forward contracts, to manage the exposures to foreign currency exchange risk to reduce earnings volatility. We do not enter into derivatives transactions for trading or speculative purposes. Non-Designated Hedges We hedge our net foreign currency monetary assets and liabilities primarily resulting from foreign currency denominated receivables and payables with foreign exchange forward contracts to reduce the risk that our earnings and cash flows will be adversely affected by changes in foreign currency exchange rates. These contracts have maturities of up to approximately 3 months. Generally, we do not designate these foreign currency forward contracts as hedges for accounting purposes and changes in the fair value of these instruments are recognized immediately in earnings. Because we enter into forward contracts only as an economic hedge, any gain or loss on the underlying foreign-denominated balance would be offset by the loss or gain on the forward contract. Gains and losses on forward contracts and foreign denominated receivables and payables are included in other income (expense), net. As of July 2, 2016 and September 30, 2015, we had outstanding forward contracts with notional amounts equivalent to the following:
The following table shows the effect of our non-designated hedges in the Consolidated Statements of Operations for the three and nine months ended July 2, 2016 and July 4, 2015:
Cash Flow Hedges Our foreign exchange risk management program objective is to identify foreign exchange exposures and implement appropriate hedging strategies to minimize earnings fluctuations resulting from foreign exchange rate movements. We designate certain foreign exchange forward contracts as cash flow hedges of Euro, Yen and SEK denominated intercompany forecasted revenue transactions (supported by third party sales). All foreign exchange forward contracts are carried at fair value on the Consolidated Balance Sheets and the maximum duration of foreign exchange forward contracts does not exceed 13 months. Cash flow hedge relationships are designated at inception, and effectiveness is assessed prospectively and retrospectively using regression analysis on a monthly basis. As the forward contracts are highly effective in offsetting changes to future cash flows on the hedged transactions, we record the effective portion of changes in these cash flow hedges in accumulated other comprehensive income and subsequently reclassify into earnings in the same period during which the hedged transactions are recognized in earnings. Changes in the fair value of foreign exchange forward contracts due to changes in time value are included in the assessment of effectiveness. Our derivatives are not subject to any credit contingent features. We manage credit risk with counterparties by trading among several counterparties and we review our counterparties’ credit at least quarterly. As of July 2, 2016 and September 30, 2015, we had outstanding forward contracts designed as cash flow hedges with notional amounts equivalent to the following:
The following table shows the effect of the our derivative instruments designated as cash flow hedges in the Consolidated Statements of Operations for the three and nine months ended July 2, 2016 and July 4, 2015 (in thousands):
As of July 2, 2016, we estimated that approximately all values reported in accumulated other comprehensive income will be reclassified to income within the next twelve months. In the event the underlying forecast transaction does not occur, or it becomes probable that it will not occur, the related hedge gains and losses on the cash flow hedge would be immediately reclassified to “Other Income (Expense)” on the Consolidated Statements of Operations. For the three and nine months ended July 2, 2016, there were no such gains or losses. The following table shows our derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets:
Offsetting Derivative Assets and Liabilities We have entered into master netting arrangements which allow net settlements under certain conditions. Although netting is permitted, it is currently our policy and practice to record all derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets. The following table sets forth the offsetting of derivative assets as of July 2, 2016:
The following table sets forth the offsetting of derivative liabilities as of July 2, 2016:
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information We operate within a single industry segment-computer software and related services. Operating segments as defined under GAAP are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our President and Chief Executive Officer. We have three operating and reportable segments: (1) the Solutions Group, which includes license, subscription, support and cloud services revenue for our core CAD, SLM and ePLM products; (2) the Technology Platform Group, which includes license, subscription, support and cloud services revenue for our IoT, analytics and augmented reality solutions, and (3) Professional Services, which includes consulting, implementation and training revenue. Our reported segment profit includes revenue from third party sales of our products and services, less direct controllable segment costs. Direct costs of the segments include certain costs of revenue, research and development and certain marketing costs. Costs excluded from segment margin include cost of revenue, selling expenses, corporate marketing and general and administrative costs that are incurred in support of all of our segments and are not specifically allocated to our segments for management reporting. Additionally, the segment profit does not include stock-based compensation, amortization of intangible assets, restructuring charges and certain other identified costs that we do not allocate to the segments for purposes of evaluating their operational performance. The revenue and profit attributable to our operating segments are summarized below. We do not produce asset information by reportable segment; therefore, it is not reported.
