What changed in this filing

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Item 1. Financial Statements

2022-07-07 compared with 2022-04-07 · 175 added, 121 removed, 614 unchanged (33% of the section changed)

1 unchanged sentence

Condensed Consolidated Balance Sheets

(In thousands, except share data) February 28, 2022 November 30, 2021

(In thousands, except share data) May 31, 2022 November 30, 2021

Current assets:

46 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended

(In thousands, except per share data) February 28, 2022 February 28, 2021

Three Months Ended Six Months Ended

(In thousands, except per share data) May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

Software licenses $ 44,814 $ 30,107 $ 87,564 $ 63,424

14 unchanged sentences

Acquisition-related expenses 2,736 844 3,648 1,240

Gain on sale of assets held for sale ( 10,770 ) — ( 10,770 ) —

Total operating expenses 84,555 80,896 176,833 156,769

3 unchanged sentences

Interest income and other, net 155 4 744 123

Foreign currency loss, net ( 366 ) ( 257 )

Foreign currency gain (loss), net 111 ( 621 ) ( 255 ) ( 878 )

Total other expense, net ( 3,390 ) ( 5,218 ) ( 6,870 ) ( 7,870 )

11 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended

(In thousands) February 28, 2022 February 28, 2021

Three Months Ended Six Months Ended

(In thousands) May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

Net income $ 29,110 $ 13,557 $ 49,564 $ 32,518

1 unchanged sentence

Foreign currency translation adjustments ( 5,104 ) 1,876 ( 3,323 ) 3,101

Unrealized gain on hedging activity, net of tax provision of $ 522 and $ 271 for the first quarter of 2022 and 2021, respectively

Unrealized (loss) gain on investments, net of tax benefit of $ 3 and $ 42 for the first quarter of 2022 and 2021, respectively

Unrealized gain on hedging activity, net of tax provision of $ 643 and $ 1,165 for the second quarter and first six months of 2022, respectively and net of tax provision of $ 76 and $ 347 for the second quarter and first six months of 2021, respectively

2,038 235 3,691 1,072

Unrealized loss on investments, net of tax benefit of $ 1 and $ 4 for the second quarter and first six months of 2022 and net of tax provision of $ 30 and a tax benefit of $ 12 for the second quarter and first six months of 2021, respectively

( 5 ) ( 53 ) ( 12 ) ( 39 )

Total other comprehensive income, net of tax ( 3,071 ) 2,058 356 4,134

2 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended February 28, 2022

Six Months Ended May 31, 2022

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity

11 unchanged sentences

Other comprehensive income — — — — 356 356

Balance, February 28, 2022 43,766 $ 438 $ 303,240 $ 93,661 $ ( 29,016 ) $ 368,323

Three Months Ended February 28, 2021

Balance, May 31, 2022 43,454 $ 435 $ 309,913 $ 93,885 $ ( 32,087 ) $ 372,146

Three Months Ended May 31, 2022

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity

(in thousands) Number of Shares Amount

Balance, December 1, 2020 44,241 $ 442 $ 305,802 $ 72,547 $ ( 32,778 ) $ 346,013

Balance, March 1, 2022 43,766 $ 438 $ 303,240 $ 93,661 $ ( 29,016 ) $ 368,323

Issuance of stock under employee stock purchase plan 115 1 3,385 — — 3,386

7 unchanged sentences

Other comprehensive income — — — — ( 3,071 ) ( 3,071 )

Balance, February 28, 2021 44,000 $ 440 $ 311,697 $ 71,118 $ ( 30,702 ) $ 352,553

Balance, May 31, 2022 43,454 $ 435 $ 309,913 $ 93,885 $ ( 32,087 ) $ 372,146

Six Months Ended May 31, 2021

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity

(in thousands) Number of Shares Amount

Balance, December 1, 2020 44,241 $ 442 $ 305,802 $ 72,547 $ ( 32,778 ) $ 346,013

Issuance of stock under employee stock purchase plan 145 1 4,039 — — 4,040

Exercise of stock options 56 1 1,831 — — 1,832

Vesting of restricted stock units and release of deferred stock units 100 1 ( 1 ) — — —

Withholding tax payments related to net issuance of RSUs — — ( 2,373 ) — — ( 2,373 )

Stock-based compensation — — 15,146 — — 15,146

Equity components of Notes, net of issuance costs and tax — — 47,797 — — 47,797

Purchase of capped calls, net of tax — — ( 32,752 ) — — ( 32,752 )

Dividends declared — — — ( 15,634 ) — ( 15,634 )

Treasury stock repurchases and retirements ( 797 ) ( 8 ) ( 5,862 ) ( 29,130 ) — ( 35,000 )

Net income — — — 32,518 — 32,518

Other comprehensive loss — — — — 4,134 4,134

Balance, May 31, 2021 43,745 $ 437 $ 333,627 $ 60,301 $ ( 28,644 ) $ 365,721

Three Months Ended May 31, 2021

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity

(in thousands) Number of Shares Amount

Balance, March 1, 2021 44,000 $ 440 $ 311,697 $ 71,118 $ ( 30,702 ) $ 352,553

Issuance of stock under employee stock purchase plan 89 — 2,495 — — 2,495

Exercise of stock options 28 1 914 — — 915

Vesting of restricted stock units and release of deferred stock units 72 1 ( 1 ) — — —

