Exhibit 99.1
FOR IMMEDIATE RELEASE
May 31, 2006
Novell Reports Financial Results for Second Fiscal Quarter 2006
Year-over-year results show continued growth in Linux and Identity revenues and improvement in overall profitability
WALTHAM, Mass. – May 31, 2006 — Novell, Inc. (NASDAQ:NOVL) today announced financial results for its second fiscal quarter ended April 30, 2006. For the quarter, Novell reported revenue of $278 million, compared to revenue of $297 million for the second fiscal quarter 2005. Net income available to common stockholders in the second fiscal quarter 2006 was $3 million or $0.01 per diluted common share. This compared to net loss available to common stockholders of $16 million, or $0.04 loss per diluted common share, for the second fiscal quarter 2005.
On a non-GAAP basis, adjusted net income available to common stockholders for the second fiscal quarter 2006 was $10 million, or $0.03 per diluted common share. This compared to non-GAAP adjusted net income available to common stockholders of $2 million, or $0.01 per diluted common share, for the second fiscal quarter 2005. These amounts exclude stock-based compensation, restructuring and acquired in-process research and development expenses, gains on sale of property, plant and equipment and a legal settlement, long-term investment impairments and related adjustments for income taxes, debt interest expense and the allocation of earnings to preferred stockholders.
In the second fiscal quarter 2006, foreign currency exchange rates unfavorably impacted total revenue by approximately $6 million year-over-year. Foreign currency exchange rates favorably impacted net income by $1 million year-over-year.
During the second fiscal quarter 2006, Novell reported total Open Platform Solutions revenue of $57 million, which was up from $20 million in the year ago period. Total Open Platform Solutions included $46 million from sales of Open Enterprise Server (OES), up $38 million year-over-year, and $10 million of revenue from Linux* Platform Products, up 20% year-over-year.
During the second fiscal quarter 2006, Novell reported $61 million of Systems, Security and Identity Management revenue, up 16% year-over-year.
Combined revenue from OES and NetWare-related products declined 16% from the year ago period.
“While Novell delivered on its financial guidance again this quarter, we have not lost sight of our goal to significantly increase our profitability by the end of fiscal year 2008, ” said Jack Messman, Chairman and CEO of Novell. “We are engaged in many initiatives to grow revenues, increase efficiencies, and lower costs, to enhance shareholder value.”
With regard to the Company's previously announced share repurchase program, Novell repurchased 35 million common shares at a cost of $267 million during the quarter. An additional 16 million common shares were repurchased for $133 million after the quarter's end, resulting in an aggregate repurchase amount of $400 million, or 51 million shares. These repurchases complete the share repurchase program authorized and announced in September 2005 and amended in April 2006.
Cash, cash equivalents and short-term investments were $1.3 billion at April 30, 2006, down $347 million from last quarter primarily due to cash used to repurchase common stock and the acquisition of e-Security. Days sales outstanding in accounts receivable was 66 days at the end of the second fiscal quarter 2006, up from 59 days in the year ago quarter. Deferred revenue was $346 million at the end of the second fiscal quarter 2006, up $25 million or 8% from the prior year. Cash flow from operations was a negative $24 million for the second fiscal quarter 2006, up from a negative $25 million in the second fiscal quarter 2005.
Full details on Novell's reported results, including a reconciliation of the non-GAAP adjusted results, are included in the financial schedules that are a part of this release.
Financial Outlook
Due to the previously announced sale on May 24, 2006, of Novell's ownership in its management consulting subsidiary, Celerant, Novell will no longer consolidate Celerant's results. Novell expects to report Celerant's partial period results in the third fiscal quarter 2006 as discontinued operations. Accordingly, Novell management provides the following financial guidance:
- Net revenue, excluding Celerant, for the third fiscal quarter 2006 is expected to be between $239 million and $247 million.
- On a non-GAAP basis, net income per diluted common share, excluding Celerant, for the third fiscal quarter 2006 is expected to be $0.03, excluding an estimated $0.03 per share expense from stock-based compensation.
A summary of Novell’s vision, mission and strategy can be accessed on the Novell® Web site at:http://www.novell.com/company/ir/qresults.
Conference call notification and Web access detail
A live Webcast of a Novell conference call to discuss the quarter will be broadcast at 5:00 PM ET May 31, 2006, from Novell’s Investor Relations Web page:
http://www.novell.com/company/ir/qresults/. The domestic conference call dial-in number is 866-335-5255, password “Novell”, and the international dial-in number is +1-706-679-2263, password “Novell”.
The call will be archived on the Web site approximately 15 minutes after its conclusion, and will be available for telephone playback through midnight ET, June 7. The domestic toll-free replay number is 800-642-1687, and the international replay number is +1-706-645-9291. Replay listeners must enter conference ID number 8678383.
A copy of this press release is posted on Novell's Web site at:
http://www.novell.com/company/ir/qresults/.
