Exhibit 99.1
FOR IMMEDIATE RELEASE
May 29, 2008
Novell Reports Financial Results for Second Fiscal Quarter 2008
• Product revenue increased 7% year-over-year
• Improved operating margin year-over-year
WALTHAM, Mass. – May 29, 2008 – Novell, Inc. (NASDAQ: NOVL) today announced financial results for its second fiscal quarter ended April 30, 2008. For the quarter, Novell reported net revenue of $236 million. This compares to net revenue of $232 million for the second fiscal quarter 2007. Income from operations for the second fiscal quarter 2008 was $2 million, compared to a loss from operations of $12 million for the second fiscal quarter 2007. Income from continuing operations in the second fiscal quarter 2008 was $6 million, or $0.02 per share. This compares to a loss from continuing operations of $1 million, or $0.00 loss per share, for the second fiscal quarter 2007. Foreign currency exchange rates favorably impacted revenue by $8 million, unfavorably impacted operating expenses by $9 million and negatively impacted income from operations by $1 million year-over-year.
On a non-GAAP basis, income from operations for the second fiscal quarter 2008 was $16 million. This compares to non-GAAP income from operations of $9 million in the year-ago quarter. Non-GAAP income from continuing operations for the second fiscal quarter 2008 was $21 million, or $0.06 per share. This compares to non-GAAP income from continuing operations of $16 million, or $0.05 per share, for the second fiscal quarter 2007.
For the second fiscal quarter 2008, Novell reported $30 million of product revenue from Open Platform Solutions of which $29 million was from Linux* Platform Products, up 31% year-over-year. Product revenue from Identity and Security Management was $31 million of which Identity and Access Management was $27 million, up 13% year-over-year. Product revenue from Systems and Resource Management was $41 million, up 15% year-over-year. Workgroup product revenue of $92 million was down 1% year-over-year.
“Our business continues to gain momentum, with strong product revenue growth in Linux, Identity and Systems and Resource Management,” said Ron Hovsepian, President and CEO of Novell. “We are encouraged by our results and remain confident we will achieve our financial objectives for fiscal 2008.”
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Cash, cash equivalents and short-term investments were $1.4 billion at April 30, 2008, down from $1.8 billion in the year-ago quarter, primarily due to the acquisition of PlateSpin and the repurchase of a portion of our debentures. Days sales outstanding in accounts receivable was 66 days at the end of the second fiscal quarter 2008, up from 64 days at the end of the year-ago quarter. Total deferred revenue was $702 million at the end of the second fiscal quarter 2008, up from $700 million at the end of the year-ago quarter. Cash flow from operations was a negative $18 million for the second fiscal quarter 2008. This compares to negative cash flow from operations of $29 million in the second fiscal quarter 2007.
During the quarter, Novell repurchased a portion of its outstanding 0.5% senior convertible debentures due 2024. To date, $135 million of cash has been used for these activities. Novell has not repurchased any shares of common stock under the share repurchase program that it announced on May 13, 2008.
Full details on Novell's reported results, including a reconciliation of the non-GAAP results, are included in the financial schedules that are a part of this release.
Financial Outlook
Novell management reiterates the following financial guidance:
For the full fiscal year 2008:
- Net revenue is expected to be between $940 million and $970 million.
- Non-GAAP operating margin is expected to be between 7% and 9%, excluding all acquisition-related intangible asset amortization.
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 29, 2008, 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 Novell Web site approximately two hours after its conclusion and will remain on the Web site until June 13, 2008. The call will also be available for telephone playback through midnight ET, June 13, 2008. 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 45769805.
A copy of this press release is posted on Novell's Web site at:
http://www.novell.com/company/ir/qresults/.