Withholding tax payments related to net issuance of RSUs — — ( 1,481 ) — — ( 1,481 )

Stock-based compensation — — 8,362 — — 8,362

Equity components of Notes, net of issuance costs and tax — — 47,797 — — 47,797

Purchase of capped calls, net of tax — — ( 32,752 ) — — ( 32,752 )

Dividends declared — — — ( 7,783 ) — ( 7,783 )

Treasury stock repurchases and retirements ( 444 ) ( 5 ) ( 3,404 ) ( 16,591 ) — ( 20,000 )

Net income — — — 13,557 — 13,557

Other comprehensive loss — — — — 2,058 2,058

Balance, May 31, 2021 43,745 $ 437 $ 333,627 $ 60,301 $ ( 28,644 ) $ 365,721

Condensed Consolidated Statements of Cash Flows

Three Months Ended

(In thousands) February 28, 2022 February 28, 2021

Six Months Ended

(In thousands) May 31, 2022 May 31, 2021

Cash flows from operating activities:

7 unchanged sentences

Loss on disposal of property and equipment 8 3

Gain on sale of assets held for sale ( 10,770 )

Deferred income taxes 1,735 ( 705 )

9 unchanged sentences

Net cash flows from operating activities 112,353 99,378

Cash flows from (used in) investing activities:

Cash flows from investing activities:

Sales and maturities of investments 900 2,650

Purchases of property and equipment ( 1,979 ) ( 2,116 )

Proceeds from sale of long-lived assets, net 25,998 —

Decrease in escrow receivable and other — 2,130

Net cash flows (used in) from investing activities ( 531 ) 2,264

Cash flows from (used in) financing activities:

Net cash flows from investing activities 24,919 2,664

Cash flows (used in) from financing activities:

Proceeds from stock-based compensation plans 7,771 6,300

1 unchanged sentence

Repurchases of common stock ( 51,473 ) ( 35,000 )

Proceeds from issuance of senior convertible notes, net of issuance costs of $ 9.9 million

Purchase of capped calls — ( 43,056 )

Dividend payments to stockholders ( 15,573 ) ( 15,617 )

2 unchanged sentences

Payment of debt issuance costs ( 1,957 ) ( 904 )

Net cash flows used in financing activities ( 28,031 ) ( 39,024 )

Net cash flows (used in) from financing activities ( 62,598 ) 153,425

Effect of exchange rate changes on cash ( 5,217 ) 3,903

3 unchanged sentences

Condensed Consolidated Statements of Cash Flows, continued

Three Months Ended

February 28, 2022 February 28, 2021

Six Months Ended

May 31, 2022 May 31, 2021

Supplemental disclosure:

13 unchanged sentences

Our products are generally sold as perpetual licenses, but certain products also use term licensing models and our cloud-based offerings use a subscription-based model.

More than half of our worldwide license revenue is realized through relationships with indirect channel partners, principally ISVs, original equipment manufacturers ("OEMs"), distributors and value-added resellers.

ISVs develop and market applications using our technology and resell our products in conjunction with sales of their own products that incorporate our technology.

More than half of our worldwide license revenue is realized through relationships with indirect channel partners (principally independent software vendors), original equipment manufacturers ("OEMs"), distributors and value-added resellers.

Independent software vendors develop and market applications using our technology and resell our products in conjunction with sales of their own products that incorporate our technology.

OEMs are companies that embed our products into their own software products or devices.

Value-added resellers are companies that add features or services to our product, then resell it as an integrated product or complete "turn-key" solution.

We operate in North America and Latin America (the "Americas");

We operate in North and Latin America (the "Americas");

Europe, the Middle East and Africa ("EMEA");

1 unchanged sentence

Basis of Presentation and Significant Accounting Policies - We prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting.

Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements and these unaudited financial statements should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2021, as amended by Form 10-K/A filed on March 30, 2022 (together, the "2021 10-K").

Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements and these unaudited financial statements should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2021, as filed with the SEC on January 27, 2022, as amended by a Form 10-K/A filed on March 30, 2022 (together, the "2021 10-K").

We made no material changes in the application of our significant accounting policies that were disclosed in our 2021 10-K.

37 unchanged sentences

Cash, Cash Equivalents and Investments

A summary of our cash, cash equivalents and available-for-sale investments at February 28, 2022 is as follows (in thousands):

A summary of our cash, cash equivalents and available-for-sale investments at May 31, 2022 is as follows (in thousands):

Amortized Cost Basis Unrealized Gains Unrealized Losses Fair Value

12 unchanged sentences

Such amounts are classified on our condensed consolidated balance sheets as follows (in thousands):

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

Cash and Equivalents Short-Term Investments Cash and Equivalents Short-Term Investments

4 unchanged sentences

Total $ 224,863 $ 1,050 $ 155,406 $ 1,967

The fair value of debt securities by contractual maturity due in one year or less was $ 1.7 million and $ 2.0 million as of February 28, 2022 and November 30, 2021, respectively.

