Exhibit 99.1
FOR IMMEDIATE RELEASE
August 27, 2009
Novell Reports Financial Results for Third Fiscal Quarter 2009
• Operating margin continues to improve year-over-year
WALTHAM, Mass. – August 27, 2009 – Novell, Inc. (NASDAQ: NOVL) today announced financial results for its third fiscal quarter ended July 31, 2009. For the quarter, Novell reported net revenue of $216 million. This compares to net revenue of $245 million for the third fiscal quarter of 2008. GAAP income from operations for the third fiscal quarter of 2009 was $21 million, compared to GAAP income from operations of $1 million for the third fiscal quarter of 2008. GAAP net income in the third fiscal quarter of 2009 was $17 million, or $0.05 per share. This compares to GAAP net loss of $15 million, or $0.04 loss per share, for the third fiscal quarter of 2008. In the third fiscal quarter of 2009, foreign currency exchange rates negatively impacted net revenue by $6 million and favorably impacted operating expenses by $8 million and income from operations by $2 million compared to the same period last year.
On a non-GAAP basis, income from operations for the third fiscal quarter of 2009 was $33 million. This compares to non-GAAP income from operations of $24 million in the year-ago quarter. Non-GAAP net income for the third fiscal quarter of 2009 was $25 million, or $0.07 per share. This compares to non-GAAP net income of $18 million, or $0.05 per share, for the third fiscal quarter of 2008. A reconciliation of GAAP to non-GAAP results is provided in the financial schedules as part of this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”
Novell reported $40 million of product revenue from Open Platform Solutions, of which $38 million was from Linux Platform Products, up 22% compared to the product revenue from Linux Platform Products from the same period last year. Product revenue from Identity and Security Management was $30 million, of which Identity, Access and Compliance Management was $28 million, down 16% compared to the product revenue from Identity, Access and Compliance Management from the same period last year. Product revenue from Systems and Resource Management was $40 million, down 15% compared to the same period last year. Workgroup product revenue of $81 million decreased 12% compared to the same period last year.
“Operating margin continued to expand year-over-year due to diligent expense management, however revenue performance was similar to many companies in the software industry,” said Ron Hovsepian, President and CEO of Novell. “We remain focused on delivering strong operating margins even as we continue to invest to generate long-term revenue growth.”
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Cash, cash equivalents and short-term investments were $921 million at July 31, 2009, down from $1 billion last quarter due primarily to the retirement of our outstanding convertible debentures. Days sales outstanding in accounts receivable was 71 days at the end of the third fiscal quarter of 2009, improved from 78 days at the end of the year-ago quarter. Total deferred revenue was $674 million at the end of the third fiscal quarter of 2009, down from $726 million at the end of the year-ago quarter. For the third fiscal quarter of 2009, cash flow from operations was $35 million. This compares to cash flow from operations of $29 million in the third fiscal quarter of 2008.
Further details on Novell's reported results are included in the financial schedules that are a part of this release.
Financial Outlook
Novell management remains committed to long-term sustainable profitability. Novell management expects to maintain double-digit non-GAAP operating margins in the full fiscal year 2009, barring unforeseen circumstances.
Conference Call Notification and Web Access Detail
A one-hour conference call with Novell management to discuss the quarter will be broadcast at 5:00 PM ET on August 27, 2009. The conference call will be available live as a listen-only webcast from Novell's Investor Relations web page at: www.novell.com/company/ir/qresults. The domestic toll-free dial-in number is 866-335-5255, password “Novell.” The international dial-in number is +1-706-679-2263, password “Novell.”
Following the live event, an archived version of the webcast will be available for twelve months on the Novell Investor Relations web page at: www.novell.com/company/ir/qresults.
A copy of this press release is posted on the Novell Investor Relations web page at: www.novell.com/company/ir/qresults.
Non-GAAP Financial Measures
We 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, adjusted operating margin, adjusted income from continuing operations, adjusted net income, adjusted income per share from continuing operations and adjusted net income per share. We provide non-GAAP financial measures to enhance an overall understanding of our current financial performance and prospects for the future and to 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 compensation. The non-GAAP financial measures do not replace the presentation of our GAAP financial results, but they eliminate expenses and gains that are excluded from most analysts’ consensus estimates, that are unusual, and/or that arise outside of the ordinary course of business, such as, but not limited to, those related to stock-based compensation, acquisition-related intangible asset amortization, restructuring, asset impairments, litigation judgments and settlements, purchased in-process research and development, and the sale of business operations, long-term investments, and property, plant and equipment.