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Non-GAAP Financial MeasuresWe supplement our consolidated unaudited condensed financial statements presented in accordance with GAAP with certain non-GAAP financial measures. These non-GAAP measures include adjusted income from operations, operating margin, income from continuing operations, net income, income per share from continuing operations and net income per share both of which are based on an adjusted number of diluted weighted average shares. We provide non-GAAP financial measures to enhance an overall understanding of our current financial performance and prospects for the future and enable investors to evaluate our performance in the same way that management does. Management uses these same non-GAAP financial measures to evaluate performance, allocate resources, and determine bonuses. The non-GAAP financial measures do not replace the presentation of our GAAP financial results, but they eliminate expenses and gains that are unusual, that are excluded from analysts' consensus estimates, and/or that arise outside of the ordinary course of business, such as, but not limited to, stock-based compensation expenses, acquisition-related intangible asset amortization, restructuring expenses, asset impairments, litigation judgments and settlements, the write-off of acquired in-process research and development, and gains (losses) on the sale of business operations, long-term investments, and property, plant and equipment.
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” within the meaning of the Private Securities Litigation Reform Act, including those related to future financial and operating results, future opportunities, the benefits and synergies of the company's brands, strategies and acquisitions, and the growth of the market for Linux Platform Products, Identity and Access Management, and Systems and Resource Management. 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 transform its business through the implementation of its strategic plan, Novell's ability to realize the benefits anticipated from the Microsoft transaction and other transactions, Novell's ability to realize the benefits anticipated from its restructuring plan, and the expected charges to be incurred and payments to be made under the restructuring plan, Novell's ability to achieve its expense targets, Novell's success in executing its Linux Platform Products, Identity and Access Management, and Systems and Resource Management strategies, Novell's ability to take a competitive position in the Linux Platform Products, Identity and Access Management, and Systems 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, Novell's ability to integrate acquired operations and employees, and the other factors described in Novell's Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 21, 2007. 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 except as required by the securities laws.
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About Novell
Novell, Inc. (NASDAQ: NOVL) delivers the best engineered, most interoperable Linux platform and a portfolio of integrated IT management software that helps customers around the world reduce cost, complexity and risk. With our infrastructure software and ecosystem of partnerships, Novell harmoniously integrates mixed IT environments, allowing people and technology to work as one. For more information, visitwww.novell.com.
_________________
* Linux is a registered trademark of Linus Torvalds. All other third-party trademarks are the property of their respective owners.
Press Contact:
Ian Bruce
Novell, Inc.
Phone: 781-464-8034
E-Mail: ibruce@novell.com
Investor Relations Contact:
Susan Walker White
Novell, Inc.
Phone: 800-317-3195
E-Mail: swhite@novell.com