There were no debt securities by contractual maturity due after one year as of February 28, 2022 or November 30, 2021.

We did not hold any investments with continuous unrealized losses as of February 28, 2022 or November 30, 2021.

The fair value of debt securities by contractual maturity due in one year or less was $ 1.1 million and $ 2.0 million as of May 31, 2022 and November 30, 2021, respectively.

There were no debt securities by contractual maturity due after one year as of May 31, 2022 or November 30, 2021.

We did not hold any investments with continuous unrealized losses as of May 31, 2022 or November 30, 2021.

Derivative Instruments

8 unchanged sentences

We reassessed the hedge in connection with the debt amendment and determined that it is still highly effective.

As of February 28, 2022 , the fair value of the hedge was a loss of $ 0.9 million, which was included in other noncurrent liabilities on our condensed consolidated balance sheets.

As of May 31, 2022 , the fair value of the hedge was a gain of $ 1.8 million, which was included in other assets on our condensed consolidated balance sheets.

The following table presents our interest rate swap contract where the notional amount reflects the quarterly amortization of the interest rate swap, which is equal to approximately one-half of the corresponding reduction in the balance of our term loan as we make scheduled principal payments.

The fair value of the derivative represents the discounted value of the expected future discounted cash flows for the interest rate swap, based on the amortization schedule and the current forward curve for the remaining term of the contract, as of the date of each reporting period (in thousands):

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

Notional Value Fair Value Notional Value Fair Value

4 unchanged sentences

All forward contracts are recorded at fair value on the consolidated balance sheets at the end of each reporting period and expire between 30 days and 3 years from the date the contract was entered.

At February 28, 2022, $ 0.1 million and $ 0.4 million was recorded in noncurrent assets and current liabilities on our condensed consolidated balance sheets.

At May 31, 2022, $ 1.6 million and $ 0.4 million was recorded in other noncurrent liabilities and other current assets on our condensed consolidated balance sheets.

At November 30, 2021, $ 0.3 million and $ 0.1 million were recorded in other noncurrent liabilities and other accrued liabilities, respectively, on our condensed consolidated balance sheets.

In the three months ended February 28, 2022 and February 28, 2021, realized and unrealized gains of $ 0.3 million and $ 1.7 million, respectively, from our forward contracts were recognized in foreign currency loss, net, on our condensed consolidated statements of operations.

These gains were substantially offset by realized and unrealized losses in the offsetting positions.

In the three and six months ended May 31, 2022, realized and unrealized losses of $ 3.9 million and $ 3.6 million, respectively, from our forward contracts were recognized in foreign currency gain (loss), net, on our condensed consolidated statements of operations.

In the three and six month ended May 31, 2021, realized and unrealized gains of $ 0.9 million and $ 2.6 million, respectively, from our forward contracts were recognized in foreign currency gain (loss), net, on our condensed consolidated statements of operations.

These gains and losses were substantially offset by realized and unrealized gains and losses in the offsetting positions.

The table below details outstanding foreign currency forward contracts where the notional amount is determined using contract exchange rates (in thousands):

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

Notional Value Fair Value Notional Value Fair Value

6 unchanged sentences

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at February 28, 2022 (in thousands):

The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at May 31, 2022 (in thousands):

Fair Value Measurements Using

3 unchanged sentences

Corporate bonds 300 — 300 —

Foreign exchange derivatives ( 319 ) — ( 319 ) —

Interest rate swap 1,778 — 1,778 —

Foreign exchange derivatives $ ( 1,214 ) $ — $ ( 1,214 ) $ —

The following table details the fair value measurements within the fair value hierarchy of our financial assets and liabilities at November 30, 2021 (in thousands):

12 unchanged sentences

Fair Value of the Convertible Senior Notes

The Notes’ fair value, inclusive of the conversion feature embedded in the Notes, was $ 356.0 million as of February 28, 2022.

The Notes’ fair value, inclusive of the conversion feature embedded in the Notes, was $ 367.7 million as of May 31, 2022.

The fair value was determined based on the Notes’ quoted price in an over-the-counter market on the last trading day of the reporting period and classified within Level 1 in the fair value hierarchy.

1 unchanged sentence

The components of inventories were as follows (in thousands):

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

Raw materials $ 1,001 $ 1,920

2 unchanged sentences

Total $ 2,780 $ 3,551

At February 28, 2022 and November 30, 2021, the inventories balances of $ 3.2 million and $ 3.6 million were recorded in other current assets on the condensed consolidated balance sheets.

At May 31, 2022 and November 30, 2021, the inventories balances of $ 2.8 million and $ 3.6 million were recorded in other current assets on the condensed consolidated balance sheets.