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We also present a projection of our non-GAAP operating margin. This projection is a forward-looking, non-GAAP financial measure. The corresponding GAAP financial measure of operating margin is not available and cannot be provided without undue effort because we are unable to accurately forecast information regarding expenses or gains such as, but not limited to, those listed above. We believe that the corresponding GAAP financial measure is not likely to be significant to an understanding of our business because there is likely to be substantial variability between projected and actual realization of the expenses and gains described above and/or that such expenses or gains are likely to arise outside of the ordinary course of business.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, targets, and prospects; future opportunities; expansion of operating margins; progress of growth businesses; profitability; the macroeconomic environment; customer priorities; timing of realization of projections; functionality, characteristics, quality and performance capabilities of Novell’s products and technology; and results achievable and benefits attainable through deployment of Novell’s products and provision of services. Actual results may differ materially from the results discussed in or implied by such forward-looking statements, which are based upon information that is currently available to us and/or management’s current expectations, speak only as of the date hereof, and are subject to a number of factors, including, but not limited to: difficulties, delays or unexpected costs in completing our cost reduction and sales growth strategic initiatives; our ability to attract and retain new customers through our indirect sales strategy; our reliance on an indirect sales channel for the distribution of products; our ability to renew SLES subscriptions with those customers who have received SLES certificates from Microsoft; an accelerated decline in our OES and NetWare-related revenue stream; the ability of our Open Platform Solutions, Identity and Security Management, and Systems and Resource Management business unit segments to grow at expected rates; our ability to successfully integrate acquired companies; our ability to compete in markets for infrastructure software services; our ability to meet customer demand for technical support services; our ability to maintain a strong brand; delays in the introduction of new products; increased foreign research and development operations; reliance on software licensed from third parties; our ability to attract and retain talented employees; claims that we have infringed the intellectual property rights of others; adverse results in legal disputes; our ability to protect our confidential information; impairment of goodwill or amortizable intangible assets causing a charge to earnings; exposure to increased economic and regulatory uncertainties from operating a global business; cancellations or reductions in the scope of our engagements with professional services clients; and uncertain economic conditions and reductions in IT spending.
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A detailed discussion of these and other factors that could affect our results is included in our SEC filings, including, but not limited to, our Annual Report on Form 10-K for the Fiscal Year Ended October 31, 2008 filed with the SEC on December 23, 2008, which may be obtained by calling (800) 317- 3195, or at our Investor Relations web site at http://www.novell.com/company/ir.
We expressly disclaim any obligation, except as required by law, or undertaking to update or revise any forward-looking statements contained in this press release to reflect any change of expectations with regard thereto or to reflect any change in events, conditions, or circumstances on which any such forward-looking statement is based, in whole or in part.
About Novell
Novell, Inc. (NASDAQ: NOVL) delivers an interoperable Linux* platform and a portfolio of integrated IT management software designed to help 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, visit www.novell.com.
_________________
Novell and the Novell logo are registered trademarks of Novell, Inc. in the United States and other countries. *All third party marks 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 --------------------------------- --------------------------------- Jul 31, 2009 Jul 31, 2008 Jul 31, 2009 Jul 31, 2008 -------------- -------------- -------------- -------------- Net revenue: Software licenses $ 27,020 $ 53,003 $ 85,537 $ 137,621 Maintenance and subscriptions 163,699 155,898 480,843 456,837 Services (1) 25,365 36,284 80,170 117,319 -------------- -------------- -------------- -------------- Total net revenue 216,084 245,185 646,550 711,777 -------------- -------------- -------------- -------------- Cost of revenue: Software licenses 2,770 5,312 7,676 12,439 Maintenance and subscriptions 13,672 13,301 38,916 36,249 Services 30,541 40,975 92,570 129,308 -------------- -------------- -------------- -------------- Total