Page 5 of 11 Novell, Inc. Consolidated Unaudited Condensed Statements of Operations (In thousands, except per share data) Fiscal Quarter Ended Fiscal Year-to-Date -------------------------------- -------------------------------- Apr 30, 2008 Apr 30, 2007 Apr 30, 2008 Apr 30, 2007 -------------- ------------- -------------- ------------- Net revenue: Software licenses $ 44,454 $ 41,779 $ 84,885 $ 80,332 Maintenance and subscriptions 150,122 139,742 299,305 274,413 Services (1) 41,090 50,866 82,402 96,028 -------------- ------------- -------------- ------------- Total net revenue 235,666 232,387 466,592 450,773 -------------- ------------- -------------- ------------- Cost of revenue: Software licenses 4,194 4,260 7,459 8,487 Maintenance and subscriptions 12,646 11,270 24,286 22,925 Services 44,228 49,040 87,862 97,605 -------------- ------------- -------------- ------------- Total cost of revenue 61,068 64,570 119,607 129,017 -------------- ------------- -------------- ------------- Gross profit 174,598 167,817 346,985 321,756 -------------- ------------- -------------- ------------- Operating expenses: Sales and marketing 92,076 88,173 178,681 178,274 Product development 48,029 52,562 94,087 99,029 General and administrative 28,324 28,377 55,200 53,260 Other operating expenses (2) 4,502 10,451 8,869 23,555 -------------- ------------- -------------- ------------- Total operating expenses 172,931 179,563 336,837 354,118 Income (loss) from operations 1,667 (11,746) 10,148 (32,362) Operating margin % 0.7% -5.1% 2.2% -7.2% Other income, net 17,852 13,760 35,008 31,793 -------------- ------------- -------------- ------------- Income (loss) from continuing operations, before income taxes 19,519 2,014 45,156 (569) Income tax expense 13,653 3,326 24,606 12,912 -------------- ------------- -------------- ------------- Income (loss) from continuing operations 5,866 (1,312) 20,550 (13,481) Income (loss) from discontinued operations, before income taxes - 1,269 1,285 (9,421) Income tax expense (benefit) on discontinued operations - 2,845 (836) (69) -------------- ------------- -------------- ------------- Income (loss) from discontinued operations - (1,576) 2,121 (9,352) Net income (loss) $ 5,866 $ (2,888) $ 22,671 $ (22,833) ============== ============= ============== ============= Income (loss) per share: Continuing operations $ 0.02 $ (0.00) $ 0.06 $ (0.04) Net income (loss) $ 0.02 $ (0.01) $ 0.06 $ (0.07) Weighted average shares (Diluted 2008, Basic 2007) 354,287 346,492 353,660 346,007 (1) Services includes professional services, technical support and training services. (2) See Page 8 of 11 for a detail of other operating expenses. Revisions were made to prior period amounts in order to conform to the current period's presentation.
Page 6 of 11 Novell, Inc. Consolidated Unaudited Condensed Balance Sheets (In thousands) Apr 30, 2008 Oct 31, 2007 ------------------- ------------------- Assets Current assets: Cash and cash equivalents $ 1,003,398 $ 1,079,819 Short-term investments 427,322 777,818 Restricted cash 52,124 - Receivables, net 176,676 208,318 Prepaid expenses 54,910 53,316 Other current assets 29,260 35,065 ------------------- ------------------- Total current assets 1,743,690 2,154,336 Property, plant and equipment, net 183,743 180,537 Long-term investments 42,088 37,304 Goodwill 596,978 404,612 Intangible assets, net 58,033 33,572 Deferred income taxes 27,321 14,518 Other assets 27,470 29,515 ------------------- ------------------- Total assets $ 2,679,323 $ 2,854,394 =================== =================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 40,841 $ 45,135 Accrued compensation 88,348 112,794 Other accrued liabilities 98,849 122,850 Income taxes payable 7,244 46,724 Deferred revenue 450,945 494,615 ------------------- ------------------- Total current liabilities 686,227 822,118 Deferred income taxes 1,361 884 Other long-term liabilities 40,502 - Long-term deferred revenue 250,629 273,066 Senior convertible debentures 479,394 600,000 ------------------- ------------------- Total liabilities 1,458,113 1,696,068 Stockholders' equity 1,221,210 1,158,326 ------------------- ------------------- Total liabilities and stockholders' equity $ 2,679,323 $ 2,854,394 =================== ===================