Legal notice regarding forward-looking statements
This press release includes statements that are not historical in nature and that may be characterized as “forward-looking statements,” including those related to future financial and operating results, benefits and synergies of the company’s brands and strategies, future opportunities and the growth of the market for Identity and Access Management and Open Platform Solutions. You should be aware that Novell’s actual results could differ materially from those contained in the forward-looking statements, which are based on current expectations of Novell management and are subject to a number of risks and uncertainties, including, but not limited to, Novell’s ability to integrate acquired operations and employees, Novell’s success in executing its Linux and identity and resource management strategies, Novell’s ability to take a competitive position in the Linux and identity and resource management industries, business conditions and the general economy, market opportunities, potential new business strategies, competitive factors, sales and marketing execution, shifts in technologies or market demand and the other factors described in Novell's Annual Report on Form 10-K filed with the Securities and Exchange Commission on January 10, 2006. Novell disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this press release.
About Novell
Novell, Inc. (Nasdaq: NOVL) delivers Software for the Open Enterprise™. With more than 50,000 customers in 43 countries, Novell helps customers manage, simplify, secure and integrate their technology environments by leveraging best-of-breed, open standards-based software. With over 20 years of experience, 5,000 employees, 5,000 partners and support centers around the world, Novell helps customers gain control over their IT operating environment while reducing cost. More information about Novell can be found athttp://www.novell.com.
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Novell and NetWare are registered trademarks, and Software for the Open Enterprise is a trademark of Novell, Inc. in the United States and other countries. * Linux is a registered trademark of Linus Torvalds. All other third-party trademarks are the property of their respective owners.
Press Contact:
Bruce Lowry
Novell, Inc.
Phone: 415-383-8408
E-Mail: blowry@novell.com
Investor Relations Contact:
Bill Smith
Novell, Inc.
Phone: 800-317-3195
E-Mail: wsmith@novell.com
Novell, Inc. Consolidated Unaudited Condensed Statements of Operations (In thousands, except per share data) Fiscal Quarter Ended Fiscal Year-to-Date ---------------------------------- ---------------------------------- Apr 30, 2006 Apr 30, 2005 Apr 30, 2006 Apr 30, 2005 -------------- --------------- --------------- -------------- Net revenue: Software licenses $ 40,063 $ 45,768 $ 82,165 $ 90,064 Maintenance and services 238,253 251,283 470,559 497,115 -------------- --------------- --------------- -------------- Total net revenue 278,316 297,051 552,724 587,179 -------------- --------------- --------------- -------------- Cost of revenue: Software licenses 4,041 4,863 8,337 9,495 Maintenance and services 100,408 112,478 197,374 219,897 -------------- --------------- --------------- -------------- Total cost of revenue 104,449 117,341 205,711 229,392 -------------- --------------- --------------- -------------- Gross profit 173,867 179,710 347,013 357,787 -------------- --------------- --------------- -------------- Operating expense (income): Sales and marketing 96,003 98,479 189,212 192,488 Product development 48,328 51,652 93,389 100,645 General and administrative 33,377 30,140 68,831 58,380 Restructuring expenses - 5,361 (1,064) 11,780 Purchased in-process research and development 2,110 480 2,110 480 Gain on sale of property, plant and equipment (2,190) - (2,190) (1,589) Gain on litigation settlements (1,225) - (1,225) (447,560) -------------- --------------- --------------- -------------- Total operating expense (income) 176,403 186,112 349,063 (85,376) -------------- --------------- --------------- -------------- Income (loss) from operations (2,536) (6,402) (2,050) 443,163 Other income, net 13,377 7,455 26,079 12,490 -------------- --------------- --------------- -------------- Income before income taxes 10,841 1,053 24,029 455,653 Income tax expense 7,499 16,680 18,822 76,119 -------------- --------------- --------------- -------------- Net income (loss) $ 3,342 $ (15,627) $ 5,207 $ 379,534 ============== =============== =============== ============== Net income (loss) available to common stockholders - basic $ 3,282 $ (15,752) $ 5,093 $ 375,310 ============== =============== =============== ============== Net income (loss) available to common stockholders - diluted $ 3,178 $ (15,752) $ 5,021 $ 378,296 ============== =============== =============== ============== Net income (loss) per common share: Basic $ 0.01 $ (0.04) $ 0.01 $ 0.99 Diluted $ 0.01 $ (0.04) $ 0.01 $ 0.87 Weighted average shares: Basic 378,403 378,219 382,095 377,738 Diluted 385,320 378,219 389,657 434,962 Certain reclassifications, none of which affected net income, were made to the prior period amounts in order to conform to the current period's presentation. *The fiscal year-to-date 2005 diluted weighted average shares includes 52 million potential common shares related to convertible debt, which are not included in the current quarter calculation because they are anti-dilutive. Stock-based compensation expense recorded in above amounts: Fiscal Quarter Ended Fiscal Year-to-Date ---------------------------------- ---------------------------------- Apr 30, 2006 Apr 30, 2005 Apr 30, 2006 Apr 30, 2005 -------------- --------------- --------------- -------------- Cost of revenue $ 923 $ 1 $ 1,985 $ 2 Sales and marketing 3,044 224 6,576 358 Product development 1,750 329 4,387 653 General and administrative 2,013 398 8,477 398 -------------- --------------- --------------- -------------- Total stock-based compensation expense $ 7,730 $ 952 $ 21,425 $ 1,411 ============== =============== =============== ==============