Intangible Assets and Goodwill

1 unchanged sentence

Intangible assets are comprised of the following significant classes (in thousands):

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value

4 unchanged sentences

Total $ 558,619 $ ( 306,259 ) $ 252,360 $ 558,619 $ ( 271,434 ) $ 287,185

In the first quarter of fiscal years 2022 and 2021, amortization expense related to intangible assets was $ 17.2 million and $ 10.4 million, respectively.

Future amortization expense for intangible assets as of February 28, 2022, is as follows (in thousands):

In the three and six months ended May 31, 2022, amortization expense related to intangible assets was $ 17.5 million and $ 34.6 million, respectively.

In the three and six months ended May 31, 2021, amortization expense related to intangible assets was $ 11.6 million and $ 22.0 million, respectively.

Future amortization expense for intangible assets as of May 31, 2022, is as follows (in thousands):

Remainder of 2022 $ 34,542

1 unchanged sentence

Total $ 252,360

Changes in the carrying amount of goodwill in the three months ended February 28, 2022 are as follows (in thousands):

Changes in the carrying amount of goodwill in the six months ended May 31, 2022 are as follows (in thousands):

Balance, November 30, 2021 $ 671,152

1 unchanged sentence

Translation adjustments 28

Balance, February 28, 2022 $ 673,036

Balance, May 31, 2022 $ 673,066

Business Combinations

1 unchanged sentence

On November 1, 2021, we completed the acquisition of the parent company of Kemp Technologies, Inc.

(“Kemp”) pursuant to the Stock Purchase Agreement (the “Purchase Agreement”), dated as of September 23, 2021.

The acquisition was completed for a base purchase price of $ 258.0 million, subject to certain customary adjustments as further described in the Purchase Agreement (the “Aggregate Consideration”), which was paid in cash from existing cash balances.

Pursuant to the Purchase Agreement, $ 2.0 million of the Aggregate Consideration was deposited into an escrow account to secure certain potential obligations of the former Kemp equity holders.

Kemp is an application experience company that helps enterprises deliver, optimize and secure applications and networks across any cloud or hybrid environment.

With this acquisition, we extended our portfolio of industry-leading products in DevOps/DevSecOps, Application Development, Data Connectivity and Digital Experience, adding Application Experience Management (AX).

Kemp Loadmaster and Flowmon Network Visibility products monitor application performance, and distribute and balance traffic and workloads across servers, in the cloud or on premise, ensuring high performance and availability.

The Aggregate Consideration has been preliminarily allocated to Kemp’s tangible assets, identifiable intangible assets, and assumed liabilities based on their estimated fair values.

(“Kemp”), which is described in greater detail in our 2021 10-K.

The acquisition was completed for a base purchase price of $ 258.0 million (subject to certain customary adjustments) in cash.

The acquisition consideration for Kemp has been preliminarily allocated to Kemp’s tangible assets, identifiable intangible assets, and assumed liabilities based on their estimated fair values.

The preliminary fair value estimates of the net assets acquired are based upon preliminary calculations and valuations, and those estimates and assumptions are subject to change as we obtain additional information for those estimates during the measurement period (up to one year from the acquisition date).

21 unchanged sentences

As described in Note 1:

Nature of Business and Summary of Significant Accounting Policies, we adopted ASU 2021-08, which amended ASC 805 to require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.

We determined the acquisition date deferred revenue balance based on our assessment of the individual contracts acquired and our application

of Topic 606.

Nature of Business and Summary of Significant Accounting Policies, we adopted ASU 2021-08, which amended ASC 805 to require acquiring entities

to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.

We determined the acquisition date deferred revenue balance based on our assessment of the individual contracts acquired and our application of Topic 606.

A significant portion of the deferred revenue is expected to be recognized in the 12 months following the acquisition.

2 unchanged sentences

Acquisition-related transaction costs (e.g., legal, due diligence, valuation, and other professional fees) and certain acquisition restructuring and related charges are not included as a component of consideration transferred but are required to be expensed as incurred.

During the three months ended February 28, 2022, we incurred approximately $ 0.4 million of acquisition-related costs, which are included in acquisition-related expenses on our consolidated statement of operations.

During the three and six months ended May 31, 2022, we incurred approximately $ 0.4 million and $ 0.8 million of acquisition-related costs, which are included in acquisition-related expenses on our consolidated statement of operations.

We determined that disclosing the amount of Kemp related earnings included in the consolidated statements of operations is impracticable, as certain operations of Kemp were integrated into the operations of the Company from the date of acquisition.

7 unchanged sentences

These results are prepared in accordance with ASC 606.

(in thousands, except per share data) Pro Forma Three Months Ended February 28, 2021

(in thousands, except per share data) Pro Forma Three Months Ended May 31, 2021

Revenue $ 139,115

2 unchanged sentences

Net income per diluted share $ 0.28

(in thousands, except per share data) Pro Forma Six Months Ended May 31, 2021

Revenue $ 274,637

Net income $ 29,463

Net income per basic share $ 0.67

Net income per diluted share $ 0.66

Chef Acquisition

On October 5, 2020, we completed the acquisition of Chef Software Inc.

(“Chef”) pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), dated as of September 4, 2020.

