The company is in the process of reviewing its revenue recognition policies with Deloitte and Touche LLP, the company's independent registered public accounting firm.  The review relates to certain in-house software license contracts with multiple products included on a single agreement with the client.  We have identified adjustments to software license and related implementation fees and those are included in the accompanying press release.  Our evaluation related to recognition of revenue related to software maintenance is ongoing and could not be completed prior to the scheduled earnings release.  Management believes any adjustments that may be required related to this issue will be immaterial, but there can be no assurance as to that outcome.  We will provide an updated disclosure regarding the outcome of this review and if material any changes to our financial statements resulting therefrom as soon as we complete the review process.

The Company reported a 6% increase in total revenue, an increase of 4% in gross profit and a 7% increase in net income over the second quarter of fiscal 2014. For the first six months of fiscal 2015, revenue increased 7%, with an increase of 7% in gross profit and an increase of 8% in net income compared to last year.

For the quarter ended December 31, 2014, the company generated total revenue of $324.2 million compared to $304.9 million in the same quarter a year ago.  Gross profit increased to $139.8 million from $134.4 million in the second quarter of last fiscal year.  Net income in the current quarter was $59.0 million, or $0.72 per diluted share, compared to $54.9 million, or $0.64 per diluted share in the same quarter a year ago.

For the six months ended December 31, 2014, total revenue of $643.9 million was generated compared to $599.1 million in the first six months of fiscal 2014. Gross profit increased to $280.0 million compared to $261.9 million dur in the first six months of fiscal 2014. Gross profit increased to $280.0 million compared to $261.9 million during the same period last fiscal year. Net income for the six months of fiscal 2015 totaled $112.8 million, or $1.37 per diluted share, compared to $104.0 million, or $1.21 per diluted share for the same six months in fiscal 2014.

According to Jack Prim, CEO, "We are pleased to deliver another quarter with record revenue and earnings.  Organic revenue growth remained solid at 7%, or 8% absent the one-time revenue recognition adjustments."

Operating Results

License revenue for the second quarter decreased to $10.7 million from $14.4 million in the second quarter a year ago.  License revenue was 3% of total revenue in the current quarter, decreasing from 5% in the same period a year ago.  All components of support and service revenue grew in the quarter compared to the prior year and increased 9% to $299.6 million, or 92% of total revenue in the second quarter of fiscal 2015 from $275.1 million, or 90% of total revenue for the same period a year ago.  Hardware sales in the second quarter of fiscal 2015 decreased 9% to $13.9 million, or 4% of total revenue, from $15.4 million, or 5% of total revenue in the second quarter of last fiscal year.

License revenue was $26.9 million for the six months ended December 31, 2014, up from $25.0 million a year ago.  License revenue was 4% of total revenue in both fiscal years.  There was growth in all components of support and service revenue in the first six months of fiscal 2015 resulting in an 8% increase in support and service revenue, which expanded to $590.3 million in the first six months of fiscal 2015 from $544.4 million for the same period a year ago. Support and service as a percentage of total revenue increased to 92% of fiscal 2015 year-to-date revenue from 91% last year. Hardware sales in the first six months of fiscal 2015 decreased 10% to $26.7 million, or 4% of total revenue, from $29.7 million, or 5% of total revenue, in the same period last year.

Cost of sales for the second quarter increased 8% to $184.4 million from $170.5 million in the second quarter of fiscal 2014.  Gross profit increased 4% to $139.8 million for the second quarter this fiscal year from $134.4 million last year.  Gross margin was 43% in the second quarter compared to 44% in the same quarter last year.

Cost of sales for the six months ended December 31, 2014 increased 8%, to $363.9 million from $337.1 million for the same period ended December 31, 2013. Gross profit for the first six months of fiscal 2015 increased 7% to $280.0 million compared to $261.9 million last year. Gross margin was 43% for the six months ended December 31, 2014 compared to 44% for the same period last year.

Gross margin on license revenue was 92% for the second quarter of both fiscal 2015 and fiscal 2014.  Support and service gross margin was 42% in the second quarter of both fiscal 2015 and fiscal 2014.  Hardware gross margins increased for the second quarter to 31% from 29% for the same quarter last year.

Gross margin on license was 91% for the six months ended December 31, 2014, increasing from 90% for the six months ended December 31, 2013.  The support and service gross margin was 42% for the year-to-date period ending December 31, 2014, compared to 43% for the six months ended December 31, 2013.  Year-to-date hardware gross margins increased from 27% in the six months ended December 31, 2013 to 29% for the six months ended December 31, 2014.

Operating expenses increased 5% in the second quarter of fiscal 2015 compared to the same quarter a year ago primarily due to increased headcount and related salaries.  Selling and marketing expenses increased 6% in the current year second quarter to $22.6 million, or 7% of total revenue, from $21.2 million, or 7% of prior year second quarter revenue.  Research and development expenses increased 10% to $17.7 million, or 5% of total revenue, from $16.1 million, or 5% of total revenue, for the second quarter in fiscal 2014.  General and administrative costs decreased 5% in the current year second quarter to $11.5 million, or 4% of total revenue, from $12.1 million, or 4% of total revenue, in the second quarter of fiscal 2014.

For the six months ended December 31, 2014, operating expenses increased 7% to $107.7 million, compared to $100.8 million for the same period a year ago.  Selling and marketing expenses increased 6% in the six months ended December 31, 2014 to $45.2 million from $42.6 million in the prior year, and remained at 7% of total revenue for both fiscal years.  Research and development expenses increased 8% to $34.5 million, or 5% of total revenue, for fiscal 2015 year to date, from $31.8 million, or 5% of total revenue, last year. General and administrative costs increased 6% to $28.0 million in the first six months of fiscal 2015, from $26.4 million for the same period a year ago, and was 4% of total revenue in both periods.

Operating income increased 4% to $88.0 million, or 27% of second quarter revenue, compared to $84.9 million, or 28% of revenue in the second quarter of fiscal 2014.  Provision for income taxes decreased 4% in the current second quarter compared to the same quarter in fiscal 2014 and is 32.8% of income before income taxes this quarter compared to 35.2% of income before income taxes for the same period in fiscal 2014.  Second quarter net income totaled $59.0 million, or $0.72 per diluted share, compared to $54.9 million, or $0.64 per diluted share in the second quarter of fiscal 2014.

Operating income increased 7% to $172.3 million for the first six months of fiscal 2015 compared to $161.2 million for the same period a year ago. Year to date operating income was 27% of total revenue in both the current and previous fiscal years. Provision for income taxes as a percentage of income before income taxes decreased to 34.3% year to date in fiscal 2015 from 35.4% year to date in fiscal 2014.  Net income for the six month period totaled $112.8 million for fiscal 2015, or $1.37 per diluted share, compared to $104.0 million, or $1.21 per diluted share, for fiscal 2014.

Full figures available here