Novell, Inc. Consolidated Unaudited Condensed Balance Sheets (In thousands) Apr 30, 2006 Oct 31, 2005 ------------------ ------------------- Assets Current assets: Cash and cash equivalents $ 542,074 $ 811,238 Short-term investments 796,967 843,666 Receivables, net 219,242 293,627 Prepaid expenses 36,047 30,777 Other current assets 31,234 29,745 ------------------ ------------------- Total current assets 1,625,564 2,009,053 Property, plant and equipment, net 204,274 212,377 Long-term investments 56,856 54,340 Goodwill 454,163 395,509 Intangible assets, net 47,484 56,421 Deferred income taxes 1,582 1,384 Other assets 32,677 32,774 ------------------ ------------------- Total assets $2,422,600 $2,761,858 ================== =================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 46,713 $ 45,445 Accrued compensation 105,146 113,760 Other accrued liabilities 80,022 131,105 Income taxes payable 57,829 56,869 Deferred revenue 345,768 405,751 ------------------ ------------------- Total current liabilities 635,478 752,930 Deferred income taxes 4,066 4,537 Senior convertible debentures 600,000 600,000 ------------------ ------------------- Total liabilities 1,239,544 1,357,467 Minority interests 2,974 8,555 Preferred stock 9,350 9,350 Stockholders' equity 1,170,732 1,386,486 ------------------ ------------------- Total liabilities and stockholders' equity $2,422,600 $2,761,858 ================== ===================
Novell, Inc. Consolidated Unaudited Condensed Statements of Cash Flows (In thousands) Fiscal Quarter Ended Fiscal Year-to-Date ---------------------------- ---------------------------- Apr 30, 2006 Apr 30, 2005 Apr 30, 2006 Apr 30, 2005 ------------- ------------- ------------- ------------ Cash flows from operating activities: Net income (loss) $ 3,342 $ (15,627) $ 5,207 $ 379,534 Adjustments to reconcile net income (loss) to net cash (used) provided by operating activities: Stock-based compensation expense 7,730 952 21,425 1,411 Tax effects of stock-based compensation plans 1,247 9,000 5,286 13,260 Excess tax benefits from stock-based compensation (1,247) - (5,286) - Depreciation and amortization 10,867 17,354 22,378 29,790 Decrease in accounts receivable allowances (1,930) (570) (4,903) (5,789) Utilization of previously reserved acquired net operating losses 2,976 600 3,520 29,600 Gain on sale of property, plant and equipment (2,190) - (2,190) (1,589) Impairment of long-term investments, net of gains 111 917 498 1,930 Purchased in-process research and development 2,110 480 2,110 480 Changes in current assets and liabilities, excluding the effect of acquisitions (46,962) (38,090) (46,868) (21,964) ------------- ------------- ------------- ------------ Net cash (used) provided by operating activities (23,946) (24,984) 1,177 426,663 ------------- ------------- ------------- ------------ Cash flows from financing activities: Issuance of common stock, net 8,206 8,512 18,082 12,979 Excess tax benefits from stock-based compensation 1,247 - 5,286 - Payment of cash dividends on Series B preferred stock (47) - (47) (250) Repurchase of common stock - retired (267,479) - (267,479) - ------------- ------------- ------------- ------------ Net cash (used) provided by financing activities (258,073) 8,512 (244,158) 12,729 ------------- ------------- ------------- ------------ Cash flows from investing activities: Purchases of property, plant and equipment (6,951) (6,035) (14,554) (11,684) Proceeds from the sale of property, plant and equipment 7,258 - 7,258 10,421 Proceeds from payoff of note receivable 9,092 - 9,092 - Short-term investment activity 41,784 274,081 46,258 162,375 Long-term investment activity (2,758) (771) (3,014) (3,018) Cash paid for equity investment in Open Invention Network, LLC - - (4,225) - Cash paid for acquisition of Tally and Immunix, net of cash acquired - (33,829) - (33,829) Cash paid for acquisition of e-Security, net of cash acquired (71,550) - (71,550) - Purchase of intangible assets - - - (15,500) Other 2,090 (1,939) 4,552 4,318 ------------- ------------- ------------- ------------ Net cash (used) provided by investing activities (21,035) 231,507 (26,183) 113,083 ------------- ------------- ------------- ------------ (Decrease) increase in cash and cash equivalents (303,054) 215,035 (269,164) 552,475 Cash and cash equivalents - beginning of period 845,128 771,844 811,238 434,404 ------------- ------------- ------------- ------------ Cash and cash equivalents - end of period $ 542,074 $ 986,879 $ 542,074 $ 986,879 ============= ============= ============= ============ Certain reclassifications, none of which affected net income, were made to the prior period amounts in order to conform to the current period's presentation.