Page 7 of 11 Novell, Inc. Consolidated Unaudited Condensed Statements of Cash Flows (In thousands) Fiscal Quarter Ended Fiscal Year-to-Date ----------------------------- ----------------------------- Apr 30, 2008 Apr 30, 2007 Apr 30, 2008 Apr 30, 2007 ------------- ------------- ------------- ------------- Cash flows from operating activities Net income (loss) $ 5,866 $ (2,888) $ 22,671 $ (22,833) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Stock-based compensation expense 7,010 8,131 17,777 14,630 Stock-based compensation modification expense - 1,802 - 1,802 Depreciation and amortization 9,847 10,309 18,847 21,473 Change in accounts receivable allowances 1,034 (1,224) 671 (451) Utilization of previously reserved acquired net operating losses 23 2,354 5,025 4,825 Purchased in-process research and development 2,700 - 2,700 - Gain on debenture repurchases (405) - (405) - Gain on long-term investments (250) - (250) (1,738) Gain on sale of venture capital funds - - - (3,591) (Gain) loss on discontinued operations, before taxes - (628) (1,180) 10,220 Changes in current assets and liabilities, excluding the effect of acquisitions and dispositions (43,506) (47,111) (109,823) 293,936 ------------- ------------- ------------- ------------- Net cash (used in) provided by operating activities (17,681) (29,255) (43,967) 318,273 ------------- ------------- ------------- ------------- Cash flows from financing activities Issuance of common stock, net 4,196 742 6,778 8,122 Excess tax effects from stock-based compensation 14,315 2,737 23,995 4,723 Debenture repurchases (115,589) - (115,589) - ------------- ------------- ------------- ------------- Net cash (used in) provided by financing activities (97,078) 3,479 (84,816) 12,845 ------------- ------------- ------------- ------------- Cash flows from investing activities Purchases of property, plant and equipment (10,463) (7,550) (16,322) (12,508) Short-term investment activity 290,922 (47,552) 325,440 (47,420) Long-term investment activity 14,523 - 14,523 1,738 Cash restricted due to litigation (629) - (52,124) - Net proceeds (distributions) from the sale of discontinued operations 2,508 2,749 (909) 2,749 Proceeds from sale of venture capital funds - - - 4,964 Net cash paid for acquisitions (220,473) - (220,473) (9,727) Purchases of intangible assets - (875) - (875) Other 3,148 4,518 2,227 5,166 ------------- ------------- ------------- ------------- Net cash provided by (used in) investing activities 79,536 (48,710) 52,362 (55,913) ------------- ------------- ------------- ------------- Increase (decrease) in cash and cash equivalents (35,223) (74,486) (76,421) 275,205 Cash and cash equivalents - beginning of period 1,038,621 1,025,478 1,079,819 675,787 ------------- ------------- ------------- ------------- Cash and cash equivalents - end of period $1,003,398 $ 950,992 $1,003,398 $ 950,992 ============= ============= ============= ============= Revisions were made to prior period amounts in order to conform to the current period's presentation.
Page 8 of 11 Novell, Inc. Unaudited Non-GAAP Adjusted Income From Operations (In thousands, except per share data) Fiscal Quarter Ended Fiscal Year-to-Date ----------------------------- ----------------------------- Apr 30, 2008 Apr 30, 2007 Apr 30, 2008 Apr 30, 2007 ------------- ------------ ------------ ------------- GAAP income (loss) from operations $ 1,667 $ (11,746) $ 10,148 $ (32,362) ------------- ------------ ------------ ------------- Adjustments: Stock-based compensation expense: Cost of revenue 535 937 1,843 1,984 Sales and marketing 2,030 2,400 5,447 4,260 Product development 2,353 2,535 5,357 4,686 General and administrative 2,092 2,259 5,130 3,700 ------------- ------------ ------------ ------------- Sub-total 7,010 8,131 17,777 14,630 ------------- ------------ ------------ ------------- Acquisition-related intangible asset amortization: Cost of revenue 1,659 1,310 2,851 2,556 Sales and marketing 738 509 1,088 1,879 Product development - - - 227 ------------- ------------ ------------ ------------- Sub-total 2,397 1,819 3,939 4,662 ------------- ------------ ------------ ------------- Other operating expenses (income): Restructuring expenses 392 4,523 4,759 11,867 Purchased in-process research and development 2,700 - 2,700 - Litigation-related income - - - (543) Acquisition integration costs 1,410 - 1,410 - Stock-based compensation review expenses - 5,928 - 12,231 ------------- ------------ ------------ ------------- Sub-total 4,502 10,451 8,869 23,555 ------------- ------------ ------------ ------------- Total operating adjustments 13,909 20,401 30,585 42,847 Non-GAAP income from operations $ 15,576 $ 8,655 $ 40,733 $ 10,485 ============= ============ ============ ============= Operating margin % 6.6% 3.7% 8.7% 2.3% - ------------------------------------------------------------------------------------------------------------------- Novell, Inc. Unaudited Non-GAAP Adjusted Net Income (In thousands, except per share data) Fiscal Quarter Ended Fiscal Year-to-Date ----------------------------- ----------------------------- Apr 30, 2008 Apr 30, 2007 Apr 30, 2008 Apr 30, 2007 ------------- ------------ ------------ ------------- GAAP net income (loss) $ 5,866 $ (2,888) $ 22,671 $ (22,833) ------------- ------------ ------------ ------------- Operating adjustments (detailed above) 13,909 20,401 30,585 42,847 Non-operating expenses (income) adjustments: Gain on sale of venture capital funds - - - (3,591) Gain on debenture repurchases (405) - (405) - Gain on long-term investments (250) - (250) (1,738) ------------- ------------ ------------ ------------- Sub-total (655) - (655) (5,329) ------------- ------------ ------------ ------------- Total pre-tax adjustments 13,254 20,401 29,930 37,518 Income tax adjustments 1,948 (2,638) 1,554 (341) Income (loss) from discontinued operations, net of taxes - 1,576 (2,121) 9,352 ------------- ------------ ------------ ------------- Total net adjustments 15,202 19,339 29,363 46,529 Non-GAAP net income and non-GAAP income from continuing operations $ 21,068 $ 16,451 $ 52,034 $ 23,696 ============= ============ ============ ============= GAAP net income (loss) per share $ 0.02 $ (0.01) $ 0.06 $ (0.07) Total adjustments detailed above 0.04 0.06 0.09 0.14 ------------- ------------ ------------ ------------- Non-GAAP net income per share and non-GAAP income from continuing operations per share $ 0.06 $ 0.05 $ 0.15 $ 0.07 ============= ============ ============ ============= GAAP weighted average shares 354,287 346,492 353,660 346,007 Change from basic to diluted weighted average shares - 2,091 - 1,971 ------------- ------------ ------------ ------------- Non-GAAP weighted average shares 354,287 348,583 353,660 347,978 ============= ============ ============ ============= Revisions were made to prior period amounts in order to conform to the current period's presentation.
Page 9 of 11 Novell, Inc. Consolidated Unaudited Condensed Segment Results (in thousands, except per share data) Fiscal Quarter Ended April 30, 2008 --------------------------------------------------------------------------------------------------------------- Identity Systems Open Platform and Security and Resource Common Solutions % Management % Management % Workgroup % Unallocated Total % ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Net revenue: Software licenses $ 164 0.4 $ 11,386 24.6 $ 11,180 23.9 $ 21,724 20.7 $ - $ 44,454 18.9 Maintenance and subscriptions 30,330 80.8 19,312 41.7 29,773 63.7 70,707 67.3 - 150,122 63.7 Services 7,023 18.7 15,601 33.7 5,816 12.4 12,650 12.0 - 41,090 17.4 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Total net revenue 37,517 100.0 46,299 100.0 46,769 100.0 105,081 100.0 - 235,666 100.0 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Cost of revenue: Software licenses 12 0.0 1,707 3.7 907 1.9 1,208 1.1 360 4,194 1.8 Maintenance and subscriptions 2,181 5.8 2,894 6.3 2,416 5.2 3,931 3.7 1,224 12,646 5.4 Services 8,756 23.3 17,587 38.0 4,194 9.0 13,081 12.4 610 44,228 18.8 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Total cost of revenue 10,949 29.2 22,188 47.9 7,517 16.1 18,220 17.3 2,194 61,068 25.9 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Gross profit 26,568 70.8 24,111 52.1 39,252 83.9 86,861 82.7 (2,194) 174,598 74.1 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Operating expenses: Sales and marketing - - - - - - - - 92,076 92,076 39.1 Product development 15,038 40.1 11,522 24.9 9,517 20.3 9,599 9.1 2,353 48,029 20.4 General and administrative - - - - - - - - 28,324 28,324 12.0 Other operating expenses - - - - - - - - 4,502 4,502 1.9 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Total operating expenses 15,038 40.1 11,522 24.9 9,517 20.3 9,599 9.1 127,255 172,931 73.4 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Income (loss) from operations $ 11,530 30.7 $ 12,589 27.2 $ 29,735 63.6 $ 77,262 73.5 $(129,449) $ 1,667 0.7 ========== ======= ========= ======= ========= ======= ========== ====== ========== ========== ====== Fiscal