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Income Taxes |
9 Months Ended |
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Jul. 02, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes In the third quarter and first nine months of 2016, our effective tax rate was 537% on a pre-tax loss of $0.7 million and (9)% on a pre-tax loss of $23.8 million, respectively, compared to 3% on pre-tax income of $17.9 million and (1)% on pretax income of $52.7 million in the third quarter and first nine months of 2015, respectively. In the third quarter and first nine months of 2016 and 2015, our effective tax rate was lower than the 35% statutory federal income tax rate due to our corporate structure in which our foreign taxes are at a net effective tax rate lower than the U.S. rate. A significant amount of our foreign earnings is generated by our subsidiaries organized in Ireland. In 2016 and 2015, the foreign rate differential predominantly relates to these Irish earnings. Our foreign rate differential in 2016 and 2015 includes a rate benefit from a business realignment completed on September 30, 2014 in which intellectual property was transferred between two wholly-owned foreign subsidiaries. The realignment allows us to more efficiently manage the distribution of our products to European customers. For the third quarter and first nine months of 2016 and 2015, this realignment resulted in a tax benefit of approximately $9 million and $16 million, and $6 million and $14 million, respectively. Additionally, in the first nine months of 2016 and 2015, our provision reflects a tax benefit of $2.6 million and $2.1 million, respectively, related to a retroactive extension of the U.S. research and development tax credit enacted in the first quarter of each of 2016 and 2015. In the first nine months of 2016 and 2015, this benefit was offset by a corresponding provision to increase our U.S. valuation allowance. In addition, in the first nine months of 2015, we recorded a tax benefit of $3.1 million related to the reassessment of our reserve requirements, and a benefit of $1.4 million in conjunction with the reorganization of our Atego U.S. subsidiaries. As of July 2, 2016 and September 30, 2015, we had unrecognized tax benefits of $15.5 million and $14.1 million, respectively. If all of our unrecognized tax benefits as of July 2, 2016 were to become recognizable in the future, we would record a benefit to the income tax provision of $13.9 million, which would be partially offset by an increase in the U.S. valuation allowance of $4.8 million. Although we believe our tax estimates are appropriate, the final determination of tax audits and any related litigation could result in favorable or unfavorable changes in our estimates. We believe it is reasonably possible that within the next 12 months the amount of unrecognized tax benefits related to the resolution of multi-jurisdictional tax positions could be reduced by up to $5.0 million as audits close and statutes of limitations expire. In the fourth quarter of 2016, we received an assessment from the tax authorities in Korea related to an ongoing tax audit of approximately $12 million. The assessment relates to various tax issues but primarily to foreign withholding taxes. We intend to appeal and will vigorously defend our positions. We believe that it is more likely than not that our positions will be sustained upon appeal. Accordingly, we have not recorded a tax reserve for this matter. We have not yet determined whether it will be necessary to pay the assessment while our appeal is pending. If we do not pay the assessment while our appeal is pending and we lose our appeal, we could be subject to substantial additional penalties. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt At July 2, 2016 and September 30, 2015, we had the following long-term borrowing obligations:
Senior Notes In May 2016, we issued $500 million in aggregate principal amount of 6.0% senior, unsecured long-term debt at par value, due in 2024. We used the net proceeds from the sale of the notes to repay a portion of our outstanding revolving loan under our current credit facility. Interest is payable semi-annually on November 15 and May 15. The debt indenture includes covenants that limit our ability to, among other things, incur additional debt, grant liens on our properties or capital stock, enter into sale and leaseback transactions or asset sales, and make capital distributions. We were in compliance with all of the covenants as of July 2, 2016. On and after May 15, 2019, we may redeem the senior notes at any time in whole or from time to time in part at specified redemption prices. In certain circumstances constituting a change of control, we will be required to make an offer to repurchase the senior notes at a purchase price equal to 101% of the aggregate principal amount of the notes, plus accrued and unpaid interest. Our ability to repurchase the senior notes in such event may be limited by law, by the indenture associated with the senior notes, by our then-available financial resources or by the terms of other agreements to which we may be party at such time. If we fail to repurchase the senior notes as required by the indenture, it would constitute an event of default under the indenture governing the senior notes which, in turn, may also constitute an event of default under other obligations. As of July 2, 2016, the total estimated fair value of the Notes was approximately $517.5 million, which is based on quoted prices for the notes on that date. Credit Agreement In November 2015, we entered into a multi-currency credit facility with a syndicate of sixteen banks for which JPMorgan Chase Bank, N.A. acts as Administrative Agent. This credit facility amended and restated in its entirety our credit facility described in Note H of our Annual Report on Form 10-K for the fiscal year ended September 30, 2015. We expect to use the credit facility for general corporate purposes, including acquisitions of businesses, share repurchases and working capital requirements. As of July 2, 2016, the fair value of our credit facility approximates its book value. The credit facility initially consisted of a $1 billion revolving loan commitment, which was reduced to $900 million in June 2016 pursuant to an amendment to the Credit Agreement. The loan commitment may be increased by an additional $500 million (in the form of revolving loans or term loans, or a combination thereof) if the existing or additional lenders are willing to make such increased commitments. The revolving loan commitment does not require amortization of principal and may be repaid in whole or in part prior to the scheduled maturity date at our option without penalty or premium. The credit facility matures on September 15, 2019, when all remaining amounts outstanding will be due and payable in full. PTC and certain eligible foreign subsidiaries are eligible borrowers under the credit facility. Any borrowings by PTC Inc. under the credit facility would be guaranteed by PTC Inc.’s material domestic subsidiaries that become parties to the subsidiary guaranty, if any. As of the filing of this Form 10-Q, there are no subsidiary guarantors of the obligations under the credit facility. Any borrowings by eligible foreign subsidiary borrowers would be guaranteed by PTC Inc. and any subsidiary guarantors. As of the filing of this Form 10-Q, no amounts under the credit facility have been borrowed by an eligible foreign subsidiary borrower. In addition, PTC and certain of its material domestic subsidiaries' owned property (including equity interests) is subject to first priority perfected liens in favor of the lenders of this credit facility. 100% of the voting equity interests of certain of PTC’s domestic subsidiaries and 65% of its material first-tier foreign subsidiaries are pledged as collateral for the obligations under the credit facility. As of July 2, 2016, we had $278.1 million in loans outstanding under the credit facility. Loans under the credit facility bear interest at variable rates which reset every 30 to 180 days depending on the rate and period selected by PTC as described below. As of July 2, 2016, the annual interest rate for borrowing outstanding was 2.44%. Interest rates on borrowings outstanding under the credit facility range from 1.25% to 1.75% above an adjusted LIBO rate for Euro currency borrowings or would range from 0.25% to 0.75% above the defined base rate (the greater of the Prime Rate, the FRBNY rate plus 0.5%, or an adjusted LIBO rate plus 1%) for base rate borrowings, in each case based upon PTC’s total leverage ratio. Additionally, PTC may borrow certain foreign currencies at rates set in the same range above the respective London interbank offered interest rates for those currencies, based on PTC’s total leverage ratio. A quarterly commitment fee on the undrawn portion of the credit facility is required, ranging from 0.175% to 0.30% per annum, based upon PTC’s total leverage ratio. The credit facility limits PTC’s and its subsidiaries’ ability to, among other things: incur liens or guarantee obligations; pay dividends (other than to PTC) and make other distributions; make investments and enter into joint ventures; dispose of assets; and engage in transactions with affiliates, except on an arms-length basis. Under the credit facility, PTC and its material domestic subsidiaries may not invest cash or property in, or loan to, PTC’s foreign subsidiaries in aggregate amounts exceeding $75.0 million for any purpose and an additional $200.0 million for acquisitions of businesses. In addition, under the credit facility, PTC and its subsidiaries must maintain the following financial ratios:
As of July 2, 2016, our total leverage ratio was 3.15 to 1.00, our senior secured leverage ratio was 1.09 to 1 and our fixed charge coverage ratio was 8.45 to 1.00 and we were in compliance with all financial and operating covenants of the credit facility. Any failure to comply with the financial or operating covenants of the credit facility would prevent PTC from being able to borrow additional funds, and would constitute a default, permitting the lenders to, among other things, accelerate the amounts outstanding, including all accrued interest and unpaid fees, under the credit facility and to terminate the credit facility. A change in control of PTC, as defined in the agreement, also constitutes an event of default, permitting the lenders to accelerate the indebtedness and terminate the credit facility. |
Commitments and Contingencies |
9 Months Ended |
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Jul. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal and Regulatory Matters Korean Tax Audit In July 2016, we received an assessment from the tax authorities in Korea related to an ongoing tax audit of approximately $12 million. See Note 12. Income Taxes for additional information. China Investigation The China Administration for Industry and Commerce (the “Agency”) recently initiated an investigation at our China subsidiary related to the investigation concerning expenditures by our business partners in China and our China business that we recently settled with the U.S. Securities and Exchange Commission (“SEC”) and the U.S. Department of Justice (“DOJ”), but not necessarily limited to the scope of that investigation. The Agency is authorized to issue fines and assess other civil penalties. We are unable to predict the outcome of this matter, which could include fines or other sanctions that could be material. Legal Proceedings On March 7, 2016, a lawsuit was filed against us and certain of our current and former officers and directors in the U.S. District Court for the District of Massachusetts by a shareholder on behalf of himself and purportedly on behalf of other shareholders who purchased our stock during the period November 24, 2011 through July 29, 2015. An amended complaint was filed on July 11, 2016. The lawsuit, which seeks unspecified damages, alleges that, during that period, PTC’s public disclosures concerning the SEC and DOJ investigation described above were false and/or misleading and/or failed to disclose certain alleged facts. We intend to contest the action vigorously. We cannot predict the outcome of this action nor when it will be resolved. If the plaintiff(s) were to prevail in the litigation, we could be liable for damages, which could be material and could adversely affect our financial condition or results of operations. We are subject to various other legal proceedings and claims that arise in the ordinary course of business. We do not believe that resolving the legal proceedings and claims that we are currently subject to will have a material adverse impact on our financial condition, results of operations or cash flows. However, the results of legal proceedings cannot be predicted with certainty. Should any of these legal proceedings and claims be resolved against us, the operating results for a particular reporting period could be adversely affected. Accruals With respect to legal proceedings and claims, we record an accrual for a contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. For legal proceedings and claims for which the likelihood that a liability has been incurred is more than remote but less than probable, we estimate the range of possible outcomes. As of July 2, 2016, we had a legal proceedings and claims accrual of $0.4 million. Guarantees and Indemnification Obligations We enter into standard indemnification agreements in the ordinary course of our business. Pursuant to such agreements with our business partners or customers, we indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to our products, as well as claims relating to property damage or personal injury resulting from the performance of services by us or our subcontractors. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited. Historically, our costs to defend lawsuits or settle claims relating to such indemnity agreements have been minimal and we accordingly believe the estimated fair value of liabilities under these agreements is immaterial. We warrant that our software products will perform in all material respects in accordance with our standard published specifications in effect at the time of delivery of the licensed products for a specified period of time. Additionally, we generally warrant that our consulting services will be performed consistent with generally accepted industry standards. In most cases, liability for these warranties is capped. If necessary, we would provide for the estimated cost of product and service warranties based on specific warranty claims and claim history; however, we have not incurred significant cost under our product or services warranties. As a result, we believe the estimated fair value of these liabilities is immaterial. |
Pension Plans (Notes) |
9 Months Ended |
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Jul. 02, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Pension Plans | 15. Pension Plans Our pension plans are described in more detail in Note M to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015. In the first nine months of 2015, we contributed $20 million to a non-U.S. pension plan. |
Subsequent Events Subsequent Events (Notes) |
9 Months Ended |
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Jul. 02, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | 16. Subsequent Events Employee Stock Purchase Plan The first offering period under our employee stock purchase plan (ESPP) began on August 1, 2016 and will end on January 31, 2017. The ESPP allows eligible employees to contribute up to 10% of their base salary, up to a maximum of $25,000 per year and subject to any other plan limitations, toward the purchase of our common stock at a discounted price. The purchase price of the shares on each purchase date is equal to 85% of the lower of the fair market value of our common stock on the first and last trading days of each offering period. The ESPP is qualified under Section 423 of the Internal Revenue Code. We will estimate the fair value of each purchase right under the ESPP on the date of grant using the Black-Scholes option valuation model and use the straight-line attribution approach to record the expense over the six-month offering period. |
Deferred Revenue and Financing Receivables (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue And Financing Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Risk Assessment for Financing Receivables | Our credit risk assessment for financing receivables was as follows:
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Restructuring Charges (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Accrual Activity | The following table summarizes restructuring accrual activity for the nine months ended July 2, 2016:
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Stock-based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation, Allocation and Classification in Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] |
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Schedule of Restricted Stock and Restricted Stock Unit Activity |
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Schedule of Restricted Stock Unit Grants for the Period |
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Schedule of Classification of Compensation Expense | Compensation expense recorded for our stock-based awards was classified in our Consolidated Statements of Operations as follows:
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Earnings per Share (EPS) and Common Stock (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share and Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings(loss) per Share Basic and Diluted |
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Goodwill and Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill [Table Text Block] | Changes in goodwill presented by reportable segments were as follows:
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Goodwill and Acquired Intangible Assets | Goodwill and acquired intangible assets consisted of the following:
(1) The weighted average useful lives of purchased software, customer lists and relationships, trademarks and trade names and other intangible assets with a remaining net book value are 7 years, 10 years, 9 years, and 3 years, respectively. |
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Amortization of Intangible Assets | The aggregate amortization expense for intangible assets with finite lives was classified in our Consolidated Statements of Operations as follows:
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, by Balance Sheet Grouping | Our significant financial assets and liabilities measured at fair value on a recurring basis as of July 2, 2016 and September 30, 2015 were as follows:
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Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | Changes in the fair value of Level 3 contingent consideration liability associated with our acquisitions of ThingWorx, ColdLight and Kepware were as follows:
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Marketable Securities (Tables) |
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Jul. 02, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale Securities | The amortized cost and fair value of marketable securities as of July 2, 2016 were as follows:
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Investments Classified by Contractual Maturity Date | The following table presents our available-for-sale marketable securities by contractual maturity date, as of July 2, 2016.