The acquisition was completed for a base purchase price of $ 220.0 million, subject to certain customary adjustments as further described in the Merger Agreement (the “Aggregate Consideration”), which was paid in cash.

Pursuant to the Merger Agreement, $ 12.0 million of the Aggregate Consideration was deposited into an escrow account to secure certain indemnification and other potential obligations of the former Chef equity holders.

Chef is a global leader in DevOps and DevSecOps, providing complete infrastructure automation to build, deploy, manage and secure applications in modern multi-cloud and hybrid environments, as well as on-premises.

Chef has enhanced our position as a trusted provider of the leading products to develop, deploy and manage high-impact business applications by providing industry-leading compliance and application automation products for multi-cloud and on-prem infrastructure.

The acquisition bolstered our core offerings, enabling customers to respond faster to business demands and improve efficiency.

(“Chef”), which is described in greater detail in our 2021 10-K.

The acquisition was completed for a base purchase price of $ 220.0 million (subject to certain customary adjustments) in cash.

We funded the acquisition through a combination of existing cash resources and by drawing down $ 98.5 million from our then-existing revolving credit facility (Note 8).

The Aggregate Consideration has been allocated to Chef’s tangible assets, identifiable intangible assets, and assumed liabilities based on their estimated fair values.

The acquisition considerations for Chef has been allocated to Chef’s tangible assets, identifiable intangible assets, and assumed liabilities based on their estimated fair values.

The excess of the total consideration over the tangible assets, identifiable intangible assets, and assumed liabilities was recorded as goodwill.

25 unchanged sentences

During the three months ended February 28, 2022, we incurred minimal acquisition-related costs, which are included in acquisition-related expenses on our consolidated statement of operations.

During the three and six months ended May 31, 2022, we incurred approximately $ 0.1 million of acquisition-related costs, which are included in acquisition-related expenses on our consolidated statement of operations.

The operations of Chef were included in our operating results beginning on the date of acquisition.

2 unchanged sentences

See Note 1 for further discussion of this recently adopted accounting policy.

As of February 28, 2022, future maturities of the Company's long-term debt were as follows:

As of May 31, 2022, future maturities of the Company's long-term debt were as follows:

(In thousands) 2026 Notes Revolving Credit Facility Total

17 unchanged sentences

The Company incurred approximately $ 10.8 million in issuance cost for the issuance of the Notes.

During the three months ended February 28, 2022, the Company did not enter into any new or amended Notes.

During the six months ended May 31, 2022, the Company did not enter into any new or amended Notes.

Conversion Rights

3 unchanged sentences

Repurchase Rights

On or after April 20, 2024, and on or before the 50th scheduled trading day immediately before the maturity date, the Company may redeem for cash all or part of the Notes, subject to the partial redemption limitation, at a repurchase price equal to 100 % of the principal amount, plus accrued and unpaid interest, if the last reported sale price per share of the Company’s common stock exceeded 130 % of the conversion price on (1) each of at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides a redemption notice and (2) the trading day immediately before the date the Company sends such notice.

(i) each of at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides a redemption notice and (ii) the trading day immediately before the date the Company sends such notice.

Pursuant to the partial redemption limitation, the Company may not elect to redeem less than all of the outstanding Notes unless at least $ 100.0 million aggregate principal amount of Notes are outstanding and not subject to redemption as of the time it sends the related redemption notice.

26 unchanged sentences

Interest expense related to the Notes:

Three Months Ended

(In thousands) February 28, 2022 February 28, 2021

Three Months Ended Six Months Ended

(In thousands) May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

Contractual interest expense ( 1 % coupon)

$ 910 $ 470 $ 1,790 $ 470

Amortization of debt discount and issuance costs 529 1,682 1,054 1,682

$ 1,439 $ 2,152 $ 2,844 $ 2,152

Prior to adoption of ASU 2020-06, the effective interest rate for the Notes was 5.71 %.

After the adoption of ASU 2020-06, the effective interest rates for the Notes is 1.63 %.

After the adoption of ASU 2020-06, the effective interest rate for the Notes is 1.63 %.

Credit Facility

10 unchanged sentences

The revolving line of credit does not require amortization of principal.

The outstanding balance of the term loan as of February 28, 2022 was $ 273.3 million, with $ 6.9 million due in the next 12 months.

The outstanding balance of the term loan as of May 31, 2022 was $ 271.6 million, with $ 6.9 million due in the next 12 months.

The term loan requires repayment of principal at the end of each fiscal quarter, beginning with the fiscal quarter ended February 28, 2022.

3 unchanged sentences

The term loan may be prepaid before maturity in whole or in part at our option without penalty or premium.

As of February 28, 2022, the carrying value of the term loan approximates the fair value, based on Level 2 inputs (observable market prices in less than active markets), as the interest rate is variable over the selected interest period and is similar to current rates at which we can borrow funds.

The interest rate as of February 28, 2022 was 1.79 %.

Costs incurred to obtain our long-term debt of $ 3.2 million, including $ 1.1 million of unamortized debt issuance costs related to the previous credit agreement, are recorded as debt issuance costs as a direct deduction from the carrying value of the long-term debt liability on our condensed consolidated balance sheets as of February 28, 2022.