Quarter Ended January 31, 2008 --------------------------------------------------------------------------------------------------------------- Identity Systems Open Platform and Security and Resource Common Solutions % Management % Management % Workgroup % Unallocated Total % ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Net revenue: Software licenses $ - - $ 12,618 26.8 $ 8,171 18.9 $ 19,642 18.9 $ - $ 40,431 17.5 Maintenance and subscriptions 30,046 81.6 19,710 41.9 28,866 66.6 70,561 68.0 - 149,183 64.6 Services 6,753 18.4 14,702 31.3 6,302 14.5 13,555 13.1 - 41,312 17.9 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Total net revenue 36,799 100.0 47,030 100.0 43,339 100.0 103,758 100.0 - 230,926 100.0 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Cost of revenue: Software licenses - - 1,222 2.6 764 1.8 1,027 1.0 252 3,265 1.4 Maintenance and subscriptions 2,417 6.6 1,908 4.1 2,698 6.2 3,689 3.6 928 11,640 5.0 Services 8,739 23.7 16,153 34.3 4,487 10.4 12,935 12.5 1,320 43,634 18.9 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Total cost of revenue 11,156 30.3 19,283 41.0 7,949 18.3 17,651 17.0 2,500 58,539 25.3 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Gross profit 25,643 69.7 27,747 59.0 35,390 81.7 86,107 83.0 (2,500) 172,387 74.7 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Operating expenses: Sales and marketing - - - - - - - - 86,605 86,605 37.5 Product development 14,280 38.8 11,681 24.8 8,281 19.1 8,812 8.5 3,004 46,058 19.9 General and administrative - - - - - - - - 26,876 26,876 11.6 Other operating expenses - - - - - - - - 4,367 4,367 1.9 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Total operating expenses 14,280 38.8 11,681 24.8 8,281 19.1 8,812 8.5 120,852 163,906 71.0 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Income (loss) from operations $ 11,363 30.9 $ 16,066 34.2 $ 27,109 62.6 $ 77,295 74.5 $ (123,352) $ 8,481 3.7 ========== ======= ========= ======= ========= ======= ========== ====== ========== ========== ====== Fiscal Quarter Ended April 30, 2007 --------------------------------------------------------------------------------------------------------------- Identity Systems Open Platform and Security and Resource Common Solutions % Management % Management % Workgroup % Unallocated Total % ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Net revenue: Software licenses $ - - $ 11,094 21.9 $ 7,646 18.1 $ 23,039 21.3 $ - $ 41,779 18.0 Maintenance and subscriptions 23,892 76.5 17,754 35.0 27,832 66.0 70,264 64.9 - 139,742 60.1 Services 7,338 23.5 21,815 43.1 6,713 15.9 15,000 13.9 - 50,866 21.9 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Total net revenue 31,230 100.0 50,663 100.0 42,191 100.0 108,303 100.0 - 232,387 100.0 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Cost of revenue: Software licenses - - 1,763 3.5 823 2.0 1,404 1.3 270 4,260 1.8 Maintenance and subscriptions 1,968 6.3 2,346 4.6 2,492 5.9 3,561 3.3 903 11,270 4.8 Services 8,613 27.6 20,324 40.1 4,605 10.9 14,424 13.3 1,074 49,040 21.1 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Total cost of revenue 10,581 33.9 24,433 48.2 7,920 18.8 19,389 17.9 2,247 64,570 27.8 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Gross profit 20,649 66.1 26,230 51.8 34,271 81.2 88,914 82.1 (2,247) 167,817 72.2 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Operating expenses: Sales and marketing - - - - - - - - 88,173 88,173 37.9 Product development 13,606 43.6 15,381 30.4 8,572 20.3 12,468 11.5 2,535 52,562 22.6 General and administrative - - - - - - - - 28,377 28,377 12.2 Other operating expenses - - - - - - - - 10,451 10,451 4.5 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Total operating expenses 13,606 43.6 15,381 30.4 8,572 20.3 12,468 11.5 129,536 179,563 77.3 ---------- ------- --------- ------- --------- ------- ---------- ------ ---------- ---------- ------ Income (loss) from operations $ 7,043 22.6 $ 10,849 21.4 $ 25,699 60.9 $ 76,446 70.6 $ (131,783) $ (11,746) (5.1) ========== ======= ========= ======= ========= ======= ========== ====== ========== ========== ====== Revisions were made to prior period amounts in order to conform to the current period's presentation.