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Derivative Financial Instruments (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional Amounts of Outstanding Forward Contracts | As of July 2, 2016 and September 30, 2015, we had outstanding forward contracts with notional amounts equivalent to the following:
As of July 2, 2016 and September 30, 2015, we had outstanding forward contracts designed as cash flow hedges with notional amounts equivalent to the following:
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Net Gains and Losses on Foreign Currency Exposures | The following table shows the effect of our non-designated hedges in the Consolidated Statements of Operations for the three and nine months ended July 2, 2016 and July 4, 2015:
The following table shows the effect of the our derivative instruments designated as cash flow hedges in the Consolidated Statements of Operations for the three and nine months ended July 2, 2016 and July 4, 2015 (in thousands):
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table shows our derivative instruments measured at gross fair value as reflected in the Consolidated Balance Sheets:
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Offsetting Assets | The following table sets forth the offsetting of derivative assets as of July 2, 2016:
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Offsetting Liabilities | The following table sets forth the offsetting of derivative liabilities as of July 2, 2016:
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue and Operating Income |
|
Basis of Presentation (Details) |
9 Months Ended |
---|---|
Jul. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Maximum payment terms on software purchases for credit-worthy customers (in months) | 24 months |
Restructuring Charges (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jul. 02, 2016 |
Apr. 02, 2016 |
Jan. 02, 2016 |
Jul. 04, 2015 |
Apr. 04, 2015 |
Jan. 03, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Restructuring Reserve [Roll Forward] | ||||||||
October 1, 2015 | $ 15,254 | $ 15,254 | ||||||
Charge to operations | $ 2,815 | $ 4,393 | 44,541 | $ 42,625 | ||||
Cash disbursements | (8,100) | $ (25,100) | (16,700) | $ (25,000) | $ (5,500) | $ (17,300) | (49,893) | |
Foreign exchange impact | 92 | |||||||
Accrual, July 2, 2016 | 9,994 | 9,994 | ||||||
Employee severance and related benefits | ||||||||
Restructuring Reserve [Roll Forward] | ||||||||
October 1, 2015 | 14,086 | 14,086 | ||||||
Charge to operations | 44,010 | |||||||
Cash disbursements | (49,059) | |||||||
Foreign exchange impact | 103 | |||||||
Accrual, July 2, 2016 | 9,140 | 9,140 | ||||||
Facility closures and related costs | ||||||||
Restructuring Reserve [Roll Forward] | ||||||||
October 1, 2015 | $ 1,168 | 1,168 | ||||||
Charge to operations | 531 | $ 1,100 | ||||||
Cash disbursements | (834) | |||||||
Foreign exchange impact | (11) | |||||||
Accrual, July 2, 2016 | $ 854 | $ 854 |
Stock-based Compensation (Schedule of Restricted Stock Unit Grants For The Period) (Details) - Restricted Stock Units (RSUs) |
9 Months Ended | |||||
---|---|---|---|---|---|---|
Jul. 02, 2016
installment
$ / shares
shares
| ||||||
Granted, shares | 2,465,000 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares | $ 37.20 | |||||
TSR Units [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Target Multiplier | 2 | |||||
Granted, shares | 326,000 | [1] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares | $ 46.96 | |||||
Performance-Based | vest in three installments [Domain] | ||||||
Number of equal annual installments | installment | 3 | |||||
Time-based Award [Member] | Vest in one installment [Member] [Domain] | ||||||
Granted, shares | 64,000 | |||||
Time-based Award [Member] | vest in two installments [Domain] | ||||||
Granted, shares | 121,000 | |||||
Time-Based | ||||||
Granted, shares | 1,795,000 | [2] | ||||
Time-Based | vest in two installments [Domain] | ||||||
Number of equal annual installments | installment | 2 | |||||
Time-Based | vest in three installments [Domain] | ||||||
Number of equal annual installments | installment | 3 | |||||
Maximum [Member] | TSR Units [Member] | ||||||
Granted, shares | 652,000 | [1] | ||||
Maximum [Member] | Performance-Based | ||||||
Granted, shares | 343,000 | |||||
Chief Executive Officer [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Target Multiplier | 2 | |||||
Executive Officer [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Target Multiplier | 1 | |||||
|
Stock-based Compensation (Schedule of Classification of Compensation Expense) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jul. 02, 2016 |
Jan. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Total stock-based compensation expense | $ 13,796 | $ 14,071 | $ 51,821 | $ 38,135 | |
Cost of software revenue | |||||
Total stock-based compensation expense | 1,158 | 1,133 | 4,163 | 3,158 | |
Cost of professional service revenue | |||||
Total stock-based compensation expense | 1,342 | 1,317 | 4,072 | 4,510 | |
Sales and Marketing | |||||
Total stock-based compensation expense | 3,195 | 4,075 | 11,254 | 10,821 | |
Research and Development | |||||
Total stock-based compensation expense | 2,531 | 2,928 | 7,578 | 9,015 | |
General and Administrative | |||||
Total stock-based compensation expense | $ 5,570 | $ 4,618 | $ 24,754 | $ 10,631 | |
stock modification [Member] | |||||
Total stock-based compensation expense | $ 10,000 |
