Selling, general and administrative expense may fluctuate from time to time, depending upon
such factors as changes in our workforce and sales efforts and the results of any operational efficiency programs that we may undertake.
Amortization of Purchased Intangible Assets and Other.
Amortization of purchased intangible assets and other in the three months
ended June 30, 2019, decreased by $2.9 million, or 10.7% to $24.1 million from $26.9 million in the three months ended June 30, 2018. The decrease in amortization of purchased intangible assets and other was primarily
attributable to a completion of amortization of previously purchased intangible assets.
Restructuring Charges.
There were
no
restructuring charges in the three months ended June 30, 2019, while there were $30.1 million of such charges in the three months ended June 30, 2018. The restructuring charges were primarily associated with recently
completed acquisitions and internal business realignment actions in North America.
Operating Income
. Operating income
increased by $36.8 million, or 34.9%, in the three months ended June 30, 2019, to $142.3 million, or 13.9% of revenue, from $105.5 million, or 10.5% of revenue, in the three months ended June 30, 2018. The increase in
operating income was attributable primarily to restructuring charges recognized in the three months ended June 30, 2018. Negative foreign exchange impacts on our revenue were partially offset by the negative foreign exchange impacts on our
operating expense, resulting in a negative impact on our operating income.
Interest and Other Expense, Net.
Interest and
other expense, net, changed from a net loss of $3.2 million in the three months ended June 30, 2018 to a net loss of $4.0 million in the three months ended June 30, 2019.
Income Taxes
. Income taxes for the three months ended June 30, 2019 were $6.9 million on
pre-tax
income of $138.4 million, resulting in an effective tax rate of 5.0%, compared to 10.5% in the three months ended June 30, 2018. Our effective tax rate may fluctuate between periods as a result of
discrete items that may affect a particular period. Please see Note 9 to our consolidated financial statements.
Net Income
.
Net income increased by $39.9 million, or 43.6%, to $131.4 million in the three months ended June 30, 2019, from $91.5 million in the three months ended June 30, 2018. The increase in net income during the three months ended
June 30, 2019 was primarily attributable to the increase in Operating Income and to decrease in income taxes.
Diluted Earnings
Per Share.
Diluted earnings per share increased by $0.32, or 50.0%, to $0.96 in the three months ended June 30, 2019, from $0.64 in the three months ended June 30, 2018. The increase in diluted earnings per share was primarily
attributable to the increase in net income due to restructuring charges recognized in the three months ended June 30, 2018, as well as to the decrease in the diluted weighted average number of shares outstanding which resulted from share
repurchases. Please see also Note 10 to our consolidated financial statements.
Liquidity and Capital Resources
Cash, Cash Equivalents and Short-Term Interest-Bearing Investments.
Cash, cash equivalents and short-term interest-bearing investments,
totaled $457.7 million as of June 30, 2019, compared to $519.2 million as of September 30, 2018. The decrease was mainly attributable to $308 million repurchase of our ordinary shares, $108.9 million of cash dividend
payment, $93.8 million for capital expenditures, net, $8.8 million acquisition payment, $7.5 million contingent consideration payment from a business acquisition and $4.8 million payment to
non-controlling
interests, partially offset by $442.8 million in positive cash flow from operations and $25.7 million of proceeds from stock option exercises. Net cash provided by operating
activities amounted to $442.8 million and $441.9 in the nine months ended June 30, 2019 and 2018, respectively.
Our normalized
free cash flow for the nine months ended June 30, 2019 was $423.9 million, which is calculated as net cash provided by operating activities for the period less $93.8 million for capital expenditures, net and excluding
$55.0 million of payments related to the settlement of the legal dispute in the U.S. District Court in Oregon, $14.4 million of payments for the
non-recurring
charges for
re-alignment
actions in North-America, $7.7 million of payment of acquisition related liabilities and $2.2 million of the capital expenditures associated with the multiyear development of our new campus in
Israel, (which is net of proceeds of $9.7 million relating to the refund of betterment levy).
Our policy is to retain sufficient
cash balances in order to support our growth. We believe that our current cash balances, cash generated from operations, our current lines of credit and our ability to access capital markets will provide sufficient resources to meet our operational
needs and to fund share repurchases and the payment of cash dividends for at least the next twelve months.
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