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Form 8-K ULTIMATE SOFTWARE GROUP For: Jul 28

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July 29, 2015 10:24 AM EDT




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_______________
 
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of Earliest Event Reported) – July 28, 2015
 
_______________
 
 
THE ULTIMATE SOFTWARE GROUP, INC.
(Exact name of Registrant as specified in its charter)
 
 
 
 
Delaware
000-24347
65-0694077
(State or other jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
 
 
 
2000 Ultimate Way, Weston, Florida
33326
(Address of principal executive offices)
(Zip Code)
 
 
(954) 331-7000
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

1


o
Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

2


Item 2.02    Results of Operations and Financial Condition.
The Ultimate Software Group, Inc. (the “Corporation”) hereby furnishes the information set forth in the press release issued on July 28, 2015, a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by reference.
This information is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01    Financial Statements and Exhibits.
(d)    Exhibits
Number
Description
 
 
99.1
Press Release, dated July 28, 2015

3



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
THE ULTIMATE SOFTWARE GROUP, INC.
 
 
By: /s/ Mitchell K. Dauerman
Mitchell K. Dauerman
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
 

Dated: July 29, 2015


4




Exhibit 99.1

FOR IMMEDIATE RELEASE                                                            
Ultimate Reports Q2 2015 Financial Results
•
Record Recurring Revenues of $124.4 Million, Up by 22%
•
Record Total Revenues of $147.2 Million, Up by 21%

Weston, FL, July 28, 2015 — Ultimate Software (Nasdaq: ULTI), a leading provider of Human Capital Management (HCM) solutions in the cloud, announced today its financial results for the second quarter of 2015. For the quarter ended June 30, 2015, Ultimate reported recurring revenues of $124.4 million, a 22% increase, and total revenues of $147.2 million, a 21% increase, both compared with 2014’s second quarter. GAAP net income for the second quarter of 2015 was $3.7 million, or $0.12 per diluted share, as compared with GAAP net income of $6.4 million, or $0.22 per diluted share, for the second quarter of 2014.

Non-GAAP net income for the second quarter of 2015, which excludes stock-based compensation expense and amortization of acquired intangible assets, was $18.4 million, or $0.62 per diluted share. Non-GAAP net income for the second quarter of 2014, on a comparable basis, was $13.4 million, or $0.46 per diluted share. See “Use of Non-GAAP Financial Information” below.

"We executed in all areas of our 2015 second-quarter plan, and these results position us well to achieve our 2015 and future goals. Recurring revenues increased by 22% to $124 million and total revenues by 21% to $147 million, both compared with the second quarter of 2014, and our non-GAAP operating margin was above our target at 20%. At the same time, our customer retention rate continued to remain higher than 96% for the trailing 12 months ending June 30, 2015,” said Scott Scherr, founder, president and CEO of Ultimate.

"We are honored that third-parties have recognized our achievements in recent months. Forbes ranked Ultimate #7 on its 2015 list of the ‘Most Innovative Growth Companies;’ FORTUNE ranked us #6 on its list of the “100 Best Workplaces for Millennials in the U.S.;” InformationWeek named us to its Elite 100, a list of the top business technology innovators in the United States; and Nucleus Research once again recognized Ultimate’s leadership status in its 2015 HCM Value Matrix. Also, the users of our solutions were responsible for identifying Ultimate as one of two leaders in G2 Crowd’s Core HR grid and as #1 in Customer Satisfaction and Market Presence."
Ultimate’s financial results teleconference will be held today, July 28, 2015, at 5:00 p.m. Eastern time, through Vcall at http://www.investorcalendar.com/IC/CEPage.asp?ID=173509. The call will be available for replay at the same address beginning at 9:00 p.m. Eastern time today. Windows Media Player software is required to listen to the call and can be downloaded from the site. Forward-looking information about future company performance will be discussed during the teleconference call.
 
Financial Highlights

•
Recurring revenues grew by 22% for the second quarter of 2015 compared with the same period in 2014. The increase was primarily attributable to revenue growth from our cloud offering. Recurring revenues were 84% of total revenues for the second quarter of 2015, which was comparable with 2014's second quarter.

•
Ultimate’s total revenues for the second quarter of 2015 increased by 21% as compared with those for the second quarter of 2014.

•
Our operating income for the second quarter of 2015 was $29.7 million, on a non-GAAP basis, as compared with $22.9 million for the second quarter of 2014. Our GAAP operating income for the second quarter of 2015 was $7.6 million as compared with $11.4 million for the second quarter of 2014.