Earnings per Share (EPS) and Common Stock (Earnings per Share Basic and Diluted) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Earnings Per Share and Common Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,725 | |||
Net income (loss) | $ 3,073 | $ 17,435 | $ (25,992) | $ 53,111 |
Weighted average shares outstanding—Basic (in shares) | 114,795 | 114,764 | 114,499 | 115,021 |
Dilutive effect of employee stock options, restricted shares and restricted stock units (in shares) | 903 | 1,261 | 0 | 1,309 |
Weighted average shares outstanding—Diluted (in shares) | 115,698 | 116,025 | 114,499 | 116,330 |
Earnings(loss) per share—Basic (in USD per share) | $ 0.03 | $ 0.15 | $ (0.23) | $ 0.46 |
Earnings(loss) per share—Diluted (in USD per share) | $ 0.03 | $ 0.15 | $ (0.23) | $ 0.46 |
Earnings per Share (EPS) and Common Stock (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jul. 04, 2015 |
Jan. 03, 2015 |
Sep. 30, 2014 |
Jul. 02, 2016 |
Jul. 04, 2015 |
Sep. 30, 2015 |
Aug. 14, 2014 |
Aug. 04, 2014 |
|
Earnings Per Share and Common Stock | ||||||||
Stock option restricted shares and restricted stock units excluded from computation of EPS, shares | 1,725,000 | |||||||
Common stock, shares authorized | 500,000,000 | 500,000,000 | ||||||
Stock Repurchase Program, Authorized Amount | $ 600,000 | |||||||
Accelerated Share Repurchases, Settlement (Payment) or Receipt | $ 125,000 | |||||||
Stock repurchased during period, shares | 1,200,000 | 1,100,000 | 2,300,000 | |||||
Stock Repurchased During Period, Value | $ 50,000 | |||||||
Repurchases of common stock | $ 0 | $ 49,962 |
Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Thousands |
Jul. 02, 2016 |
Sep. 30, 2015 |
---|---|---|
Intangible Assets, Net (Including Goodwill) | $ 1,493,042 | $ 1,360,342 |
Solutions Group | ||
Intangible Assets, Net (Including Goodwill) | 1,206,400 | |
Technology Platform Group | ||
Intangible Assets, Net (Including Goodwill) | 255,800 | |
Professional Services | ||
Intangible Assets, Net (Including Goodwill) | $ 30,900 | |
Segment Software Products | ||
Intangible Assets, Net (Including Goodwill) | 1,297,900 | |
Segment Services | ||
Intangible Assets, Net (Including Goodwill) | $ 62,400 |
Goodwill and Intangible Assets (Amortization of Intangible Assets) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of acquired intangible assets | $ 8,294 | $ 9,105 | $ 25,040 | $ 27,691 |
Cost of software revenue | 6,383 | 4,957 | 18,235 | 14,438 |
Total amortization expense | $ 14,677 | $ 14,062 | $ 43,275 | $ 42,129 |
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Apr. 02, 2016 |
Jan. 02, 2016 |
Jul. 02, 2016 |
Sep. 30, 2015 |
|
Goodwill [Line Items] | ||||
Goodwill | $ 1,169,660 | $ 1,069,041 | ||
Goodwill, Translation and Purchase Accounting Adjustments | 222 | |||
Intangible Assets, Net (Including Goodwill) | 1,493,042 | 1,360,342 | ||
Segment, Software Products [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill | 1,117,038 | 1,016,413 | ||
Goodwill, Translation and Purchase Accounting Adjustments | 228 | |||
Intangible Assets, Net (Including Goodwill) | 1,297,900 | |||
Segment Services | ||||
Goodwill [Line Items] | ||||
Goodwill | 52,622 | 52,628 | ||
Goodwill, Translation and Purchase Accounting Adjustments | (6) | |||
Intangible Assets, Net (Including Goodwill) | $ 62,400 | |||
Solutions Group | ||||
Goodwill [Line Items] | ||||
Goodwill | 1,050,013 | |||
Intangible Assets, Net (Including Goodwill) | 1,206,400 | |||
Technology Platform Group | ||||
Goodwill [Line Items] | ||||
Goodwill | 90,100 | |||
Intangible Assets, Net (Including Goodwill) | 255,800 | |||
Professional Services | ||||
Goodwill [Line Items] | ||||
Goodwill | 29,600 | |||
Intangible Assets, Net (Including Goodwill) | $ 30,900 | |||
Vuforia Acquisition [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill, Acquired During Period | $ 23,316 | |||
Vuforia Acquisition [Member] | Segment, Software Products [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill, Acquired During Period | 23,316 | |||
Vuforia Acquisition [Member] | Segment Services | ||||
Goodwill [Line Items] | ||||
Goodwill, Acquired During Period | $ 0 | |||
acquired entity name-Kepware [Domain] | ||||
Goodwill [Line Items] | ||||
Goodwill, Acquired During Period | $ 77,081 | |||
acquired entity name-Kepware [Domain] | Segment, Software Products [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill, Acquired During Period | 77,081 | |||
acquired entity name-Kepware [Domain] | Segment Services | ||||
Goodwill [Line Items] | ||||
Goodwill, Acquired During Period | $ 0 |
Fair Value Measurements (Financial Assets And Liabilities Measured At Fair Value On Recurring Basis) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Jul. 02, 2016 |
Jul. 02, 2016 |
Sep. 30, 2015 |
|
Financial assets: | |||
Cash equivalents—Level 1 | $ 72,829 | $ 72,829 | $ 91,216 |
Available-for-sale Securities | 44,606 | 44,606 | |
Forward contracts | 1,739 | 1,739 | 507 |
Financial assets, fair value | 119,174 | 119,174 | 91,723 |
Financial liabilities: | |||
Forward contracts | 6,150 | 6,150 | 46 |
Contingent Consideration Liability, Fair Value Disclosure | 19,497 | 19,497 | 13,000 |
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability | 1,097 | ||
Payment of contingent consideration | (11,500) | ||
Liabilities, Fair Value Disclosure, Recurring | 25,647 | 25,647 | 13,046 |
Level 1 | |||
Financial assets: | |||
Cash equivalents—Level 1 | 72,829 | 72,829 | 91,216 |
Forward contracts | 0 | 0 | 0 |
Financial assets, fair value | 104,419 | 104,419 | 91,216 |
Financial liabilities: | |||
Forward contracts | 0 | 0 | 0 |