Novell, Inc. Unaudited Non-GAAP Adjusted Earnings Information (In thousands, except per share data) Fiscal Quarter Ended Fiscal Year-to-Date --------------------------- --------------------------- Apr 30, 2006 Apr 30, 2005 Apr 30, 2006 Apr 30, 2005 ------------- ------------- ------------ ------------- GAAP diluted net income (loss) available to common stockholders $ 3,178 $ (15,752) $ 5,021 $ 378,296 ------------- ------------- ------------ ------------- Pre-tax adjustments: Stock-based compensation expense 7,730 952 21,425 1,411 Restructuring expenses - 5,361 (1,064) 11,780 Purchased in-process research and development 2,110 480 2,110 480 Gains on sale of property, plant and equipment (2,190) - (2,190) (1,589) Gain on litigation settlements (1,225) - (1,225) (447,560) Transaction costs related to Celerant divestiture 588 - 588 - Impairment of long-term investments, net of gains 111 917 498 1,930 Income tax adjustments: Tax adjustments, net 209 (1,766) 1,975 (2,404) Cumulative tax effect of the Microsoft settlement - 12,100 - 69,360 Diluted net income (loss) adjustments: Debt interest expense - - 2,986 (2,986) Allocation of earnings to preferred and minority stockholders (29) (24) (86) 3,841 ------------- ------------- ------------ ------------- Total net adjustments 7,304 18,020 25,017 (365,737) Non-GAAP diluted net income available to common stockholders $ 10,482 $ 2,268 $ 30,038 $ 12,559 ============= ============= ============ ============= GAAP diluted net income (loss) per common share $ 0.01 $ (0.04) $ 0.01 $ 0.87 Adjustments detailed above 0.02 0.05 0.06 (0.84) ------------- ------------- ------------ ------------- Non-GAAP diluted net income per common share $ 0.03 $ 0.01 $ 0.07 $ 0.03 ============= ============= ============ ============= GAAP diluted weighted average shares 385,320 378,219 389,657 434,962 Change in dilution from assumed: Conversion of convertible debt - - 52,074 (52,074) Conversion of preferred stock - - - - Stock option exercises 4,022 4,035 4,363 - Restricted stock and stock-based compensation changes (315) - (618) (374) ------------- ------------- ------------ ------------- Non-GAAP diluted weighted average shares 389,027 382,254 445,476 382,514 ============= ============= ============ ============= Certain reclassifications were made to the prior period amounts in order to conform to the current period's presentation.
Novell, Inc. Consolidated Unaudited Condensed Statements of Operations (In thousands, except per share data) Fiscal Year Trailing Four Q2 2005 % 2005 % Q1 2006 % Q2 2006 % Quarters % ----------- ------ ----------- ------- ------------------ ----------- ------ ----------- ------ Net revenue: Software licenses $ 45,768 15.4 $ 213,803 17.9 $ 42,102 15.3 $ 40,063 14.4 $ 205,904 17.7 Maintenance and services 251,283 84.6 983,893 82.1 232,306 84.7 238,253 85.6 957,337 82.3 ----------- ------ ----------- ------- ------------------ ----------- ------ ----------- ------ Total net revenue 297,051 100.0 1,197,696 100.0 274,408 100.0 278,316 100.0 1,163,241 100.0 ----------- ------ ----------- ------- ------------------ ----------- ------ ----------- ------ Cost of revenue: Software licenses 4,863 1.6 21,600 1.8 4,297 1.6 4,041 1.5 20,442 1.8 Maintenance and services 112,478 37.9 421,519 35.2 96,965 35.3 100,408 36.1 398,996 34.3 ----------- ------ ----------- ------- ------------------ ----------- ------ ----------- ------ Total cost of revenue 117,341 39.5 443,119 37.0 101,262 36.9 104,449 37.5 419,438 36.1 ----------- ------ ----------- ------- ------------------ ----------- ------ ----------- ------ Gross profit 179,710 60.5 754,577 63.0 173,146 63.1 173,867 62.5 743,803 63.9 ----------- ------ ----------- ------- ------------------ ----------- ------ ----------- ------ Operating expense (income): Sales and marketing 98,479 33.2 382,998 32.0 93,209 34.0 96,003 34.5 379,722 32.6 Product development 51,652 17.4 206,478 17.2 45,061 16.4 48,328 17.4 199,222 17.1 General and administrative 30,140 10.1 122,026 10.2 35,454 12.9 33,377 12.0 132,477 11.4 Restructuring expenses 5,361 1.8 59,106 4.9 (1,064) (0.4) - - 46,262 4.0 Purchased in-process research and development 480 0.2 480 0.0 - - 2,110 0.8 2,110 0.2 Gain on sale of property, plant and equipment - - (1,589) (0.1) - - (2,190) (0.8) (2,190) (0.2) Gain on litigation settlements - - (447,560) (37.4) - - (1,225) (0.4) (1,225) (0.1) ----------- ------ ----------- ------- ------------------ ----------- ------ ----------- ------ Total operating expense (income) 186,112 62.7 321,939 26.9 172,660 62.9 176,403 63.4 756,378 65.0 ----------- ------ ----------- ------- ------------------ ----------- ------ ----------- ------ Income (loss) from operations (6,402) (2.2) 432,638 36.1 486 0.2 (2,536) (0.9) (12,575) (1.1) ----------- ------ ----------- ------- ------------------ ----------- ------ ----------- ------ Other income Investment income 9,323 3.1 43,135 3.6 14,592 5.3 15,590 5.6 55,554 4.8 Other, net (1,868) (0.6) (9,631) (0.8) (1,890) (0.7) (2,213) (0.8) (8,461) (0.7) ----------- ------ ----------- ------- ------------------ ----------- ------ ----------- ------ Other income, net 7,455 2.5 33,504 2.8 12,702 4.6 13,377 4.8 47,093 4.0 ----------- ------ ----------- ------- ------------------ ----------- ------ ----------- ------ Income before income taxes 1,053 0.4 466,142 38.9 13,188 4.8 10,841 3.9 34,518 3.0 Income tax expense 16,680 5.6 89,420 7.5 11,323 4.1 7,499 2.7 32,123 2.8 ----------- ------ ----------- ------- ------------------ ----------- ------ ----------- ------ Net income (loss) $ (15,627) (5.3) $ 376,722 31.5 $ 1,865 0.7 $ 3,342 1.2 $ 2,395 0.2 =========== ====== =========== ======= ================== =========== ====== =========== ====== Preferred stock dividends (125) (0.0) (466) (0.0) (47) (0.0) (47) (0.0) Allocation of earnings to preferred stockholders - - (3,667) (0.3) (7) (0.0) (13) (0.0) ----------- ------ ----------- ------- ------------------ ----------- ------ Net income (loss) available to common stockholders - basic $ (15,752) (5.3) $ 372,589 31.1 $ 1,811 0.7 $ 3,282 1.2 =========== ====== =========== ======= ================== =========== ====== Net income (loss) available to common stockholders - diluted $ (15,752) (5.3) $ 378,159 31.6 $ 1,811 0.7 $ 3,178 1.1 =========== ====== =========== ======= ================== =========== ====== Net income (loss) per common share: Basic $ (0.04) $ 0.98 $ 0.00 $ 0.01 Diluted $ (0.04) $ 0.86 $ 0.00 $ 0.01 Weighted average shares: Basic 378,219 379,499 385,787 378,403 Diluted 378,219 440,585 394,534 385,320 Certain reclassifications, none of which affected net income, were made to the prior period amounts in order to conform to the current period's presentation.
Core Novell (without Celerant) Unaudited Non-GAAP Condensed Statements of Operations* (In thousands, except per share data) Q2 2005 % Q3 2005 % Q4 2005 % Q1 2006 % Q2 2006 % ------------- -------- ------------ ------- ------------- -------- ------------- ------- ------------- -------- Net revenue: Software licenses $ 45,768 18.1 $ 45,628 18.1 $ 78,111 27.2 $ 42,102 17.4 $ 40,063 16.8 Maintenance and services 207,376 81.9 206,754 81.9 209,507 72.8 200,192 82.6 198,663 83.2 ------------- -------- ------------ ------- ------------- -------- ------------- ------- ------------- -------- Total net revenue 253,144 100.0 252,382 100.0 287,618 100.0 242,294 100.0 238,726 100.0 ------------- -------- ------------ ------- ------------- -------- ------------- ------- ------------- -------- Cost of revenue: Software licenses 4,863 1.9 4,475 1.8 7,630 2.7 4,297 1.8 4,041 1.7 Maintenance and services 87,185 34.4 80,169 31.8 81,422 28.3 75,966 31.4 76,686 32.1 ------------- -------- ------------ ------- ------------- -------- ------------- ------- ------------- -------- Total cost of revenue 92,048 36.4 84,644 33.5 89,052 31.0 80,263 33.1 80,727 33.8 ------------- -------- ------------ ------- ------------- -------- ------------- ------- ------------- -------- Gross profit 161,096 63.6 167,738 66.5 198,566 69.0 162,031 66.9 157,999 66.2 ------------- -------- ------------ ------- ------------- -------- ------------- ------- ------------- -------- Operating expense: Sales and marketing 90,320 35.7 84,012 33.3 92,014 32.0 83,324 34.4 85,672 35.9 Product development 51,324 20.3 50,010 19.8 54,453 18.9 42,423 17.5 46,578 19.5 General and administrative 23,353 9.2 25,372 10.1 24,619 8.6 22,580 9.3 24,143 10.1 ------------- -------- ------------ ------- ------------- -------- ------------- ------- ------------- -------- Total operating expense 164,997 65.2 159,394 63.2 171,086 59.5 148,327 61.2 156,393 65.5 ------------- -------- ------------ ------- ------------- -------- ------------- ------- ------------- -------- Income (loss) from operations (3,901) (1.5) 8,344 3.3 27,480 9.6 13,704 5.7 1,606 0.7 ------------- -------- ------------ ------- ------------- -------- ------------- ------- ------------- -------- Other income Investment income 10,241 4.0 11,515 4.6 13,521 4.7 14,979 