As of May 31, 2022, the carrying value of the term loan approximates the fair value, based on Level 2 inputs (observable market prices in less than active markets), as the interest rate is variable over the selected interest period and is similar to current rates at which we can borrow funds.

The interest rate as of May 31, 2022 was 2.63 %.

These costs are being amortized over the term of the Credit Agreement using the effective interest rate method.

Amortization expense related to the debt issuance costs was $ 0.3 million and $ 0.1 million, for the three months ended February 28, 2022 and February 28, 2021, respectively.

Amortization expense related to the debt issuance costs was $ 0.2 million and $ 0.1 million, for the three months ended May 31, 2022 and May 31, 2021, respectively.

Amortization expense related to the debt issuance costs was $ 0.5 million and $ 0.3 million for the six months ended May 31, 2022 and May 31, 2021, respectively.

These amounts are recorded in interest expense on our condensed consolidated statements of operations.

The revolving line of credit may be borrowed, repaid, and reborrowed until January 25, 2027, at which time all amounts outstanding must be repaid.

As of February 28, 2022, there were no amounts outstanding under the revolving line of credit and $ 2.2 million of letters of credit outstanding.

As of May 31, 2022, there were no amounts outstanding under the revolving line of credit and $ 2.1 million of letters of credit outstanding.

Upon adoption of ASC 842, there were a number of optional practical expedients to apply in transition.

15 unchanged sentences

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of operating lease cost for the three months ended February 28, 2022 and February 28, 2021 were as follows (in thousands):

Three Months Ended Three Months Ended

February 28, 2022 February 28, 2021

The components of operating lease cost for the three and six months ended May 31, 2022 were as follows (in thousands):

Three Months Ended Six Months Ended

May 31, 2022 May 31, 2022

Lease costs under long-term operating leases $ 1,820 $ 3,584

3 unchanged sentences

(1) Lease costs that are not fixed at lease commencement.

The table below presents supplemental cash flow information related to leases during the three months ended February 28, 2022 and February 28, 2021 (in thousands):

Three Months Ended

February 28, 2022 February 28, 2021

The components of operations lease cost for the three and six months ended May 31, 2021 were as follows (in thousands):

Three Months Ended Six Months Ended

May 31, 2021 May 31, 2021

Lease costs under long-term operating leases $ 2,009 $ 4,144

Lease costs under short-term operating leases 4 19

Variable lease cost under short-term and long-term operating leases (1)

Operating lease right-of-use asset impairment 36 36

Total operating lease cost $ 2,084 $ 4,349

(1) Lease costs that are not fixed at lease commencement.

The table below presents supplemental cash flow information related to leases during the three and six months ended May 31, 2022 (in thousands):

Three Months Ended Six Months Ended

May 31, 2022 May 31, 2022

Cash paid for leases $ 2,191 $ 4,337

Right-of-use assets recognized for new leases and amendments (non-cash) $ 80 $ 301

The table below presents supplemental cash flow information related to leases during the three and six months ended May 31, 2021 (in thousands):

Three Months Ended Six Months Ended

May 31, 2021 May 31, 2021

Cash paid for leases $ 2,209 $ 4,467

Right-of-use assets recognized for new leases and amendments (non-cash) $ 1,309 $ 3,647

Weighted average remaining lease term in years and weighted average discount rate are as follows:

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

Weighted average remaining lease term in years 3.73 4.15

1 unchanged sentence

Future payments under non-cancellable leases are as follows (in thousands):

February 28, 2022

Remainder of 2022 $ 4,343

6 unchanged sentences

In January 2020, our Board of Directors increased the total share repurchase authorization from $ 75 million to $ 250 million.

In the three months ended February 28, 2022 and February 28, 2021, we repurchased and retired 0.6 million shares for $ 25.0 million and 0.4 million shares for $ 15.0 million, respectively.

In the three months ended May 31, 2022 and May 31, 2021, we repurchased and retired 0.6 million shares for $ 26.5 million and 0.4 million shares for $ 20.0 million, respectively.

In the six months ended May 31, 2022 and May 31, 2021, we repurchased and retired 1.1 million shares for $ 51.5 million and 0.8 million shares for $ 35.0 million, respectively.

The shares were repurchased in both periods as part of our Board of Directors authorized share repurchase program.

As of February 28, 2022, there was $ 130.0 million remaining under the current authorization.

As of May 31, 2022, there was $ 103.5 million remaining under the current authorization.