Contingent Consideration Liability, Fair Value Disclosure | 0 | 0 | 0 |
Liabilities, Fair Value Disclosure, Recurring | 0 | 0 | 0 |
Level 2 | |||
Financial assets: | |||
Cash equivalents—Level 1 | 0 | 0 | 0 |
Available-for-sale Securities | 0 | 0 | |
Forward contracts | 1,739 | 1,739 | 507 |
Financial assets, fair value | 14,755 | 14,755 | 507 |
Financial liabilities: | |||
Forward contracts | 6,150 | 6,150 | 46 |
Contingent Consideration Liability, Fair Value Disclosure | 0 | 0 | 0 |
Liabilities, Fair Value Disclosure, Recurring | 6,150 | 6,150 | 46 |
Fair Value, Inputs, Level 3 [Member] | |||
Financial assets: | |||
Cash equivalents—Level 1 | 0 | 0 | 0 |
Forward contracts | 0 | 0 | 0 |
Financial assets, fair value | 0 | 0 | 0 |
Financial liabilities: | |||
Forward contracts | 0 | 0 | 0 |
Contingent Consideration Liability, Fair Value Disclosure | 19,497 | 19,497 | 13,000 |
Liabilities, Fair Value Disclosure, Recurring | 19,497 | 19,497 | 13,000 |
Current portion [Member] | |||
Financial liabilities: | |||
Contingent Consideration Liability, Fair Value Disclosure | 0 | 0 | |
acquired entity name-ThingWorx [Member] | |||
Financial liabilities: | |||
Contingent Consideration Liability, Fair Value Disclosure | 0 | 0 | |
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability | 0 | ||
acquired entity name-ThingWorx [Member] | Fair Value, Inputs, Level 3 [Member] | |||
Financial liabilities: | |||
Contingent Consideration Liability, Fair Value Disclosure | 9,000 | ||
Acquired entity name: ColdLight [Member] | |||
Financial liabilities: | |||
Contingent Consideration Liability, Fair Value Disclosure | 2,500 | 2,500 | |
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability | 1,000 | ||
Payment of contingent consideration | (2,500) | ||
Acquired entity name: ColdLight [Member] | Fair Value, Inputs, Level 3 [Member] | |||
Financial liabilities: | |||
Contingent Consideration Liability, Fair Value Disclosure | 4,000 | ||
acquired entity name-Kepware [Domain] | |||
Financial liabilities: | |||
Contingent Consideration Liability, Fair Value Disclosure | 16,997 | 16,997 | |
Addition to Contingent Consideration | 16,900 | ||
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability | 97 | ||
acquired entity name-Kepware [Domain] | Fair Value, Inputs, Level 3 [Member] | |||
Financial liabilities: | |||
Contingent Consideration Liability, Fair Value Disclosure | $ 0 | ||
ThingWorx [Member] | |||
Financial liabilities: | |||
Payment of contingent consideration | (9,000) | (9,000) | |
Non-current portion [Member] [Member] | |||
Financial liabilities: | |||
Contingent Consideration Liability, Fair Value Disclosure | 7,700 | 7,700 | |
Certificates of Deposit [Member] | Level 2 | |||
Financial assets: | |||
Available-for-sale Securities | 680 | 680 | |
Commercial Paper [Member] | Level 2 | |||
Financial assets: | |||
Available-for-sale Securities | 9,930 | 9,930 | |
Corporate Bond Securities [Member] | Level 1 | |||
Financial assets: | |||
Available-for-sale Securities | 31,590 | 31,590 | |
US Government Agencies Debt Securities [Member] | Level 2 | |||
Financial assets: | |||
Available-for-sale Securities | $ 2,406 | $ 2,406 |
Marketable Securities (Details) $ in Thousands |
3 Months Ended |
---|---|
Jul. 02, 2016
USD ($)
| |
Schedule of Available-for-sale Securities [Line Items] | |
Available-for-sale Securities, Debt Maturities, Next Rolling Twelve Months, Amortized Cost Basis | $ 11,387 |
Available-for-sale Securities, Amortized Cost Basis | 44,599 |
Available-for-sale Securities, Gross Unrealized Gain | 11 |
Available-for-sale Securities, Gross Unrealized Loss | (4) |
Available-for-sale Securities | 44,606 |
Available-for-sale Securities, Debt Maturities, Next Rolling Twelve Months, Fair Value | 11,380 |
Available-for-sale Securities, Debt Maturities, Rolling Year Two Through Five, Amortized Cost Basis | 33,212 |
Available-for-sale Securities, Debt Maturities, Rolling Year Two Through Five, Fair Value | 33,226 |
Certificates of Deposit [Member] | |
Schedule of Available-for-sale Securities [Line Items] | |
Available-for-sale Securities, Amortized Cost Basis | 680 |
Available-for-sale Securities, Gross Unrealized Gain | 0 |
Available-for-sale Securities, Gross Unrealized Loss | 0 |
Available-for-sale Securities | 680 |
Commercial Paper, Not Included with Cash and Cash Equivalents [Member] | |
Schedule of Available-for-sale Securities [Line Items] | |
Available-for-sale Securities, Amortized Cost Basis | 9,934 |
Available-for-sale Securities, Gross Unrealized Gain | 0 |
Available-for-sale Securities, Gross Unrealized Loss | (4) |
Available-for-sale Securities | 9,930 |
Corporate Bond Securities [Member] | |
Schedule of Available-for-sale Securities [Line Items] | |
Available-for-sale Securities, Amortized Cost Basis | 31,579 |
Available-for-sale Securities, Gross Unrealized Gain | 11 |
Available-for-sale Securities, Gross Unrealized Loss | 0 |
Available-for-sale Securities | 31,590 |
US Government Agencies Debt Securities [Member] | |
Schedule of Available-for-sale Securities [Line Items] | |
Available-for-sale Securities, Amortized Cost Basis | 2,406 |
Available-for-sale Securities, Gross Unrealized Gain | 0 |
Available-for-sale Securities, Gross Unrealized Loss | 0 |
Available-for-sale Securities | $ 2,406 |
Derivative Financial Instruments (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 02, 2016 |
Sep. 30, 2015 |
|
Forward contracts (2) - Derivative Assets | $ 1,739 | $ 507 |
Forward contracts (2) - Derivative Liabilities | 6,150 | 46 |