cost of revenue 46,983 59,588 139,162 177,996 -------------- -------------- -------------- -------------- Gross profit 169,101 185,597 507,388 533,781 -------------- -------------- -------------- -------------- Operating expenses: Sales and marketing 74,647 95,950 227,238 277,861 Product development 45,683 50,082 135,627 141,092 General and administrative 25,997 27,463 75,224 83,709 Other operating expenses (2) 1,400 11,131 16,657 20,000 -------------- -------------- -------------- -------------- Total operating expenses 147,727 184,626 454,746 522,662 Income from operations 21,374 971 52,642 11,119 Operating margin % 9.9% 0.4% 8.1% 1.6% Other income, net: Interest income, net 2,944 7,384 12,067 33,807 Other (3,810) (16,160) (10,365) (7,575) -------------- -------------- -------------- -------------- Total other income, net (866) (8,776) 1,702 26,232 -------------- -------------- -------------- -------------- Income (loss) from continuing operations before taxes 20,508 (7,805) 54,344 37,351 Income tax expense 4,151 7,320 13,295 31,926 -------------- -------------- -------------- -------------- Income (loss) from continuing operations 16,357 (15,125) 41,049 5,425 Income from discontinued operations before taxes 302 - 1,904 1,285 Income tax benefit on discontinued operations - - - (836) -------------- -------------- -------------- -------------- Income from discontinued operations 302 - 1,904 2,121 Net income (loss) $ 16,659 $ (15,125) $ 42,953 $ 7,546 ============== ============== ============== ============== Diluted earnings per share: Continuing operations $ 0.05 $ (0.04) $ 0.12 $ 0.02 Net income (loss) $ 0.05 $ (0.04) $ 0.12 $ 0.02 Weighted average shares 346,660 351,878 346,120 353,290 (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) Jul 31, 2009 Oct 31, 2008 -------------- -------------- Assets Current assets: Cash and cash equivalents $ 536,864 $ 680,034 Short-term investments 384,632 387,813 Restricted cash 53,008 52,701 Receivables, net 169,638 193,088 Prepaid expenses 35,343 34,365 Current deferred tax assets 4,943 5,685 Other current assets 23,921 32,006 -------------- -------------- Total current assets 1,208,349 1,385,692 Property, plant and equipment, net 171,266 174,978 Long-term investments 8,543 14,972 Goodwill 626,404 582,117 Intangible assets, net 50,516 53,320 Deferred income taxes 29,479 36,244 Other assets 20,801 22,026 -------------- -------------- Total assets $ 2,115,358 $ 2,269,349 ============== ============== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 30,695 $ 36,982 Accrued compensation 94,029 102,317 Other accrued liabilities 85,952 108,929 Income taxes payable 3,583 22,563 Senior convertible debentures - 125,668 Deferred revenue 476,221 503,174 -------------- -------------- Total current liabilities 690,480 899,633 Deferred income taxes 14,374 11,725 Other long-term liabilities 39,628 43,587 Long-term deferred revenue 198,103 226,876 -------------- -------------- Total liabilities 942,585 1,181,821 Stockholders' equity 1,172,773 1,087,528 -------------- -------------- Total liabilities and stockholders' equity $ 2,115,358 $ 2,269,349 ============== ==============
Page 7 of 11 Novell, Inc. Consolidated Unaudited Condensed Statements of Cash Flows (In thousands) Fiscal Quarter Ended Fiscal Year-to-Date ------------------------------- ------------------------------ Jul 31, 2009 Jul 31, 2008 Jul 31, 2009 Jul 31, 2008 -------------- -------------- -------------- -------------- Cash flows from operating activities Net income (loss) $ 16,659 $ (15,125) $ 42,953 $ 7,546 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Stock-based compensation expense 6,476 7,593 20,198 25,370 Depreciation and amortization 9,545 11,980 31,018 30,827 Change in accounts receivable allowances (705) (250) (364) 421 Utilization of previously reserved acquired net operating losses 455 1 455 5,026 Purchased in-process research and development - - - 2,700 Loss (gain) on debenture repurchases 57 (139) (11) (544) Gain on discontinued operations, before taxes (302) - (1,904) (1,180) Impairment of investments 2,370 14,738 5,466 14,738 Gain on sale of previously impaired long-term investments - - - (250) Loss (gain) on sale of subsidiaries - 3,811 (16) 3,811 IT outsourcing transition costs 173 - 173 - Changes in current assets and liabilities, excluding the effect of acquisitions and dispositions (205) 6,002 (76,900) (107,295) -------------- -------------- -------------- -------------- Net cash provided by (used in) operating activities 34,523 28,611 21,068 (18,830) -------------- -------------- -------------- -------------- Cash flows from investing activities Purchases of property, plant and equipment (8,181) (12,201) (14,763) (28,523) Short-term investment activity (121) 33,820 10,299 359,260 Long-term investment activity 2,173 7,215 3,909 21,738 Change in restricted cash (47) (286) (307) (52,410) Net cash proceeds (distributions) from sale of discontinued operations - - 1,036 (909) Net distributions from subsidiary sales - (6,427) - (6,427) Cash paid for acquisitions, net of cash