Page 10 of 11 Novell, Inc. Unaudited Trended Segment Revenue by Software Licenses and Maintenance and Services (In thousands) Fiscal Year Change from Q2 2007 % 2007 % Q1 2008 % Q2 2008 % Q2 2008 to Q1 2008 Q2 2008 to Q2 2007 ----------- ------- ---------- ------- ---------- ------- ---------- ------- ------------------ ----------------- Open platform solutions Linux platform products Software licenses $ - - $ - - $ - - $ - - $ - - $ - - Maintenance and subscriptions 21,870 9.4 87,391 9.4 27,890 12.1 28,626 12.1 736 2.6 6,756 30.9 ----------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------ ---------- ------- 21,870 9.4 87,391 9.4 27,890 12.1 28,626 12.1 736 2.6 6,756 30.9 Other open platform products Software licenses - - 197 0.0 - - 164 0.1 164 - 164 - Maintenance and subscriptions 2,022 0.9 6,453 0.7 2,156 0.9 1,704 0.7 (452) (21.0) (318) (15.7) ----------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------ ---------- ------- 2,022 0.9 6,650 0.7 2,156 0.9 1,868 0.8 (288) (13.4) (154) (7.6) Total open platform solutions 23,892 10.3 94,041 10.1 30,046 13.0 30,494 12.9 448 1.5 6,602 27.6 Identity and security management Identity and access management Software licenses 10,003 4.3 46,349 5.0 11,866 5.1 10,894 4.6 (972) (8.2) 891 8.9 Maintenance and subscriptions 14,349 6.2 61,520 6.6 16,613 7.2 16,531 7.0 (82) (0.5) 2,182 15.2 ----------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------ ---------- ------- 24,352 10.5 107,869 11.6 28,479 12.3 27,425 11.6 (1,054) (3.7) 3,073 12.6 Other identity and security management Software licenses 1,091 0.5 4,157 0.4 752 0.3 492 0.2 (260) (34.6) (599) (54.9) Maintenance and subscriptions 3,405 1.5 13,657 1.5 3,097 1.3 2,781 1.2 (316) (10.2) (624) (18.3) ----------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------ ---------- ------- 4,496 1.9 17,814 1.9 3,849 1.7 3,273 1.4 (576) (15.0) (1,223) (27.2) Total identity and security management 28,848 12.4 125,683 13.5 32,328 14.0 30,698 13.0 (1,630) (5.0) 1,850 6.4 Systems and resource management Software licenses 7,646 3.3 35,234 3.8 8,171 3.5 11,180 4.7 3,009 36.8 3,534 46.2 Maintenance and subscriptions 27,832 12.0 112,510 12.1 28,866 12.5 29,773 12.6 907 3.1 1,941 7.0 Total systems and resource management 35,478 15.3 147,744 15.8 37,037 16.0 40,953 17.4 3,916 10.6 5,475 15.4 Workgroup Open Enterprise Server Software licenses 9,060 3.9 37,820 4.1 8,324 3.6 8,615 3.7 291 3.5 (445) (4.9) Maintenance and subscriptions 39,853 17.1 161,435 17.3 40,298 17.5 39,577 16.8 (721) (1.8) (276) (0.7) ----------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------ ---------- ------- 48,913 21.0 199,255 21.4 48,622 21.1 48,192 20.4 (430) (0.9) (721) (1.5) NetWare and other NetWare-related Software licenses 4,953 2.1 18,972 2.0 3,943 1.7 4,213 1.8 270 6.8 (740) (14.9) Maintenance and subscriptions 1,471 0.6 6,810 0.7 1,558 0.7 