•
Our non-GAAP operating margin for the second quarter of 2015 was 20.2% versus 18.7% for the second quarter of 2014. Our GAAP operating margin was 5.2% for the second quarter of 2015 versus 9.3% for the second quarter of 2014.

•
Ultimate’s annualized retention rate, on a rolling 12-month basis, exceeded 96% for its recurring revenue cloud customer base as of June 30, 2015.

1


•
Net income, on a non-GAAP basis, for the second quarter of 2015 was $18.4 million as compared with $13.4 million for the second quarter of 2014. GAAP net income for the second quarter of 2015 was $3.7 million as compared with $6.4 million for the second quarter of 2014.

•
Cash flows from operating activities for the second quarter of 2015 were $17.6 million, compared with $15.4 million for the same period in 2014. For the six months ended June 30, 2015, Ultimate generated $43.6 million in cash from operations, compared with $41.0 million for the six months ended June 30, 2014. The combination of cash, cash equivalents, and marketable securities was $113.9 million as of June 30, 2015, compared with $118.5 million as of December 31, 2014.

•
Days sales outstanding were 67 days at June 30, 2015, representing a reduction of 1 day compared with days sales outstanding at December 31, 2014.

Stock Repurchases

During the six months ended June 30, 2015, we used $30.7 million to acquire 185,469 shares of our $0.01 par value common stock ("Common Stock") under our previously announced stock repurchase plan ("Stock Repurchase Plan"), and we used $10.8 million to acquire 65,013 shares of our Common Stock to settle employees’ tax withholding obligations associated with their restricted stock that vested during the period. We have 597,905 shares available for repurchase under our Stock Repurchase Plan.

Financial Outlook

Ultimate provides the following financial guidance for the third quarter ending September 30, 2015, and full year 2015:

For the third quarter of 2015:

•
Recurring revenues of approximately $132 million,

•
Total revenues of approximately $156 million, and

•
Operating margin, on a non-GAAP basis (discussed below), of approximately 20%.

For the year 2015:

•
Recurring revenues to increase by approximately 23% over 2014,

•
Total revenues to increase by approximately 22% over 2014, and

•
Operating margin, on a non-GAAP basis (discussed below), in excess of 20%.

Operating margin expectations were determined on a non-GAAP basis using the methodologies identified under the caption “Use of Non-GAAP Financial Information” in this press release.

Forward-Looking Statements
Certain statements in this press release are, and certain statements on the teleconference call may be, forward-looking statements within the meaning provided under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are made only as of the date hereof. These statements involve known and unknown risks and uncertainties that may cause Ultimate’s actual results to differ materially from those stated or implied by such forward-looking statements, including risks and uncertainties associated with fluctuations in Ultimate’s quarterly operating results, concentration of Ultimate’s product offerings, development risks involved with new products and technologies, competition, contract renewals with business partners, compliance by our customers with the terms of their contracts with us, and other factors disclosed in Ultimate’s filings with the Securities and Exchange Commission. Ultimate undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

About Ultimate Software
Ultimate is a leading provider of cloud-based human capital management (HCM) solutions, with more than 20 million people records in the cloud. Ultimate’s award-winning UltiPro delivers HR, payroll, talent, and time and labor management solutions that connect people with the information they need to work more effectively. Founded in 1990, the company is headquartered in

2

Weston, Florida, and employs more than 2,600 professionals. In 2015, for the fourth consecutive year, Ultimate was ranked in the top 25 on FORTUNE’s list of the 100 Best Companies to Work For; recognized for the third year in a row as one of Achievers’ 50 Most Engaged Workplaces™ in North America; ranked #7 on Forbes magazine’s list of the 100 Most Innovative Growth Companies; named among the InformationWeek Elite 100, honoring innovation in business technology; and recognized as a “Leader” in Nucleus Research’s HCM Technology Value Matrix. Ultimate has more than 2,800 customers with employees in 160 countries, including Bloomin’ Brands, Culligan International, Major League Baseball, Pep Boys, Texas Roadhouse, and Yamaha Corporation of America. More information on Ultimate’s products and services for people management can be found at www.ultimatesoftware.com.


UltiPro is a registered trademark of The Ultimate Software Group, Inc. All other trademarks referenced are the property of their respective owners.