Level 2 | ||
Forward contracts (2) - Derivative Assets | 1,739 | 507 |
Forward contracts (2) - Derivative Liabilities | 6,150 | 46 |
Other Current Liabilities [Member] | ||
Foreign Currency Cash Flow Hedge Liability at Fair Value | 3,022 | 0 |
Foreign Currency Derivative Instruments Not Designated as Hedging Instruments, Liability at Fair Value | 3,128 | 46 |
Other Current Assets [Member] | ||
Foreign currency cash flow hedge asset at fair value | 95 | 0 |
Foreign Currency Derivative Instruments Not Designated as Hedging Instruments, Asset at Fair Value | $ 1,644 | $ 507 |
Foreign Exchange Forward [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivative, Remaining Maturity | 3 months | |
Foreign Exchange Forward [Member] | Designated as Hedging Instrument [Member] | ||
Derivative, Remaining Maturity | 13 months |
Derivative Financial Instruments (Notional Amounts Of Outstanding Forward Contracts) (Details) - Forward Contracts - USD ($) $ in Thousands |
Jul. 02, 2016 |
Sep. 30, 2015 |
---|---|---|
Designated as Hedging Instrument [Member] | ||
Notional amounts | $ 90,497 | $ 0 |
Designated as Hedging Instrument [Member] | Euro / U.S. Dollar | ||
Notional amounts | 60,742 | 0 |
Designated as Hedging Instrument [Member] | Japanese Yen / US | ||
Notional amounts | 20,488 | 0 |
Designated as Hedging Instrument [Member] | Sweden, Kronor | ||
Notional amounts | 9,267 | 0 |
Not Designated as Hedging Instrument [Member] | ||
Notional amounts | 218,501 | 157,255 |
Not Designated as Hedging Instrument [Member] | Canadian / U.S. Dollar | ||
Notional amounts | 16,148 | 17,448 |
Not Designated as Hedging Instrument [Member] | Euro / U.S. Dollar | ||
Notional amounts | 145,317 | 82,917 |
Not Designated as Hedging Instrument [Member] | British Pound to Euro [Domain] | ||
Notional amounts | 0 | 9,409 |
Not Designated as Hedging Instrument [Member] | Israeli New Sheqel / U.S. Dollar | ||
Notional amounts | 6,147 | 4,607 |
Not Designated as Hedging Instrument [Member] | Japanese Yen to Euro [Domain] | ||
Notional amounts | 30,900 | 25,133 |
Not Designated as Hedging Instrument [Member] | Swiss Franc / Euro | ||
Notional amounts | 229 | 5,149 |
Not Designated as Hedging Instrument [Member] | All other | ||
Notional amounts | 7,933 | 9,464 |
Not Designated as Hedging Instrument [Member] | Sweden, Kronor | ||
Notional amounts | $ 5,111 | $ 3,128 |
Derivative Financial Instruments (Derivative Instruments and Hedging Activities Disclosures) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Forward Contracts (not designated as hedging instruments) | $ (1,059) | $ (741) | $ (1,645) | $ (1,122) |
Forward Contracts | Designated as Hedging Instrument [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized hedge gain (loss) arising during the period | 361 | 0 | (3,633) | 0 |
Net hedge loss reclassified into earnings | (1,560) | 0 | (727) | 0 |
Gain (Loss) on Foreign Currency Cash Flow Hedge Ineffectiveness | $ 9 | $ 0 | $ (28) | $ 0 |
Derivative Financial Instruments (Offsetting Assets) (Details) - USD ($) |
Jul. 02, 2016 |
Sep. 30, 2015 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross Amount of Recognized Assets | $ 1,739,000 | |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 | |
Net Amounts of Assets Presented in the Consolidated Balance Sheets | 1,739,000 | $ 507,000 |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments | (1,739,000) | |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Received | 0 | |
Net Amount | $ 0 |
Derivative Financial Instruments (Offsetting Liabilities) (Details) - USD ($) |
Jul. 02, 2016 |
Sep. 30, 2015 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross Amount of Recognized Liabilities | $ 6,150,000 | |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 | |
Net Amounts of Liabilities Presented in the Consolidated Balance Sheets | 6,150,000 | $ 46,000 |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments | (1,739,000) | |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Pledged | 0 | |
Net Amount | $ 4,411,000 |
Segment Information (Revenue and Operating Income) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
|
Revenue | $ 288,652 | $ 303,113 | $ 852,296 | $ 942,674 |
Total Segment Cost of Revenue | 109,530 | 106,765 | 326,775 | 345,970 |
Cost of Revenue | 82,470 | 79,376 | 242,809 | 258,372 |
Gross Profit | 206,182 | 223,737 | 609,487 | 684,302 |
Segment Gross Profit | 179,122 | 196,348 | 525,521 | 596,704 |
Operating income | 7,596 | 21,607 | (3,939) | 63,226 |
Non operating income and expenses | 8,300 | 3,668 | 19,880 | 10,492 |
Income before income taxes | (704) | 17,939 | (23,819) | 52,734 |
Unallocated Operating Expennses | 168,711 | 170,348 | 484,919 | 490,853 |
Restructuring charges | 2,815 | 4,393 | 44,541 | 42,625 |
Solutions Group | ||||
Revenue | 217,673 | 229,157 | 652,985 | 726,679 |
Cost of Revenue | 44,882 | 54,583 | 140,465 | 174,109 |
Gross Profit | 172,791 | 174,574 | 512,520 | 552,570 |
Restructuring charges | 1,384 | 1,001 | 16,345 | 8,482 |
Professional Services | ||||
Revenue | 50,301 | 53,500 | 148,277 | 177,782 |
Cost of Revenue | 42,393 | 44,703 | 124,832 | 151,521 |
Gross Profit | 7,908 | 8,797 | 23,445 | 26,261 |
Restructuring charges | 264 | 341 | 4,786 | 10,930 |
Technology Platform Group | ||||
Revenue | 20,678 | 20,456 | 51,034 | 38,213 |
Cost of Revenue | 22,255 | 7,479 | 61,478 | 20,340 |
Gross Profit | (1,577) | 12,977 | (10,444) | 17,873 |
Restructuring charges | 551 | 111 | 1,286 | 324 |
unallocated [Member] | ||||
Restructuring charges | $ 616 | $ 2,940 | $ 22,124 | $ 22,889 |