1,756 0.7 198 12.7 285 19.4 ----------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------ ---------- ------- 6,424 2.8 25,782 2.8 5,501 2.4 5,969 2.5 468 8.5 (455) (7.1) Collaboration Software licenses 6,566 2.8 27,116 2.9 6,574 2.8 7,130 3.0 556 8.5 564 8.6 Maintenance and subscriptions 19,627 8.4 79,628 8.5 20,786 9.0 21,083 8.9 297 1.4 1,456 7.4 ----------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------ ---------- ------- 26,193 11.3 106,744 11.4 27,360 11.8 28,213 12.0 853 3.1 2,020 7.7 Other workgroup Software licenses 2,460 1.1 6,262 0.7 801 0.3 1,766 0.7 965 120.5 (694) (28.2) Maintenance and subscriptions 9,313 4.0 34,950 3.7 7,919 3.4 8,291 3.5 372 4.7 (1,022) (11.0) ----------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------ ---------- ------- 11,773 5.1 41,212 4.4 8,720 3.8 10,057 4.3 1,337 15.3 (1,716) (14.6) Total workgroup 93,303 40.1 372,993 40.0 90,203 39.1 92,431 39.2 2,228 2.5 (872) (0.9) Total software licenses, maintenance and subscriptions Software licenses 41,779 18.0 176,107 18.9 40,431 17.5 44,454 18.9 4,023 10.0 2,675 6.4 Maintenance and subscriptions 139,742 60.1 564,354 60.5 149,183 64.6 150,122 63.7 939 0.6 10,380 7.4 ----------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------ ---------- ------- Total product revenue 181,521 78.1 740,461 79.4 189,614 82.1 194,576 82.6 4,962 2.6 13,055 7.2 ----------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------ ---------- ------- Services 50,866 21.9 192,038 20.6 41,312 17.9 41,090 17.4 (222) (0.5) (9,776) (19.2) ----------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------ ---------- ------- Total net revenue $ 232,387 100.0 $ 932,499 100.0 $ 230,926 100.0 $ 235,666 100.0 $ 4,740 2.1 $ 3,279 1.4 =========== ======= ========== ======= ========== ======= ========== ======= ========== ====== ========== ======= Revisions were made to prior period amounts in order to conform to the current period's presentation.
Page 11 of 11 Novell, Inc. Major IT Software and Solutions Included Within Reported Line Items Open Platform Solutions Linux Platform Products > SUSE LINUX Enterprise Server > SUSE LINUX Enterprise Desktop Other Open Platform Products > openSUSE > SUSE Engineering Identity and Security Management Identity and Access Management > Identity Manager > SecureLogin > Access Manager > Sentinel Other Identity and Security Management > Web Services > eDirectory Systems and Resource Management > ZENworks Suite > ZENworks Patch Management > ZENworks Asset Management > ZENworks Linux Management > ZENworks Configuration Management > PlateSpin Workgroup Open Enterprise Server > Open Enterprise Server NetWare and Other NetWare-Related > NetWare > Cluster Services Collaboration > GroupWise > Teaming + Conferencing Other Workgroup > BorderManager Services > Professional Services > Technical Support Services > Training Services