Contact: Mitchell K. Dauerman
Chief Financial Officer and Investor Relations
Phone: 954-331-7369



3



THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
 
For the Three Months Ended June 30,
 
For the Six Months Ended
June 30,
 
2015
 
2014
 
2015
 
2014
Revenues:
 
 
 
 
 
 
 
Recurring
$
124,407

 
$
102,108

 
$
243,293

 
$
199,526

Services
22,823

 
19,841

 
48,591

 
43,049

License
—

 
48

 
223

 
500

Total revenues
147,230

 
121,997

 
292,107

 
243,075

Cost of revenues:
 

 
 
 
 

 
 
Recurring
34,388

 
28,422

 
67,128

 
55,376

Services
23,621

 
21,037

 
47,939

 
43,111

License
—

 
11

 
49

 
83

Total cost of revenues
58,009

 
49,470

 
115,116

 
98,570

Gross profit
89,221

 
72,527

 
176,991

 
144,505

Operating expenses:
 

 
 
 
 

 
 
Sales and marketing
39,195

 
29,462

 
79,958

 
58,291

Research and development
23,906

 
20,433

 
45,304

 
40,153

General and administrative
18,488

 
11,244

 
34,340

 
22,303

Total operating expenses
81,589

 
61,139

 
159,602

 
120,747

Operating income
7,632

 
11,388

 
17,389

 
23,758

Other income (expense):
 
 
 
 
 

 
 
Interest and other expense
(135
)
 
(106
)
 
(250
)
 
(172
)
Other income, net
46

 
96

 
103

 
171

Total other expense, net
(89
)
 
(10
)
 
(147
)
 
(1
)
Income before income taxes
7,543

 
11,378

 
17,242

 
23,757

Provision for income taxes
(3,886
)
 
(5,015
)
 
(9,425
)
 
(10,511
)
Net income
$
3,657

 
$
6,363

 
$
7,817

 
$
13,246

Net income per share:
 
 
 
 
 
 
 
Basic
$
0.13

 
$
0.23

 
$
0.27

 
$
0.47

Diluted
$
0.12

 
$
0.22

 
$
0.26

 
$
0.45

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
28,591

 
28,252

 
28,587

 
28,224

Diluted
29,591

 
29,218

 
29,599

 
29,284


 

4



The following table sets forth the stock-based compensation expense resulting from stock-based arrangements (excluding the income tax effect, or “gross”) and the amortization of acquired intangibles that are recorded in Ultimate’s unaudited condensed consolidated statements of income for the periods indicated (in thousands):


 
 
For the Three Months Ended June 30,
 
For the Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
Stock-based compensation expense:
 
 
 
 
 
 
 
 
Cost of recurring revenues
 
$
1,546

 
$
1,382

 
$
2,973

 
$
2,622

Cost of services revenues
 
1,186

 
1,133

 
2,468

 
2,188

Sales and marketing
 
10,751

 
4,937

 
18,534

 
9,734

Research and development
 
1,842

 
1,178

 
3,090

 
2,448

General and administrative
 
6,452

 
2,548

 
10,789

 
5,024

Total non-cash stock-based compensation expense
 
$
21,777

 
$
11,178

 
$
37,854

 
$
22,016

 
 
 
 
 
 
 
 
 
Amortization of acquired intangibles:
 
 
 
 
 
 
 
 
General and administrative
 
$
264

 
$
286

 
$
528

 
$
575

Total amortization of acquired intangibles
 
$
264

 
$
286

 
$
528

 
$
575

 
 
 
 
 
 
 
 
 

5

THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 
 
 
 
As of
 
As of
 
June 30,
 
December 31,
 
2015
 
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
104,276

 
$
108,298

Investments in marketable securities
6,543

 
7,862

Accounts receivable, net
108,701

 
100,218

Prepaid expenses and other current assets
40,576

 
34,788

Deferred tax assets, net
983

 
965

Total current assets before funds held for clients
261,079

 
252,131

Funds held for clients
401,283

 
759,087

Total current assets
662,362

 
1,011,218

Property and equipment, net
103,004

 
86,595

Goodwill
25,226

 
25,696

Investments in marketable securities
3,129

 
2,294

Intangible assets, net
6,018

 
6,774

Other assets, net
25,035

 
20,611

Deferred tax assets, net
43,458

 
37,110

Total assets
$
868,232

 
$
1,190,298

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
7,388

 
$
7,418

Accrued expenses
31,652

 
30,941

Deferred revenue
121,147

 
109,552

Capital lease obligations
4,303

 
3,655

Other borrowings
400

 
567

Total current liabilities before client fund obligations
164,890

 
152,133

Client fund obligations
401,283

 
759,087

Total current liabilities
566,173

 
911,220

Deferred revenue
57

 
153

Deferred rent
2,839

 
2,368

Capital lease obligations
4,024

 
3,359

Other borrowings
200

 
400

Deferred income tax liability
817

 
1,049

Total liabilities
574,110

 
918,549

 
 