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 60 Months Ended | ||
---|---|---|---|---|---|
Jul. 02, 2016 |
Jul. 04, 2015 |
Jul. 02, 2016 |
Jul. 04, 2015 |
Sep. 30, 2015 |
|
Income Tax Disclosure [Line Items] | |||||
Effective income tax rate | 537.00% | 3.00% | (9.00%) | (1.00%) | |
Income before income taxes | $ (704) | $ 17,939 | $ (23,819) | $ 52,734 | |
Effective Income Tax Rate Reconciliation, Other Adjustments, Amount | (9,000) | $ (6,000) | (16,000) | (14,000) | |
Deferred Other Tax Expense (Benefit) | (1,400) | ||||
Effective Income Tax Rate Reconciliation, Tax Credit, Research, Amount | (2,600) | (2,100) | |||
Unrecognized Tax Benefits, Increase Resulting from Prior Period Tax Positions | $ (3,100) | ||||
Unrecognized tax benefits | 15,500 | 15,500 | $ 14,100 | ||
Income tax provision upon recognition of unrecognized tax benefit | 13,900 | 13,900 | |||
Unrecognized tax benefits that would impact valuation allowance | 4,800 | 4,800 | |||
Potentail reduction in unrecognized tax benefits and accrued interest over next 12 months | $ (5,000) | $ (5,000) | |||
Korea (South), Won | |||||
Income Tax Disclosure [Line Items] | |||||
Income Tax Examination, Description | 12 |
Debt (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 02, 2016
USD ($)
bank
|
Jul. 02, 2016
USD ($)
bank
|
Apr. 02, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
|
|
Debt Instrument [Line Items] | ||||
Senior Notes | $ 500,000 | $ 500,000 | $ 0 | |
Debt Instrument, Interest Rate, Stated Percentage | 6.00% | 6.00% | ||
Debt Instrument, Redemption Price, Percentage | 101.00% | |||
Debt Instrument, Fair Value Disclosure | $ 517,500 | $ 517,500 | ||
Additional borrowing capacity on credit facility if agreed to by lenders | 500,000 | 500,000 | ||
Long-term portion of long term debt | 618,125 | |||
Long-term Debt, Gross | $ 778,125 | $ 778,125 | 668,125 | |
Voting interest in foreign subsidiaries pledged against credit facility | 65.00% | |||
Leverage Ratio, Actual | 3.15 | 3.15 | ||
Debt Instrument, Covenant Compliance, Senior Debt Leverage Ratio, actual | 1.09 | 1.09 | ||
Fixed charge coverage ratio, actual | 8.45 | 8.45 | ||
Unamortized Debt Issuance Expense | $ (11,254) | $ (11,254) | (7,587) | |
debt net of unamortized debt issuance cost | 766,871 | 766,871 | 660,538 | |
Current portion of long term debt | 0 | $ 0 | 50,000 | |
Minimum | ||||
Debt Instrument [Line Items] | ||||
Line of Credit Facility, Variable Interest Rate, Length of Time Between Updates | 30 days | |||
Maximum | ||||
Debt Instrument [Line Items] | ||||
Line of Credit Facility, Variable Interest Rate, Length of Time Between Updates | 180 days | |||
Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Credit facility amount | 900,000 | $ 900,000 | $ 1,000,000 | |
Line of Credit [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term portion of long term debt | $ 278,100 | $ 278,100 | 193,100 | |
Line of Credit Facility, Interest Rate at Period End | 2.438% | 2.438% | ||
Component of Base Rate, Basis Spread on Federal Reserve Bank of New York (FRBNY) rate | 0.50% | 0.50% | ||
Component of Base Rate, Basis Spread on Adjusted LIBOR | 1.00% | |||
Investment limit in foreign subsidiaries | $ 75,000 | $ 75,000 | ||
Cash investment limit for acquisition of business | $ 200,000 | $ 200,000 | ||
Minimum fixed charge coverage ratio allowed under debt covenant | 3.50 | 3.50 | ||
Maximum total leverage ratio allowed under debt covenant after covenant modification trigger event | 4 | 4 | ||
Debt Instrument, Covenant Compliance, maximum Senior Debt Leverage Ratio after covenant modification trigger event | 3.0 | 3.0 | ||
Line of Credit [Member] | Minimum | ||||
Debt Instrument [Line Items] | ||||
Credit facility commitment fees percentage | 0.175% | |||
Line of Credit [Member] | Maximum | ||||
Debt Instrument [Line Items] | ||||
Credit facility commitment fees percentage | 0.30% | |||
Secured Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Number of Banks in Credit Facility | bank | 16 | 16 | ||
Long-term portion of long term debt | $ 0 | $ 0 | $ 475,000 | |
London Interbank Offered Rate (LIBOR) [Member] | Line of Credit [Member] | Minimum | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 1.25% | |||
London Interbank Offered Rate (LIBOR) [Member] | Line of Credit [Member] | Maximum | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 1.75% | |||
Base Rate [Member] | Line of Credit [Member] | Minimum | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 0.25% | |||
Base Rate [Member] | Line of Credit [Member] | Maximum | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 0.75% | |||
Domestic [Domain] | ||||
Debt Instrument [Line Items] | ||||
Voting interest in domestic subsidiaries pledged against credit facility | 100.00% |
Commitments and Contingencies (Details) $ in Millions |
Jul. 02, 2016
USD ($)
|
---|---|
Pending Litigation | |
Loss Contingencies [Line Items] | |
Loss contingency accrual | $ 0.4 |
Pension Plans (Details) $ in Millions |
9 Months Ended |
---|---|
Jul. 04, 2015
USD ($)
| |
Foreign Pension Plan, Defined Benefit [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Defined Benefit Plan, Contributions by Employer | $ 20 |
Subsequent Events (Details) - Subsequent Event [Member] |
Aug. 01, 2016
USD ($)
|
---|---|
Subsequent Event [Line Items] | |
ESPP maximum contribution percentage | 10.00% |
ESPP maximum contribution amount by employee | $ 25,000 |
ESPP purchase price as a % of stock price | 85.00% |
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