6.2 15,700 6.6 Other, net (1,319) (0.5) (3,855) (1.5) (816) (0.3) (1,500) (0.6) (2,434) (1.0) ------------- -------- ------------ ------- ------------- -------- ------------- ------- ------------- -------- Other income, net 8,922 3.5 7,660 3.0 12,705 4.4 13,479 5.6 13,266 5.6 ------------- -------- ------------ ------- ------------- -------- ------------- ------- ------------- -------- Income before income taxes 5,021 2.0 16,004 6.3 40,185 14.0 27,183 11.2 14,872 6.2 Income tax expense 4,636 1.8 4,270 1.7 9,302 3.2 9,099 3.8 6,584 2.8 ------------- -------- ------------ ------- ------------- -------- ------------- ------- ------------- -------- Net income (loss) $ 385 0.2 $ 11,734 4.6 $ 30,883 10.7 $ 18,084 7.5 $ 8,288 3.5 ============= ======== ============ ======= ============= ======== ============= ======= ============= ======== Preferred stock dividends (125) (0.0) (125) (0.0) (91) (0.0) (47) (0.0) (47) (0.0) Allocation of earnings to preferred stockholders - - (121) (0.0) (235) (0.1) (70) (0.0) (34) (0.0) ------------- -------- ------------ ------- ------------- -------- ------------- ------- ------------- -------- Net income (loss) available to common stockholders - basic $ 260 0.1 $ 11,488 4.6 $ 30,557 10.6 $ 17,967 7.4 $ 8,207 3.4 ============= ======== ============ ======= ============= ======== ============= ======= ============= ======== Net income (loss) available to common stockholders - diluted $ 260 0.1 $ 12,981 5.1 $ 32,050 11.1 $ 19,460 8.0 $ 8,207 3.4 ============= ======== ============ ======= ============= ======== ============= ======= ============= ======== Net income (loss) per common share - diluted $ 0.00 $ 0.03 $ 0.07 $ 0.04 $ 0.02 Weighted average shares - diluted 382,254 437,189 442,753 449,840 389,027 * The above non-GAAP statements of operations for Core Novell (without Celerant) are provided due to Novell's disposition of Celerant on May 24, 2006.
Novell, Inc. Unaudited Non-GAAP Adjusted Earnings Information for Core Novell without Celerant (In thousands, except per share data) Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 ------------ ----------- ------------ ------------ ------------ GAAP Novell, Inc. diluted net income (loss) available to common stockholders $ (15,752) $ 1,910 $ (5,043) $ 1,811 $ 3,178 ------------ ----------- ------------ ------------ ------------ Celerant pre-tax adjustments: Non-GAAP Celerant (income) loss before taxes (3,739) (2,552) (595) 978 (3,095) Stock-based compensation expense - - - 195 68 Restructuring expenses 1,531 (68) - - - ------------ ----------- ------------ ------------ ------------ GAAP Celerant (income) loss before taxes (2,208) (2,620) (595) 1,173 (3,027) Core Novell pre-tax adjustments: Stock-based compensation expense 952 (177) 514 13,500 7,662 Restructuring expenses 3,830 9,442 37,951 (1,064) - Purchased in-process research and development 480 - - - 2,110 Gain on sale of property, plant and equipment - - - - (2,190) Gain on litigation settlement - - - - (1,225) Transaction costs related to Celerant divestiture - - - - 588 Impairment of intangible assets - - 1,521 - - Impairment of long-term investments, net of gains 917 (822) 486 387 111 Income tax adjustments: Tax adjustments, net (56) 871 (2,342) 2,224 915 Cumulative tax effect of the Microsoft settlement 12,100 2,900 (1,700) - - Diluted net income (loss) adjustments: Debt interest expense - 1,493 1,493 1,493 - Allocation of earnings to preferred and minority stockholders (3) (16) (235) (64) 85 ------------ ----------- ------------ ------------ ------------ Total net adjustments 16,012 11,071 37,093 17,649 5,029 Non-GAAP Core Novell (without Celerant) diluted net income available to common stockholders $ 260 $ 12,981 $ 32,050 $ 19,460 $ 8,207 ============ =========== ============ ============ ============ GAAP Novell, inc. diluted net income (loss) per common share $ (0.04) $ 0.00 $ (0.01) $ 0.00 $ 0.01 Adjustments detailed above 0.04 0.03 0.08 0.04 0.01 ------------ ----------- ------------ ------------ ------------ Non-GAAP Core Novell (without Celerant) diluted net income (loss) per common share $ 0.00 $ 0.03 $ 0.07 $ 0.04 $ 0.02 ============ =========== ============ ============ ============ GAAP Novell, Inc. diluted weighted average shares 378,219 380,242 382,279 394,534 385,320 Change in dilution from assumed: Conversion of convertible debt - 52,074 52,074 52,074 - Conversion of preferred stock - - - - - Stock option exercises 4,035 4,782 8,304 4,003 4,022 Restricted stock and stock-based compensation changes - 91 96 (771) (315) ------------ ----------- ------------ ------------ ------------ Non-GAAP Core Novell (without Celerant) diluted weighted average shares 382,254 437,189 442,753 449,840 389,027 ============ =========== ============ ============ ============