 
 
Stockholders’ equity:
 
 
 
Preferred Stock, $.01 par value
—

 
—

Series A Junior Participating Preferred Stock, $.01 par value
—

 
—

Common Stock, $.01 par value
330

 
327

Additional paid-in capital
423,376

 
376,609

Accumulated other comprehensive loss
(5,061
)
 
(3,590
)
Accumulated earnings
44,745

 
36,928

 
463,390

 
410,274

Treasury stock, at cost
(169,268
)
 
(138,525
)
Total stockholders’ equity
294,122

 
271,749

       Total liabilities and stockholders’ equity
$
868,232

 
$
1,190,298


6


THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
For the Six Months Ended
June 30,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Net income
$
7,817

 
$
13,246

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
10,589

 
8,955

Provision for doubtful accounts
1,940

 
1,096

Non-cash stock-based compensation expense
37,854

 
22,016

Income taxes
9,312

 
10,253

Excess tax benefit from employee stock plan
(15,910
)
 
(12,651
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(10,423
)
 
226

Prepaid expenses and other current assets
(5,788
)
 
(3,154
)
Other assets
(4,424
)
 
(1,263
)
Accounts payable
(30
)
 
919

Accrued expenses and deferred rent
1,182

 
644

Deferred revenue
11,499

 
721

Net cash provided by operating activities
43,618

 
41,008

Cash flows from investing activities:
 
 
 
Purchases of marketable securities
(3,816
)
 
(6,085
)
Maturities of marketable securities
4,300

 
6,208

Net remittances (purchases) of client funds securities
357,804

 
(199,674
)
Purchases of property and equipment
(21,303
)
 
(21,014
)
Net cash provided by (used in) investing activities
336,985

 
(220,565
)
Cash flows from financing activities:
 
 
 
Repurchases of Common Stock
(30,743
)
 
(19,981
)
Net proceeds from issuances of Common Stock
2,340

 
3,029

Excess tax benefits from employee stock plan
15,910

 
12,651

Shares acquired to settle employee tax withholding liability
(10,752
)
 
(10,727
)
Principal payments on capital lease obligations
(2,436
)
 
(1,930
)
Repayments of other borrowings
(367
)
 
(2,059
)
Net (decrease) increase in client fund obligations
(357,804
)
 
199,674

Net cash (used in) provided by financing activities
(383,852
)
 
180,657

Effect of exchange rate changes on cash
(773
)
 
73

Net (decrease) increase in cash and cash equivalents
(4,022
)
 
1,173

Cash and cash equivalents, beginning of period
108,298

 
79,794

Cash and cash equivalents, end of period
$
104,276

 
$
80,967

 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
Cash paid for interest
$
189

 
$
152

Cash paid for taxes
$
332

 
$
314

 
 
 
 
Non-cash investing and financing activities:
 
 
 
Capital lease obligations to acquire new equipment
$
3,749

 
$
3,677

Stock consideration adjustment recorded for acquisitions
$
—

 
$
(818
)
Stock based compensation for capitalized software
$
1,418

 
$
649


7



THE ULTIMATE SOFTWARE GROUP, INC. AND SUBSIDIARIES
Unaudited Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
(In thousands, except per share amounts)
 
 
 
 
 
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended
June 30,
 
2015
 
2014
 
2015
 
2014
Non-GAAP operating income reconciliation:
 
 
 
 
 
 
 
Operating income
7,632

 
11,388

 
17,389

 
23,758

Operating income, as a % of total revenues
5.2
%
 
9.3
%
 
6.0
%
 
9.8
%
Add back:
 
 
 
 
 
 
 
Non-cash stock-based compensation expense
21,777

 
11,178

 
37,854

 
22,016

Non-cash amortization of acquired intangible assets
264

 
286

 
528

 
575

Non-GAAP operating income
$
29,673

 
$
22,852

 
$
55,771

 
$
46,349

Non-GAAP operating income, as a % of total revenues
20.2
%
 
18.7
%
 
19.1
%
 
19.1
%
 
 
 
 
 
 
 
Non-GAAP net income reconciliation:
 
 
 
 
 
 
 
Net income
$
3,657

 
$
6,363

 
$
7,817

 
$
13,246

Add back:
 
 
 