Stock-Based Compensation

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The following table provides the classification of stock-based compensation as reflected on our condensed consolidated statements of operations (in thousands):

Three Months Ended

February 28, 2022 February 28, 2021

Three Months Ended Six Months Ended

May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

Cost of maintenance and services $ 472 $ 468 $ 883 $ 860

4 unchanged sentences

Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated balances of other comprehensive loss during the three months ended February 28, 2022 (in thousands):

The following table summarizes the changes in accumulated balances of other comprehensive loss during the six months ended May 31, 2022 (in thousands):

Foreign Currency Translation Adjustment Unrealized (Losses) on Investments Unrealized (Losses) Gains on Hedging Activity Accumulated Other Comprehensive Loss

1 unchanged sentence

Other comprehensive income before reclassifications, net of tax ( 3,323 ) ( 12 ) 3,691 356

Balance, February 28, 2022 $ ( 28,274 ) $ ( 56 ) $ ( 686 ) $ ( 29,016 )

The tax effect on accumulated unrealized (losses) gains on hedging activity and unrealized (losses) on investments was $ 0.2 million and $ 0.7 million as of February 28, 2022 and November 30, 2021, respectively.

Balance, May 31, 2022 $ ( 33,378 ) $ ( 61 ) $ 1,352 $ ( 32,087 )

The tax effect on accumulated unrealized (losses) gains on hedging activity and unrealized (losses) on investments was $ 0.5 million and $ 0.7 million as of May 31, 2022 and November 30, 2021, respectively.

Revenue Recognition

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Information relating to revenue from external customers by revenue type is as follows (in thousands):

Three Months Ended

(In thousands) February 28, 2022 February 28, 2021

Three Months Ended Six Months Ended

(In thousands) May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

Performance obligations transferred at a point in time:

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Information relating to revenue from external customers from different geographical areas is as follows (in thousands):

Three Months Ended

(In thousands) February 28, 2022 February 28, 2021

Three Months Ended Six Months Ended

(In thousands) May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

North America $ 85,394 $ 71,094 $ 163,487 $ 142,599

4 unchanged sentences

No single customer, partner, or country outside of the U.S.

has accounted for more than 10% of our total revenue for the three months ended February 28, 2022 and February 28, 2021.

has accounted for more than 10% of our total revenue for the three months ended May 31, 2022 and May 31, 2021.

Contract Balances

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Our multi-year term license arrangements, which are typically billed annually, result in revenue recognition in advance of invoicing and the recognition of unbilled receivables.

As of February 28, 2022, invoicing of our long-term unbilled receivables is expected to occur as follows (in thousands):

As of May 31, 2022, invoicing of our long-term unbilled receivables is expected to occur as follows (in thousands):

Total $ 23,840

Contract assets, which arise when revenue is recognized prior to invoicing and the right to the amount due from customers is conditioned on something other than the passage of time, such as the completion of a related performance obligation, were $ 3.3 million as of February 28, 2022 and $ 5.0 million as of November 30, 2021.

Contract assets, which arise when revenue is recognized prior to invoicing and the right to the amount due from customers is conditioned on something other than the passage of time, such as the completion of a related performance obligation, were $ 3.0 million as of May 31, 2022 and $ 5.0 million as of November 30, 2021.

These amounts are included in unbilled receivables or long-term unbilled receivables on our condensed consolidated balance sheets.

2 unchanged sentences

Our deferred revenue balance is primarily made up of deferred maintenance.

As of February 28, 2022, the changes in deferred revenue were as follows (in thousands):

As of May 31, 2022, the changes in deferred revenue were as follows (in thousands):

Balance, December 1, 2021 $ 252,380

1 unchanged sentence

Revenue recognized ( 293,669 )

Balance, February 28, 2022 $ 261,542

Balance, May 31, 2022 $ 258,580

Transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods.

As of February 28, 2022, transaction price allocated to remaining performance obligations was $ 276 million.

As of May 31, 2022, transaction price allocated to remaining performance obligations was $ 265 million.

We expect to recognize approximately 80 % of the revenue within the next year and the remainder thereafter.

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We determined that a three to five year product life represents the period of benefit that we receive from these incremental costs based on both qualitative and quantitative factors, which include customer contracts, industry norms, and product upgrades.

Total deferred contract costs were $ 7.8 million and $ 7.9 million as of February 28, 2022 and November 30, 2021, respectively, and are included in other current assets and other assets on our condensed consolidated balance sheets.

Total deferred contract costs were $ 8.0 million and $ 7.9 million as of May 31, 2022 and November 30, 2021, respectively, and are included in other current assets and other assets on our condensed consolidated balance sheets.

Amortization of deferred contract costs is included in sales and marketing expense on our condensed consolidated statement of operations and was minimal in all periods presented.

5 unchanged sentences

Cash disbursements ( 508 ) ( 1,837 ) ( 2,345 )

Translation adjustments and other — 6 6

Balance, February 28, 2022 $ 4,334 $ 1,136 $ 5,470

Balance, May 31, 2022 $ 4,183 $ 498 $ 4,681

During the fourth quarter of fiscal year 2021, we restructured our operations in connection with the acquisition of Kemp (Note 7).

This restructuring resulted in a reduction in redundant positions, primarily within the administrative functions of Kemp.

For the three months ended February 28, 2022, we incurred expenses of $ 0.4 million, related to this restructuring.

For the three months ended May 31, 2022, we incurred minimal expenses related to this restructuring.

For the six months ended May 31, 2022, we incurred expenses of $ 0.4 million, related to this restructuring.