Novell, Inc. Unaudited Trended Solutions and Segment Revenue (In thousands) Fiscal Year Trailing Four Revenue by solution Q2 2005 % 2005 % Q1 2006 % Q2 2006 % Quarters % ------------ ------- ------------ ------- ------------- ------ ------------- ------ ------------ -------- IT software and solutions Systems, security and identity management Resource management $ 31,329 10.5 $ 144,358 12.1 $ 33,158 12.1 $ 33,799 12.1 $ 150,018 12.9 Identity and access management 16,256 5.5 74,936 6.3 25,548 9.3 22,347 8.0 88,720 7.6 Other systems, security and identity management products 5,170 1.7 21,022 1.8 4,298 1.6 5,061 1.8 20,376 1.8 ------------ ------- ------------ ------- ------------- ------ ------------- ------ ------------ -------- Total systems, security and identity management 52,755 17.8 240,316 20.1 63,004 23.0 61,207 22.0 259,114 22.3 ------------ ------- ------------ ------- ------------- ------ ------------- ------ ------------ -------- Open platform solutions Open Enterprise Server 7,827 2.6 85,331 7.1 43,112 15.7 45,719 16.4 166,335 14.3 Linux platform products 8,606 2.9 35,836 3.0 10,382 3.8 10,307 3.7 39,428 3.4 Other open platform products 3,541 1.2 17,761 1.5 2,745 1.0 1,101 0.4 12,525 1.1 ------------ ------- ------------ ------- ------------- ------ ------------- ------ ------------ -------- Total open platform solutions 19,974 6.7 138,928 11.6 56,239 20.5 57,127 20.5 218,288 18.8 ------------ ------- ------------ ------- ------------- ------ ------------- ------ ------------ -------- Workspace solutions NetWare and other NetWare-related 60,463 20.4 193,549 16.2 18,256 6.7 11,566 4.2 94,162 8.1 Collaboration 23,656 8.0 99,422 8.3 23,676 8.6 22,830 8.2 97,932 8.4 Other workspace products 8,879 3.0 30,842 2.6 5,411 2.0 7,210 2.6 28,677 2.5 ------------ ------- ------------ ------- ------------- ------ ------------- ------ ------------ -------- Total workspace solutions 92,998 31.3 323,813 27.0 47,343 17.3 41,606 14.9 220,771 19.0 ------------ ------- ------------ ------- ------------- ------ ------------- ------ ------------ -------- Total software-related licenses and maintenance 165,727 55.8 703,057 58.7 166,586 60.7 159,940 57.5 698,173 60.0 Global services 87,417 29.4 336,166 28.1 75,708 27.6 78,786 28.3 322,847 27.8 ------------ ------- ------------ ------- ------------- ------ ------------- ------ ------------ -------- Total IT software and solutions 253,144 85.2 1,039,223 86.8 242,294 88.3 238,726 85.8 1,021,020 87.8 Celerant consulting 43,907 14.8 158,473 13.2 32,114 11.7 39,590 14.2 142,221 12.2 ------------ ------- ------------ ------- ------------- ------ ------------- ------ ------------ -------- Total net revenue by solution $ 297,051 100.0 $ 1,197,696 100.0 $ 274,408 100.0 $ 278,316 100.0 $ 1,163,241 100.0 ============ ======= ============ ======= ============= ====== ============= ====== ============ ======== Revenue by segment Americas $ 130,565 44.0 $ 537,198 44.9 $ 133,777 48.8 $ 129,344 46.5 $ 540,772 46.5 EMEA 99,044 33.3 407,998 34.1 88,836 32.4 86,580 31.1 388,819 33.4 Asia Pacific 23,535 7.9 94,027 7.9 19,681 7.2 22,802 8.2 91,429 7.9 Celerant Consulting 43,907 14.8 158,473 13.2 32,114 11.7 39,590 14.2 142,221 12.2 ------------ ------- ------------ ------- ------------- ------ ------------- ------ ------------ -------- Total net revenue by segment $ 297,051 100.0 $ 1,197,696 100.0 $ 274,408 100.0 $ 278,316 100.0 $ 1,163,241 100.0 ============ ======= ============ ======= ============= ====== ============= ====== ============ ======== Open Enterprise Server and NetWare-related revenue Open Enterprise Server $ 7,827 11.5 $ 85,331 30.6 $ 43,112 70.3 $ 45,719 79.8 $ 166,335 63.9 NetWare and other NetWare-related 60,463 88.5 193,549 69.4 18,256 29.7 11,566 20.2 94,162 36.1 ------------ ------- ------------ ------- ------------- ------ ------------- ------ ------------ -------- Total Open Enterprise Server and NetWare-related revenue $ 68,290 100.0 $ 278,880 100.0 $ 61,368 100.0 $ 57,285 100.0 $ 260,497 100.0 ============ ======= ============ ======= ============= ====== ============= ====== ============ ======== Certain reclassifications were made to the prior period amounts in order to conform to the current period's presentation.