acquired - 920 (48,472) (219,553) Purchases of intangible assets - (6,000) - (6,000) Other 8,657 1,138 10,031 3,365 -------------- -------------- -------------- -------------- Net cash provided by (used in) investing activities 2,481 18,179 (38,267) 70,541 -------------- -------------- -------------- -------------- Cash flows from financing activities Issuance of common stock 1,773 2,366 2,925 12,618 Excess tax benefits from stock-based compensation - (7,186) (2,788) 16,809 Common stock repurchases/retirements - (44,663) - (44,663) Debt repayment (193) - (571) - Debenture repurchases (121,668) (26,868) (125,537) (142,457) -------------- -------------- -------------- -------------- Net cash used in financing activities (120,088) (76,351) (125,971) (157,693) -------------- -------------- -------------- -------------- Decrease in cash and cash equivalents (83,084) (29,561) (143,170) (105,982) Cash and cash equivalents - beginning of period 619,948 1,003,398 680,034 1,079,819 -------------- -------------- -------------- -------------- Cash and cash equivalents - end of period $ 536,864 $ 973,837 $ 536,864 $ 973,837 ============== ============== ============== ============== 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 ------------------------------- ------------------------------- Jul 31, 2009 Jul 31, 2008 Jul 31, 2009 Jul 31, 2008 -------------- -------------- -------------- -------------- GAAP income from operations $ 21,374 $ 971 $ 52,642 $ 11,119 -------------- ------------- -------------- -------------- Adjustments: Stock-based compensation expense: Cost of revenue 554 871 2,137 2,695 Sales and marketing 1,243 1,953 5,356 7,400 Product development 2,817 2,543 7,611 7,900 General and administrative 1,862 2,226 5,094 7,375 -------------- ------------- -------------- -------------- Sub-total 6,476 7,593 20,198 25,370 -------------- ------------- -------------- -------------- Acquisition-related intangible asset amortization: Cost of revenue 2,398 3,184 7,886 6,035 Sales and marketing 1,478 1,341 4,590 2,429 -------------- ------------- -------------- -------------- Sub-total 3,876 4,525 12,476 8,464 -------------- ------------- -------------- -------------- Other operating expenses (income): Restructuring expenses 1,227 6,570 16,500 11,329 IT outsourcing transition costs 173 - 173 - Litigation-related expense - 750 - 750 Purchased in-process research and development - - - 2,700 Acquisition integration costs - - - 1,410 Loss (gain) on sale of subsidiaries - 3,811 (16) 3,811 -------------- ------------- -------------- -------------- Sub-total 1,400 11,131 16,657 20,000 -------------- ------------- -------------- -------------- Total operating adjustments 11,752 23,249 49,331 53,834 Non-GAAP income from operations $ 33,126 $ 24,220 $ 101,973 $ 64,953 ============== ============= ============== ============== Operating margin % 15.3% 9.9% 15.8% 9.1% - ------------------------------------------------------------------------------------------------------------------------------ Novell, Inc. Unaudited Non-GAAP Adjusted Net Income (In thousands, except per share data) Fiscal Quarter Ended Fiscal Year-to-Date -------------------------------- ------------------------------- Jul 31, 2009 Jul 31, 2008 Jul 31, 2009 Jul 31, 2008 -------------- -------------- -------------- -------------- GAAP net income (loss) $ 16,659 $ (15,125) $ 42,953 $ 7,546 -------------- -------------- -------------- -------------- Operating adjustments (detailed above) 11,752 23,249 49,331 53,834 Non-operating expenses (income) adjustments: Loss (gain) on debenture repurchases 57 (139) (11) (544) Impairment of investments 2,370 14,738 5,466 14,738 Gain on sale of previously impaired long-term investments - - - (250) -------------- -------------- -------------- -------------- Sub-total 2,427 14,599 5,455 13,944 -------------- -------------- -------------- -------------- Total pre-tax adjustments 14,179 37,848 54,786 67,778 Income tax adjustments (5,549) (4,841) (17,089) (4,045) Income from discontinued operations, net of taxes (302) - (1,904) (2,121) -------------- -------------- -------------- -------------- Total net adjustments 8,328 33,007 35,793 61,612 Non-GAAP net income and non-GAAP income from continuing operations $ 24,987 $ 17,882 $ 78,746 $ 69,158 ============== ============== ============== ============== GAAP net income (loss) per share $ 0.05 $ (0.04) $ 0.12 $ 0.02 Total adjustments detailed above 0.02 0.09 0.11 0.18 -------------- -------------- -------------- -------------- Non-GAAP net income per share and non-GAAP income from continuing operations per share $ 0.07 $ 0.05 $ 0.23 $ 0.20 ============== ============== ============== ============== GAAP weighted average shares 346,660 351,878 346,120 353,290 Change from basic to diluted weighted average shares - 1,319 - - -------------- -------------- -------------- -------------- Non-GAAP weighted average shares 346,660 353,197 346,120 353,290 ============== ============== ============== ============== Revisions were made to prior period amounts in order to conform to the current period's presentation.