 
 
 
 
Non-cash stock-based compensation expense
21,777

 
11,178

 
37,854

 
22,016

Non-cash amortization of acquired intangible assets
264

 
286

 
528

 
575

Income tax effect of above two items
(7,336
)
 
(4,464
)
 
(12,605
)
 
(8,722
)
Non-GAAP net income
$
18,362

 
$
13,363

 
33,594

 
$
27,115

 
 
 
 
 
 
 
 
Non-GAAP net income, per diluted share, reconciliation: (1)
 
 
 
 
 
 
 
Net income, per diluted share
$
0.12

 
$
0.22

 
$
0.26

 
$
0.45

Add back:
 
 
 
 
 
 
 
Non-cash stock-based compensation expense
0.74

 
0.38

 
1.28

 
0.75

Non-cash amortization of acquired intangible assets
0.01

 
0.01

 
0.02

 
0.02

Income tax effect of above two items
(0.25
)
 
(0.15
)
 
(0.43
)
 
(0.29
)
Non-GAAP net income, per diluted share
$
0.62

 
$
0.46

 
$
1.13

 
$
0.93

Shares used in calculation of GAAP and non-GAAP net income per share:
 
 
 
 
 
 
 
Basic
28,591

 
28,252

 
28,587

 
28,224

Diluted
29,591

 
29,218

 
29,599

 
29,284

(1) The non-GAAP net income per diluted share reconciliation is calculated on a diluted weighted average share basis for GAAP net income periods.
 
 
 
 
 
 
 

 

8

Use of Non-GAAP Financial Information

This press release contains non-GAAP financial measures. Ultimate believes that non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Ultimate’s financial condition and results of operations. Ultimate’s management uses these non-GAAP results to compare Ultimate’s performance to that of prior periods for trend analyses, for purposes of determining executive incentive compensation, and for budget and planning purposes. These measures are used in monthly financial reports prepared for management and in quarterly financial reports presented to Ultimate’s Board of Directors. These measures may be different from non-GAAP financial measures used by other companies.

These non-GAAP measures should not be considered in isolation or as an alternative to such measures determined in accordance with generally accepted accounting principles in the United States (GAAP). The principal limitation of these non-GAAP financial measures is that they exclude significant expenses that are required by GAAP to be recorded. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses are excluded from the non-GAAP financial measures.

To compensate for these limitations, Ultimate presents its non-GAAP financial measures in connection with its GAAP results. Ultimate strongly urges investors and potential investors in Ultimate’s securities to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures that are included in this press release (under the caption “Unaudited Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures”) and not to rely on any single financial measure to evaluate its business.

Ultimate presents the following non-GAAP financial measures in this press release: non-GAAP operating income, non-GAAP operating income, as a percentage of total revenues (or non-GAAP operating margin), non-GAAP net income and non-GAAP net income, per diluted share. We exclude the following items from these non-GAAP financial measures as appropriate:

Stock-based compensation expense. Ultimate’s non-GAAP financial measures exclude stock-based compensation expense, which consists of expenses for stock options and stock and stock unit awards recorded in accordance with Accounting Standards Codification 718, “Compensation – Stock Compensation.” For the three and six months ended June 30, 2015, stock-based compensation expense was $21.8 million and $37.9 million, respectively, on a pre-tax basis. For the three and six months ended June 30, 2014, stock-based compensation expense was $11.2 million and $22.0 million, respectively, on a pre-tax basis. Stock-based compensation expense is excluded from the non-GAAP financial measures because it is a non-cash expense that Ultimate does not consider part of ongoing operations when assessing its financial performance. Ultimate believes that such exclusion facilitates the comparison of results of ongoing operations for current and future periods with such results from past periods. For GAAP net income periods, non-GAAP reconciliations are calculated on a diluted weighted average share basis.

Amortization of acquired intangible assets. In accordance with GAAP, operating expenses include amortization of acquired intangible assets over the estimated useful lives of such assets. For the three and six months ended June 30, 2015, the amortization of acquired intangible assets was $0.3 million and $0.5 million, respectively. For the three and six months ended June 30, 2014 the amortization of acquired intangible assets was $0.3 million and $0.6 million, respectively. Amortization of acquired intangible assets is excluded from Ultimate’s non-GAAP financial measures because it is a non-cash expense that Ultimate does not consider part of ongoing operations when assessing its financial performance. Ultimate believes that such exclusion facilitates comparisons to its historical operating results and to the results of other companies in the same industry, which have their own unique acquisition histories.



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