Novell, Inc. Unaudited Trended Solutions Revenue by Software Licenses and Maintenance and Services (In thousands) Fiscal Year Trailing Four Q2 2005 % 2005 % Q1 2006 % Q2 2006 % Quarters % ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ IT software and solutions Systems, security and identity management Resource management Software licenses $ 7,168 2.4 $ 46,539 3.9 $ 6,372 2.3 $ 7,105 2.6 $ 45,896 3.9 Maintenance and services 24,161 8.1 97,819 8.2 26,786 9.8 26,694 9.6 104,122 9.0 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ 31,329 10.5 144,358 12.1 33,158 12.1 33,799 12.1 150,018 12.9 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ Identity and access management Software licenses 5,812 2.0 31,714 2.6 11,603 4.2 7,781 2.8 38,243 3.3 Maintenance and services 10,444 3.5 43,222 3.6 13,945 5.1 14,566 5.2 50,477 4.3 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ 16,256 5.5 74,936 6.3 25,548 9.3 22,347 8.0 88,720 7.6 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ Other systems, security and identity management products Software licenses 1,393 0.5 7,650 0.6 1,114 0.4 1,756 0.6 7,464 0.6 Maintenance and services 3,777 1.3 13,372 1.1 3,184 1.2 3,305 1.2 12,912 1.1 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ 5,170 1.7 21,022 1.8 4,298 1.6 5,061 1.8 20,376 1.8 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ Open platform solutions Open Enterprise Server Software licenses 6,233 2.1 34,862 2.9 9,983 3.6 9,225 3.3 47,837 4.1 Maintenance and services 1,594 0.5 50,469 4.2 33,129 12.1 36,494 13.1 118,498 10.2 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ 7,827 2.6 85,331 7.1 43,112 15.7 45,719 16.4 166,335 14.3 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ Linux platform products Software licenses - - - - - - - - - - Maintenance and services 8,606 2.9 35,836 3.0 10,382 3.8 10,307 3.7 39,428 3.4 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ 8,606 2.9 35,836 3.0 10,382 3.8 10,307 3.7 39,428 3.4 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ Other open platform products Software licenses 28 0.0 268 0.0 404 0.1 74 0.0 718 0.1 Maintenance and services 3,513 1.2 17,493 1.5 2,341 0.9 1,027 0.4 11,807 1.0 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ 3,541 1.2 17,761 1.5 2,745 1.0 1,101 0.4 12,525 1.1 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ Workspace solutions NetWare and other NetWare-related Software licenses 14,622 4.9 52,248 4.4 6,762 2.5 5,876 2.1 29,511 2.5 Maintenance and services 45,841 15.4 141,301 11.8 11,494 4.2 5,690 2.0 64,651 5.6 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ 60,463 20.4 193,549 16.2 18,256 6.7 11,566 4.2 94,162 8.1 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ Collaboration Software licenses 5,608 1.9 26,636 2.2 4,891 1.8 4,543 1.6 24,291 2.1 Maintenance and services 18,048 6.1 72,786 6.1 18,785 6.8 18,287 6.6 73,641 6.3 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ 23,656 8.0 99,422 8.3 23,676 8.6 22,830 8.2 97,932 8.4 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ Other workspace products Software licenses 4,904 1.7 13,886 1.2 973 0.4 3,703 1.3 11,944 1.0 Maintenance and services 3,975 1.3 16,956 1.4 4,438 1.6 3,507 1.3 16,733 1.4 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ 8,879 3.0 30,842 2.6 5,411 2.0 7,210 2.6 28,677 2.5 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ Total software-related licenses and maintenance Software licenses 45,768 15.4 213,803 17.9 42,102 15.3 40,063 14.4 205,904 17.7 Maintenance and services 119,959 40.4 489,254 40.8 124,484 45.4 119,877 43.1 492,269 42.3 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ 165,727 55.8 703,057 58.7 166,586 60.7 159,940 57.5 698,173 60.0 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ Global services 87,417 29.4 336,166 28.1 75,708 27.6 78,786 28.3 322,847 27.8 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ Total IT software and solutions Software licenses 45,768 15.4 213,803 17.9 42,102 15.3 40,063 14.4 205,904 17.7 Maintenance and services 207,376 69.8 825,420 68.9 200,192 73.0 198,663 71.4 815,116 70.1 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ 253,144 85.2 1,039,223 86.8 242,294 88.3 238,726 85.8 1,021,020 87.8 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ Celerant consulting 43,907 14.8 158,473 13.2 32,114 11.7 39,590 14.2 142,221 12.2 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ Total net revenue Software licenses 45,768 15.4 213,803 17.9 42,102 15.3 40,063 14.4 205,904 17.7 Maintenance and services 251,283 84.6 983,893 82.1 232,306 84.7 238,253 85.6 957,337 82.3 ----------- ------ ---------- ------ ---------- ------ ----------- ----- ----------- ------ Total net revenue $ 297,051 100.0 $1,197,696 100.0 $ 274,408 100.0 $ 278,316 100.0 $1,163,241 100.0 =========== ====== ========== ====== ========== ====== =========== ===== =========== ====== Certain reclassifications were made to the prior period amounts in order to conform to the current period's presentation.
Novell, Inc. Major IT Software and Solutions Included Within Reported Line Items Systems, Security and Identity Management Resource Management > ZENworks Suite > ZENworks Patch Management > ZENworks Asset Management > ZENworks Linux Management Identity and Access Management > Identity Manager > SecureLogin > iChain > Sentinel Other Systems, Security and Identity Management Products > Web Services > eDirectory Open Platform Solutions Open Enterprise Server > Open Enterprise Server Linux Platform Products > SUSE LINUX Enterprise Server > Linux Desktop Other Open Platform Products > SUSE LINUX Professional > SUSE Engineering Workspace Solutions NetWare and Other NetWare-Related > NetWare > Small Business Suite > Cluster Services Collaboration > GroupWise Other Workspace Products > BorderManager Global Services > IT Consulting Services > Technical Support Services > Training Services