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Consolidated Unaudited Condensed Segment Results (in thousands, except per share data) Fiscal Quarter Ended July 31, 2009 --------------------------------------------------------------------------------------------------------- Identity Systems Open Platform and Security and Resource Common Solutions % Management % Management % Workgroup % Unallocated Total % ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Net revenue: Software licenses $ 73 0.2 $ 7,929 20.7 $ 7,527 16.5 $ 11,491 13.1 $ - $ 27,020 12.5 Maintenance and subscriptions 39,868 90.1 22,336 58.2 32,469 71.2 69,026 78.5 - 163,699 75.8 Services 4,307 9.7 8,102 21.1 5,584 12.3 7,372 8.4 - 25,365 11.7 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Total net revenue 44,248 100.0 38,367 100.0 45,580 100.0 87,889 100.0 - 216,084 100.0 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Cost of revenue: Software licenses 3 0.0 977 2.5 861 1.9 538 0.6 391 2,770 1.3 Maintenance and subscriptions 1,605 3.6 2,753 7.2 3,713 8.1 3,230 3.7 2,371 13,672 6.3 Services 6,359 14.4 8,851 23.1 5,384 11.8 9,757 11.1 190 30,541 14.1 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Total cost of revenue 7,967 18.0 12,581 32.8 9,958 21.8 13,525 15.4 2,952 46,983 21.7 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Gross profit 36,281 82.0 25,786 67.2 35,622 78.2 74,364 84.6 (2,952) 169,101 78.3 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Operating expenses: Sales and marketing - - - - - - - - 74,647 74,647 34.5 Product development 12,849 29.0 9,859 25.7 11,027 24.2 9,131 10.4 2,817 45,683 21.1 General and administrative - - - - - - - - 25,997 25,997 12.0 Other operating expenses - - - - - - - - 1,400 1,400 0.6 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Total operating expenses 12,849 29.0 9,859 25.7 11,027 24.2 9,131 10.4 104,861 147,727 68.4 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Income (loss) from operations $ 23,432 53.0 $ 15,927 41.5 $ 24,595 54.0 $ 65,233 74.2 $(107,813) $ 21,374 9.9 ============= ===== ============ ===== ============ ===== =========== ===== =========== =========== ====== Fiscal Quarter Ended April 30, 2009 ---------------------------------------------------------------------------------------------------------- Identity Systems Open Platform and Security and Resource Common Solutions % Management % Management % Workgroup % Unallocated Total % ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Net revenue: Software licenses $ 31 0.1 $ 9,191 23.7 $ 8,520 18.8 $ 12,508 14.3 $ - $ 30,250 14.0 Maintenance and subscriptions 38,785 87.9 21,135 54.4 31,566 69.6 66,843 76.6 - 158,329 73.4 Services 5,296 12.0 8,520 21.9 5,268 11.6 7,932 9.1 - 27,016 12.5 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Total net revenue 44,112 100.0 38,846 100.0 45,354 100.0 87,283 100.0 - 215,595 100.0 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Cost of revenue: Software licenses 2 0.0 636 1.6 713 1.6 518 0.6 511 2,380 1.1 Maintenance and subscriptions 2,802 6.4 1,463 3.8 2,642 5.8 2,762 3.2 2,676 12,345 5.7 Services 6,552 14.9 9,188 23.7 4,477 9.9 10,121 11.6 219 30,557 14.2 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Total cost of revenue 9,356 21.2 11,287 29.1 7,832 17.3 13,401 15.4 3,406 45,282 21.0 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Gross profit 34,756 78.8 27,559 70.9 37,522 82.7 73,882 84.6 (3,406) 170,313 79.0 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Operating expenses: Sales and marketing - - - - - - - - 75,697 75,697 35.1 Product development 