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): February 25, 2014

ACCELRYS, INC.

(Exact name of registrant as specified in its charter)




Delaware	0-27188	33-0557266
(State or other jurisdiction of incorporation or organization)	Commission file number	(I.R.S. Employer identification number)

5005 Wateridge Vista Drive, San Diego, California 92121-1761

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (858) 799-5000

N/A

(Former name, former address and former fiscal year, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)



¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)



¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))



¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 2.02.	Results of Operations and Financial Condition

On February 25, 2014, Accelrys, Inc. (“we”, “us”, “our” or the “Company”) issued a press release announcing its financial results for the year ended December 31, 2013. A copy of this press release is attached hereto as Exhibit 99.1.

The press release describes non-GAAP financial measures for revenue, operating income, net income, net income per diluted share and free cash flow that exclude deferred revenue fair value adjustments, acquisition-related cost of revenue, business consolidation, restructuring and headquarter-relocation costs, stock-based compensation expense, note receivable impairment, purchased intangible asset amortization, royalty income fair value adjustments, amortization of note receivable discount, gain on sale of real estate, gain on sale of intellectual property, write-off of lease related assets, other non-operating expense and income tax adjustments. These financial measures are not calculated in accordance with generally accepted accounting principles (GAAP) and are not based on any comprehensive set of accounting rules or principles.

Management believes these non-GAAP financial measures provide a useful measure of the Company’s operating results, a meaningful comparison with historical results and with the results of other companies and insight into the Company’s ongoing operating performance. Further, management and the Board of Directors of the Company utilize these measures, in addition to GAAP measures, when evaluating and comparing the Company’s operating performance against internal financial forecasts and budgets. These non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review the reconciliation of the non-GAAP financial measures presented in the press release to their most directly comparable GAAP financial measures included in the press release.

As described above, the Company adjusts its GAAP financial statements for the following items:

Deferred revenue fair value adjustment. The deferred revenue fair value adjustment relates to our acquisitions of Qumas Limited on December 9, 2013, ChemSW, Inc. (“ChemSW”) on September 3, 2013, Vialis AG (“Vialis”) on January 11, 2013, Aegis Analytical Corporation (“Aegis”) on October 23, 2012, VelQuest Corporation (“VelQuest”) on December 30, 2011, Contur Industry Holding AB and Contur Software AB (collectively, “Contur”) on May 19, 2011, and our merger with Symyx Technologies, Inc. (“Symyx”) on July 1, 2010. At the time of each of these business combination transactions, each of ChemSW, Vialis, Aegis, VelQuest, Contur and Symyx had recorded deferred revenue related to revenue which would be recognized in future periods as revenue recognition criteria are satisfied. The purchase accounting guidance required us to write down a significant portion of this deferred revenue to its fair value as of the business combination transaction date. Consequently, on a GAAP basis in post-acquisition periods, we do not recognize the full amount of this deferred revenue. When measuring the performance of our business, however, we add back non-GAAP revenue associated with the deferred revenue that would have been recognized during the relevant accounting period but was excluded as a result of these purchase accounting adjustments, as we believe this provides information about the impact on operations of the acquired business in a manner consistent with the revenue recognition for our pre-existing services. We further believe that the inclusion of non-GAAP revenue enables investors to better understand the impact of the acquisitions on the baseline revenue of the Company and provides useful information to investors on revenue trends impacting the business in the post-acquisition periods.

Acquisition-related cost of revenue. The acquisition-related cost of revenue relates to our acquisition of VelQuest and resulted from professional service arrangements under which resulting revenue was deferred at the acquisition date. The acquisition-related cost of revenue is recorded as the associated revenue is recognized. The purchase accounting rules required us to write down the acquisition-related cost of revenue to its fair value as of the business combination transaction date, which we estimated to be zero. When measuring the performance of our business, however, we add back non-GAAP acquisition-related costs of revenue, as we believe this enables investors to better understand the impact of the acquisition on the Company and provides useful information to investors.

Business consolidation, restructuring and headquarter-relocation costs. Business consolidation, restructuring and headquarter-relocation costs consist of professional services, legal, litigation, investment banking, and other costs incurred in connection with anticipated and completed business combinations, as well as costs incurred by the Company to integrate acquired companies, including consultant and employee related costs incurred during integration and transition periods. Also included are acquisition-related contingent compensation costs, lease obligation exit costs, facility closure costs, severance and other costs incurred in connection with the various restructuring activities commenced by the Company and costs associated with our headquarter relocation in July 2013, including professional services and additional rent expense during the transition to the new facility. The Company excludes these costs because it believes they are not reflective of ongoing operating results.

Stock-based compensation expense. Stock-based compensation expense consists of expenses recorded for employee stock options, restricted stock units and employee stock purchase rights. These expenses are excluded from the Company’s non-GAAP financial measures because they are non-cash expenses that the Company believes are not reflective of ongoing operating results. Further, the Company believes it is useful to investors to understand the impact of stock-based

compensation expense to its results of operations. Stock-based compensation expense is recorded in the cost of revenue, product development, sales and marketing, general and administrative and business consolidation, restructuring and headquarter-relocation costs lines in the Company’s consolidated statements of operations.

Note receivable impairment. Note receivable impairment relates to an impairment charge incurred in the three months ended December 31, 2013 related to an unsecured note receivable. We believe it is useful to exclude the note receivable impairment because it is not part of our direct operations.

Purchased intangible asset amortization. Purchased intangible asset amortization reflects the amortization expense recorded for intangible assets acquired through a business combination. These expenses are excluded from the Company’s non-GAAP financial measures primarily because they are non-cash expenses that the Company believes are not reflective of ongoing operating results. Purchased intangible asset amortization is recorded in the amortization of completed technology, purchased intangible asset amortization and royalty and other income, net lines in the Company’s consolidated statements of operations.

Royalty income fair value adjustment. Royalty income fair value adjustment relates to our merger with Symyx. At the time of the merger, Symyx had recorded deferred royalty income for advance payments received on royalty contracts, the revenue resulting from which would be recognized in future periods over the contractual period. The purchase accounting rules required us to write down this amount to its fair value as of the completion of the merger, which we estimated to be zero. We further believe that the inclusion of the royalty income fair value adjustment enables investors to better understand the impact of the acquisition on the Company and provides useful information to investors.

Amortization of note receivable discount. Amortization of note receivable discount reflects the amortization of the discount on our promissory note receivable from Intermolecular, Inc. (“IM”) in connection with the sale of certain intellectual property to IM in November 2011. We believe it is useful to exclude the amortization of the discount on this promissory note receivable because this incremental income is not part of our direct operations.

Gain on sale of real estate. Gain on sale of real estate relates to the sale of real property, comprised of land and an office building located in Santa Clara, California, which we sold in June 2012. This property was acquired as a result of our merger with Symyx and was not utilized in our ongoing operations.

Gain on sale of intellectual property. Gain on sale of intellectual property reflects the net gain recognized upon the sale of certain patents to IM in November 2011 in consideration for a secured promissory note receivable that we collected in full in May 2013.

Write-off of lease related assets. Write-off of lease related assets relates to the write off in June 2012 of certain assets in connection with exiting the lease of a restructured facility.

Other non-operating expense. Other non-operating expense relates to loss on disposal of certain fixed assets as a result of the relocation of our corporate headquarters in July 2013.

Income tax. Income tax adjustments relate to adjusting our non-GAAP operating results to reflect an effective tax rate that would be applied if the Company was in a taxable income position and was not able to utilize its net operating loss carryforwards. The income tax adjustment also excludes any impact of a release of our valuation allowance against deferred tax assets.

In accordance with General Instruction B.2. of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.



Item 9.01.	Financial Statements and Exhibits.

(d) Exhibits




Exhibit No.		Description

99.1		Press release dated February 25, 2014

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 hereunto duly authorized.




ACCELRYS, INC.

By:		/s/ Michael A. Piraino
		Michael A. Piraino
		Executive Vice President and
		Chief Financial Officer

Date: February 25, 2014

ACCELRYS, INC. 8-K