The expenses are recorded as restructuring expenses in the consolidated statements of operations.

4 unchanged sentences

Cash disbursements — ( 1,830 ) ( 1,830 )

Translation adjustments and other — 6 6

Balance, February 28, 2022 $ — $ 1,136 $ 1,136

Balance, May 31, 2022 $ — $ 498 $ 498

Cash disbursements for expenses incurred to date under this restructuring are expected to be made through fiscal year 2022.

Accordingly, the balance of the restructuring reserve of $ 1.1 million is included in other accrued liabilities on the consolidated balance sheet at February 28, 2022.

Accordingly, the balance of the restructuring liability of $ 0.5 million is included in other accrued liabilities on the consolidated balance sheet at May 31, 2022.

We expect to incur additional expenses as part of this action related to employee costs during fiscal year 2022, but we do not expect these costs to be material.

1 unchanged sentence

This restructuring resulted in a reduction in redundant positions, primarily within administrative functions of Chef.

For the three months ended February 28, 2022, we incurred expenses of $ 0.1 million, related to this restructuring.

For the three and six months ended May 31, 2022, we incurred expenses of $ 0.1 million and $ 0.2 million, respectively, related to this restructuring.

The expenses are recorded as restructuring expenses in the consolidated statements of operations.

4 unchanged sentences

Cash disbursements ( 508 ) ( 7 ) ( 515 )

Balance, February 28, 2022 $ 4,334 $ — $ 4,334

Balance, May 31, 2022 $ 4,183 $ — $ 4,183

Cash disbursements for expenses incurred to date under this restructuring are expected to be made through fiscal year 2022.

Accordingly, the balance of the restructuring reserve of $ 4.3 million is included in other accrued liabilities, and short-term and long-term lease liabilities on the consolidated balance sheet at February 28, 2022.

Accordingly, the balance of the restructuring liability of $ 4.2 million is included in other accrued liabilities, and short-term and long-term lease liabilities on the consolidated balance sheet at May 31, 2022.

We expect to incur additional expenses as part of this action related to employee costs and facility closures as we consolidate offices in various locations during fiscal year 2022, but we do not expect these costs to be material.

Our income tax provision for the first quarter of fiscal years 2022 and 2021 reflects our estimate of the effective tax rates expected to be applicable for the full fiscal years, adjusted for any discrete events, which are recorded in the period in which they occur.

Our income tax provision for the second quarter of fiscal years 2022 and 2021 reflects our estimate of the effective tax rates expected to be applicable for the full fiscal years, adjusted for any discrete events, which are recorded in the period in which they occur.

The estimates are reevaluated each quarter based on our estimated tax expense for the full fiscal year.

Our effective tax rate was 21 % in the first fiscal quarter of 2022, compared to 23 % in the first fiscal quarter of 2021.

The decrease is due primarily to discrete tax expense related to the vesting of our Long-Term Incentive Plan ("LTIP") in the first fiscal quarter of 2021.

There were no significant discrete tax items in the first fiscal quarter of 2022.

Our effective tax rate was 21 % in the second fiscal quarter of both 2022 and 2021.There were no significant discrete tax items in the second fiscal quarter of either 2022 or 2021.

Our federal income tax returns have been examined or are closed by statute for all years prior to fiscal year 2018.

8 unchanged sentences

The following table sets forth the calculation of basic and diluted earnings per share on an interim basis (in thousands, except per share data):

Three Months Ended

February 28, 2022 February 28, 2021

Three Months Ended Six Months Ended

May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021

Net income $ 29,110 $ 13,557 $ 49,564 $ 32,518

7 unchanged sentences

Diluted earnings per share $ 0.66 $ 0.30 $ 1.11 $ 0.73

We excluded stock awards representing approximately 1,536,000 and 1,078,000 shares of common stock from the calculation of diluted earnings per share in the three months ended February 28, 2022 and February 28, 2021, respectively, as these awards were anti-dilutive.

We excluded stock awards representing approximately 1,904,000 and 1,720,000 shares of common stock from the calculation of diluted earnings per share in the three and six months ended May 31, 2022, respectively, as these awards were anti-dilutive.

In the three and six months ended May 31, 2021, we excluded stock awards representing 1,396,000 shares and 1,237,000 shares of common stock, respectively, from the calculation of diluted earnings per share as they were anti-dilutive.

As a result of our adoption of ASU 2020-06 on December 1, 2021, the dilutive impact of the Notes on our calculation of diluted net income per share is considered using the if-converted method.

However, because the principal amount of the Notes must be settled in cash, the dilutive impact of applying the if-converted method is limited to the in-the-money portion, if any, of the Notes.

During the three months ended February 28, 2022, we did not include the Notes in our diluted earnings per share calculation because the conversion feature in the Notes was out of the money.

During the three and six months ended May 31, 2022, we did not include the Notes in our diluted earnings per share calculation because the conversion feature in the Notes was out of the money.

For periods prior to our December 1, 2021 adoption of ASU 2020-06, we applied the treasury stock method to account for the dilutive impact of the Notes for diluted earnings per share purposes.

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements