Exhibit 99.2
[OPENWAVE LOGO]
OPENWAVE REPORTS FOURTH QUARTER AND FISCAL 2003 YEAR END RESULTS
REDWOOD CITY, Calif. — July 24, 2003 — Openwave Systems Inc. (Nasdaq: OPWV), the leading provider of open software products and services for the communications industry, today announced that revenues for the fourth fiscal quarter ended June 30, 2003 were $66.5 million, an increase from the third fiscal quarter revenue of $63.5 million. Revenues for the twelve months ended June 30, 2003 were $268 million.
The Company delivered results at the high end of the range for management’s outlook with respect to a number of metrics in addition to revenue. These metrics included gross margins of 73 percent, ending total cash and investments of $234.1 million, and EBITDA without restructuring charges ahead of the outlook.
“We are pleased that we delivered to plan and grew revenue this quarter amid challenging market conditions,” said Don Listwin, president and CEO of Openwave. “Our position in the industry is improving as mobile data is becoming a strategic initiative for operators worldwide.”
Based on Generally Accepted Accounting Principles (GAAP), net loss for the fourth fiscal quarter of 2003 was $25.7 million, or $0.14 per basic share, compared to a net loss of $23.2 million, or $0.13 per basic share, for the third fiscal quarter. The per share amounts are based on 179.2 and 178.6 million weighted-average basic and diluted shares outstanding for the two comparative periods, respectively. EBITDA loss, which consists of earnings before interest, taxes, depreciation and amortization of assets including deferred stock-based compensation expense, was $13.4 million. EBITDA loss without restructuring-related charges was $5.5 million. The Company considers EBITDA to be an important measure of performance because it reflects the resources available to fund the Company’s operations, and it is an important metric often used by investors to evaluate the performance of a business.
In connection with the cost reduction plan announced on June 19, 2003, the Company recorded $8.6 million in restructuring-related charges during the quarter. In addition, the Company recorded $1.3 million in charges during the quarter that resulted primarily from changes in
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Page 2 of 8 — Openwave Reports Fourth Quarter and Fiscal 2003 Year End Results
estimates of certain operating leases from the prior restructuring plans. The combined restructuring impact was $.05 per basic share.
As of June 30, 2003, the Company had cash, cash equivalents, short-term and long-term investments totaling $234.1 million, of which $22.3 million is set aside as restricted cash. Net cash used for operating activities during the three months ended June 30, 2003 was $8.1 million, which includes $3.7 million of cash used for restructuring costs. Net cash provided by financing and investing activities was $25.2 million, which includes $24.9 million in net proceeds from the sale of short- and long-term investments. Total assets and stockholders’ equity were $366.7 million and $182.3 million, respectively, as of June 30, 2003.
First Quarter Fiscal 2004 Business Outlook
Openwave’s Business Outlook set forth below will be available on the Company’s Investor Relations Web site throughout the current quarter. Notwithstanding changes in our outlook that may occur in the interim, we do not expect to update the Business Outlook until the release of our next quarterly earnings announcement; however, Openwave reserves the right to update the full Business Outlook or any portion thereof at any time for any reason.The following statements are forward looking and actual results may differ materially due to factors noted below, among others.
Management’s current outlook for the quarter ending September 30, 2003 is that revenues will be within a range of $64 million plus or minus 10 percent, gross profit will be between 71 and 74 percent of revenues, and GAAP net loss per share will be between $0.05 and $0.14 per share.
For the quarter ending September 30, 2003, management expects EBITDA loss to be approximately $1 million to $15 million, including $2.5 to $3.5 million in restructuring charges. The EBITDA loss outlook excludes approximately $8.4 million in charges for interest, tax, depreciation, and amortization, which amounts would be included in GAAP net income. Management expects to have cash, cash equivalents, short-term and long-term investments, inclusive of restricted cash, of $205 to $215 million as of September 30, 2003.
Conference Call Information
Openwave has scheduled a conference call for 5:00 p.m. EDT today to discuss its financial results for the fourth fiscal quarter. Interested parties may access the conference call over the
Page 3 of 8 — Openwave Reports Fourth Quarter and Fiscal 2003 Year End Results
Internet through the Company’s web site atwww.openwave.com or by telephone at (888) 428-4480 or (651) 291-5254. A replay of the conference call will be available for 72 hours beginning at 5:30 p.m. Pacific time on July 24 by calling (800) 475-6701. The replay can be accessed internationally by calling (320) 365-3844, reservation number: 690563.
A live webcast of the call, together with supplemental financial information, will also be available on the Quarterly Earnings section of Openwave’s website athttp://investor.Openwave.com/medialist.cfm for at least 12 months.
About Openwave
Openwave Systems Inc. (Nasdaq: OPWV) is the leading provider of open software products and services for the communications industry, serving more than 70 mobile operators, 47 handset manufacturers and 22 broadband suppliers. Openwave’s breadth of products, including mobile phone software, multimedia messaging software (MMS), email, location and mobile gateways, along with its worldwide expertise enable its customers to deliver innovative and differentiated data services. Headquartered in Redwood City, California, Openwave has offices in 28 locations and in 14 countries. For more information please visitwww.openwave.com.
Cautionary Note Regarding Forward Looking Statements
This release contains forward-looking statements relating to expectations, plans or prospects for Openwave Systems Inc. that are based upon the current expectations and beliefs of Openwave’s management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. In particular, the following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: (a) the ability to realize our strategic objectives by taking advantage of market opportunities in the Americas, Europe, the Middle East, and Asia; (b) the ability to make changes in business strategy, development plans and product offerings to respond to the needs of our current, new and potential customers, suppliers and strategic partners; (c) risks associated with the development and licensing of software generally, including potential delays in software development and technical difficulties that may be encountered in the development or use of our software; (d) the effects of our restructurings and the ability to successfully support our operations; (e) the potential negative reaction by our customers to our reduced size and market capitalization; (f) the ability to recruit and retain qualified, experienced employees; (g) the willingness of communication service providers to invest and improve their data networks; (h) the ability to successfully partner with other companies; (i) the ability to acquire additional companies and technologies and integrate such acquisitions; (j) increased global competition; (k) technological changes and developments; (l) general risks of the Internet and wireless and wireline telecommunications sectors; and (m) the uncertain economic and political climate in the United States and throughout the rest of the world and the potential that such climate may deteriorate further.
For a detailed discussion of these and other cautionary statements, please refer to the risk factors discussed in filings with the U.S. Securities and Exchange Commission (“SEC”), including but not limited to the Company’s Annual Report on Form 10-K for the fiscal year ended
Page 4 of 8 — Openwave Reports Fourth Quarter and Fiscal 2003 Year End Results
June 30, 2002, the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, and subsequently filed reports. All documents also are available through the SEC’s Electronic Data Gathering Analysis and Retrieval system (EDGAR) atwww.sec.gov or from Openwave’s Web site at www.openwave.com. The Company assumes no obligation to update the forward-looking statements included in this document.
Openwave and the Openwave logo are trademarks and or registered trademarks of Openwave Systems Inc. All other trademarks are the properties of their respective owners.
INVESTOR CONTACTS:
Bonnie McBride
The Global Consulting Group
415-388-1635
Bonnie.mcbride@tfn.com
Joshua Pace
Chief Accounting Officer
Openwave Systems Inc.
650-480-4999
investor@openwave.com
MEDIA CONTACT:
Michele Landry
Openwave Systems Inc.
650-480-4622
Michele.landry@openwave.com
Page 5 of 8 — Openwave Reports Fourth Quarter and Fiscal 2003 Year End Results
OPENWAVE SYSTEMS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| Unaudited | Audited | |||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
| 2003 | 2003 | 2002 | 2003 | 2002 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
License | $ | 32,056 | $ | 35,011 | $ | 33,996 | $ | 143,034 | $ | 238,796 | ||||||||||
Maintenance and support services | 22,209 | 18,494 | 18,374 | 78,530 | 76,273 | |||||||||||||||
Professional services | 8,014 | 4,933 | 12,483 | 27,048 | 44,484 | |||||||||||||||
Project | 4,264 | 5,033 | 5,279 | 19,343 | 5,279 | |||||||||||||||
Total revenues | 66,543 | 63,471 | 70,132 | 267,955 | 364,832 | |||||||||||||||
Cost of revenues: | ||||||||||||||||||||
License | 797 | 904 | 1,252 | 3,923 | 9,237 | |||||||||||||||
Maintenance and support services | 6,708 | 6,571 | 7,408 | 28,972 | 30,848 | |||||||||||||||
Professional services | 6,394 | 5,911 | 6,494 | 23,554 | 26,849 | |||||||||||||||
Project | 3,833 | 4,381 | 4,708 | 17,369 | 4,708 | |||||||||||||||
Amortization of acquisition-related contract intangibles | 438 | 303 | — | 2,141 | — | |||||||||||||||
Total cost of revenues | 18,170 | 18,070 | 19,862 | 75,959 | 71,642 | |||||||||||||||
Gross profit | 48,373 | 45,401 | 50,270 | 191,996 | 293,190 | |||||||||||||||
Operating Expenses: | ||||||||||||||||||||
Research and development | 26,796 | 27,256 | 30,319 | 115,119 | 135,136 | |||||||||||||||
Sales and marketing | 24,781 | 27,058 | 35,299 | 115,199 | 161,046 | |||||||||||||||
General and administrative | 8,670 | 9,343 | 12,820 | 46,998 | 56,470 | |||||||||||||||
Restructuring and other related costs | 9,926 | — | 1,439 | 93,117 | 35,801 | |||||||||||||||
Stock-based compensation | 901 | 686 | 2,559 | 3,681 | 14,866 | |||||||||||||||
Amortization and impairment of goodwill and other intangible assets | 252 | 460 | 437,195 | 10,535 | 1,136,109 | |||||||||||||||
Accelerated amortization related to planned facility closings | — | — | — | — | 1,931 | |||||||||||||||
Merger, acquisition and other integration-related costs | — | — | — | 386 | 570 | |||||||||||||||
Total operating expenses | 71,326 | 64,803 | 519,631 | 385,035 | 1,541,929 | |||||||||||||||
Operating loss | (22,953 | ) | (19,402 | ) | (469,361 | ) | (193,039 | ) | (1,248,739 | ) | ||||||||||
Interest and other income, net | 1,830 | 1,372 | 2,085 | 6,941 | 11,445 | |||||||||||||||
Impairment of nonmarketable equity securities | (1,464 | ) | (1,864 | ) | (383 | ) | (5,328 | ) | (5,585 | ) | ||||||||||
Loss before provision for income taxes and cumulative effect of change in accounting principle | (22,587 | ) | (19,894 | ) | (467,659 | ) | (191,426 | ) | (1,242,879 | ) | ||||||||||
Income taxes | 3,116 | 3,320 | 7,093 | 10,985 | 17,879 | |||||||||||||||
Loss before cumulative effect of change in accounting principle | (25,703 | ) | (23,214 | ) | (474,752 | ) | (202,411 | ) | (1,260,758 | ) | ||||||||||
Cumulative effect of change in goodwill accounting principle | — | — | — | (14,547 | ) | — | ||||||||||||||
Net Loss | $ | (25,703 | ) | $ | (23,214 | ) | $ | (474,752 | ) | $ | (216,958 | ) | $ | (1,260,758 | ) | |||||
Basic and diluted net loss per share | $ | (0.14 | ) | $ | (0.13 | ) | $ | (2.73 | ) | $ | (1.22 | ) | $ | (7.28 | ) | |||||
Shares used in computing basic and diluted net loss per share | 179,200 | 178,641 | 174,216 | 177,943 | 173,193 | |||||||||||||||
Page 6 of 8 — Openwave Reports Fourth Quarter and Fiscal 2003 Year End Results
OPENWAVE SYSTEMS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| Audited | Unaudited | Audited | |||||||
| June 30, | March 31, | June 30, | |||||||
| 2003 | 2003 | 2002 | |||||||
Assets | |||||||||
Current Assets: | |||||||||
Cash, cash equivalents and short-term investments | $ | 172,684 | $ | 189,859 | $ | 214,199 | |||
Accounts receivable, net | 62,125 | 75,559 | 96,571 | ||||||
Other current assets | 13,218 | 8,520 | 11,432 | ||||||
Total current assets | 248,027 | 273,938 | 322,202 | ||||||
Property and equipment, net | 44,582 | 53,027 | 77,559 | ||||||
Long-term investments | 39,195 | 30,083 | 79,962 | ||||||
Restricted cash | 22,271 | 22,556 | 22,349 | ||||||
Goodwill, intangibles and other assets | 12,594 | 15,391 | 28,640 | ||||||
| $ | 366,669 | $ | 394,995 | $ | 530,712 | ||||
Liabilities and Stockholders’ Equity | |||||||||
Current Liabilities: | |||||||||
Accounts payable | $ | 3,844 | $ | 3,941 | $ | 4,926 | |||
Accrued liabilities | 36,377 | 38,848 | 49,957 | ||||||
Accrued restructuring costs | 18,358 | 13,157 | 5,751 | ||||||
Deferred revenue | 73,790 | 79,352 | 66,858 | ||||||
Total current liabilities | 132,369 | 135,298 | 127,492 | ||||||
Accrued restructuring costs—long term | 48,152 | 49,494 | 6,844 | ||||||
Deferred rent obligations | 3,870 | 3,600 | 3,480 | ||||||
Total liabilities | 184,391 | 188,392 | 137,816 | ||||||
Total stockholders’ equity | 182,278 | 206,603 | 392,896 | ||||||
| $ | 366,669 | $ | 394,995 | $ | 530,712 | ||||
Page 7 of 8 — Openwave Reports Fourth Quarter and Fiscal 2003 Year End Results
OPENWAVE SYSTEMS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Unaudited | Audited | |||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| June 30, 2003 | March 31, 2003 | June 30, 2002 | June 30, | |||||||||||||||||
| 2003 | 2002 | |||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net loss | $ | (25,703 | ) | $ | (23,214 | ) | $ | (474,752 | ) | $ | (216,958 | ) | $ | (1,260,758 | ) | |||||
Adjustments to reconcile net loss to net cash used for operating activities: | ||||||||||||||||||||
Depreciation, amortization and impairment of intangibles | 8,304 | 8,878 | 447,789 | 47,207 | 1,184,159 | |||||||||||||||
Impairment of nonmarketable equity securities | 1,464 | 1,864 | 383 | 5,328 | 5,585 | |||||||||||||||
Provision for (recovery of) doubtful accounts | (1,959 | ) | (393 | ) | 1,630 | 3,032 | 10,630 | |||||||||||||
Cumulative effect of change in accounting principle | — | — | — | 14,547 | — | |||||||||||||||
Impairment of property and equipment — restructuring related | 2,083 | — | — | 14,285 | 5,339 | |||||||||||||||
Other non-cash operating activities | (70 | ) | 112 | 19 | 145 | 712 | ||||||||||||||
Changes in operating assets and liabilities: | 7,786 | (8,730 | ) | 19,444 | 74,366 | 22,301 | ||||||||||||||
Net cash used for operating activities | (8,095 | ) | (21,483 | ) | (5,487 | ) | (58,048 | ) | (32,032 | ) | ||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchases of property and equipment, net | (731 | ) | (1,294 | ) | (2,243 | ) | (8,259 | ) | (20,687 | ) | ||||||||||
Acquisitions, net of cash acquired | — | (677 | ) | (2,321 | ) | (18,973 | ) | (23 | ) | |||||||||||
Net proceeds of short-term investments | 35,035 | 14,575 | 42,403 | 93,840 | 97,974 | |||||||||||||||
Net proceeds (purchases) of long-term investments | (10,140 | ) | (23,994 | ) | 1,143 | (13,501 | ) | (43,011 | ) | |||||||||||
Other | 285 | — | (927 | ) | 629 | (4,576 | ) | |||||||||||||
Net cash provided by (used for) investing activities | 24,449 | (11,390 | ) | 38,055 | 53,736 | 29,677 | ||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Net proceeds from issuance of common stock, net | 727 | 104 | 9,914 | 2,800 | 17,407 | |||||||||||||||
Net proceeds from put warrants | — | — | — | — | 3,864 | |||||||||||||||
Repurchases of treasury stock | — | — | (19,350 | ) | — | (38,089 | ) | |||||||||||||
Other | — | — | (112 | ) | 152 | (2,252 | ) | |||||||||||||
Net cash provided by (used for) financing activities | 727 | 104 | (9,548 | ) | 2,952 | (19,070 | ) | |||||||||||||
Effect of exchange rate on cash and cash equivalents | — | — | — | — | 137 | |||||||||||||||
Net decrease in cash and cash equivalents | 17,081 | (32,769 | ) | 23,020 | (1,360 | ) | (21,288 | ) | ||||||||||||
Cash and cash equivalents at beginning of period | 122,258 | 155,027 | 117,679 | 140,699 | 161,987 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 139,339 | $ | 122,258 | $ | 140,699 | $ | 139,339 | $ | 140,699 | ||||||||||
Page 8 of 8 — Openwave Reports Fourth Quarter and Fiscal 2003 Year End Results
OPENWAVE SYSTEMS INC. AND SUBSIDIARIES
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION—UNAUDITED
(in thousands)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
| 2003 | 2003 | 2002 | 2003 | 2002 | ||||||||||||||||
EBITDA Computation: | ||||||||||||||||||||
GAAP net loss | $ | (25,703 | ) | $ | (23,214 | ) | $ | (474,752 | ) | $ | (216,958 | ) | $ | (1,260,758 | ) | |||||
Add back: | ||||||||||||||||||||
Income taxes | 3,116 | 3,320 | 7,093 | 10,985 | 17,879 | |||||||||||||||
Interest income, net | (1,184 | ) | (1,160 | ) | (2,132 | ) | (5,928 | ) | (12,317 | ) | ||||||||||
Depreciation and amortization | 7,403 | 8,192 | 106,432 | 35,481 | 553,692 | |||||||||||||||
Impairment of goodwill and other intangible assets | — | — | 338,798 | 22,592 | 618,272 | |||||||||||||||
Impairment of property and equipment | 2,083 | — | — | 14,285 | 5,339 | |||||||||||||||
Stock-based compensation | 901 | 686 | 2,559 | 3,681 | 12,195 | |||||||||||||||
Earnings before interest, taxes, depreciation and amortization | $ | (13,384 | ) | $ | (12,176 | ) | $ | (22,002 | ) | $ | (135,862 | ) | $ | (65,698 | ) | |||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
| 2003 | 2003 | 2002 | 2003 | 2002 | ||||||||||||||||
Reconciliation of EBITDA to Cash Flows Used for Operating Activities | ||||||||||||||||||||
Earnings before interest, taxes, depreciation and amortization | $ | (13,384 | ) | $ | (12,176 | ) | $ | (22,002 | ) | $ | (135,862 | ) | $ | (65,698 | ) | |||||
Income taxes | (3,116 | ) | (3,320 | ) | (7,093 | ) | (10,985 | ) | (17,879 | ) | ||||||||||
Interest income, net | 1,184 | 1,160 | 2,132 | 5,928 | 12,317 | |||||||||||||||
Impairment of nonmarketable equity securities | 1,464 | 1,864 | 383 | 5,328 | 5,585 | |||||||||||||||
Provision for (recovery of) doubtful accounts | (1,959 | ) | (393 | ) | 1,630 | 3,032 | 10,630 | |||||||||||||
Other non-cash operating activities | (70 | ) | 112 | 19 | 145 | 712 | ||||||||||||||
Changes in operating assets and liabilities | 7,786 | (8,730 | ) | 19,444 | 74,366 | 22,301 | ||||||||||||||
Cash flows used for operating activities | $ | (8,095 | ) | $ | (21,483 | ) | $ | (5,487 | ) | $ | (58,048 | ) | $ | (32,032 | ) | |||||