13,305 30.2 9,253 23.8 10,960 24.2 8,745 10.0 2,289 44,552 20.7 General and administrative - - - - - - - - 25,032 25,032 11.6 Other operating expenses - - - - - - - - 7,408 7,408 3.4 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Total operating expenses 13,305 30.2 9,253 23.8 10,960 24.2 8,745 10.0 110,426 152,689 70.8 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Income (loss) from operations $ 21,451 48.6 $ 18,306 47.1 $ 26,562 58.6 $ 65,137 74.6 $(113,832) $ 17,624 8.2 ============= ===== ============ ===== ============ ===== =========== ===== =========== =========== ===== Fiscal Quarter Ended July 31, 2008 --------------------------------------------------------------------------------------------------------- Identity Systems Open Platform and Security and Resource Common Solutions % Management % Management % Workgroup % Unallocated Total % ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Net revenue: Software licenses $ - - $ 16,567 32.9 $ 15,439 29.1 $ 20,997 20.4 $ - $ 53,003 21.6 Maintenance and subscriptions 33,558 86.3 20,311 40.3 31,671 59.7 70,358 68.4 - 155,898 63.6 Services 5,326 13.7 13,482 26.8 5,972 11.3 11,504 11.2 - 36,284 14.8 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Total net revenue 38,884 100.0 50,360 100.0 53,082 100.0 102,859 100.0 - 245,185 100.0 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Cost of revenue: Software licenses - - 2,035 4.0 1,376 2.6 1,116 1.1 785 5,312 2.2 Maintenance and subscriptions 1,934 5.0 2,495 5.0 2,824 5.3 3,739 3.6 2,309 13,301 5.4 Services 8,237 21.2 14,571 28.9 4,896 9.2 12,310 12.0 961 40,975 16.7 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Total cost of revenue 10,171 26.2 19,101 37.9 9,096 17.1 17,165 16.7 4,055 59,588 24.3 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Gross profit 28,713 73.8 31,259 62.1 43,986 82.9 85,694 83.3 (4,055) 185,597 75.7 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Operating expenses: Sales and marketing - - - - - - - - 95,950 95,950 39.1 Product development 15,043 38.7 11,346 22.5 11,544 21.7 9,606 9.3 2,543 50,082 20.4 General and administrative - - - - - - - - 27,463 27,463 11.2 Other operating expenses - - - - - - - - 11,131 11,131 4.5 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Total operating expenses 15,043 38.7 11,346 22.5 11,544 21.7 9,606 9.3 137,087 184,626 75.3 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ----- Income (loss) from operations $ 13,670 35.2 $ 19,913 39.5 $ 32,442 61.1 $ 76,088 74.0 $(141,142) $ 971 0.4 ============= ===== ============ ===== ============ ===== =========== ===== =========== =========== ===== 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 Q3 2008 % 2008 % Q2 2009 % Q3 2009 % Q2 2009 to Q3 2009 Q3 2008 to Q3 2009 --------- ----- ----------- ----- --------- ----- --------- ----- ------------------ ------------------ Open platform solutions Linux platform products Software licenses $ - - $ - - $ - - $ - - $ - - $ - - Maintenance and subscriptions 31,266 12.8 123,386 12.9 36,681 17.0 38,240 17.7 1,559 4.3 6,974 22.3 --------- ----- ----------- ----- --------- ----- --------- ----- ---------- ------- ---------- ------- 31,266 12.8 123,386 12.9 36,681 17.0 38,240 17.7 1,559 4.3 6,974 22.3 Other open platform products Software licenses - - 164 0.0 31 0.0 73 0.0 42 135.5 73 - Maintenance and subscriptions 2,292 0.9 9,576 1.0 2,104 1.0 1,628 0.8 (476) (22.6) (664) (29.0) --------- ----- ----------- ----- --------- ----- --------- ----- ---------- ------- ---------- ------- 2,292 0.9 9,740 1.0 2,135 1.0 1,701 0.8 (434) (20.3) (591) (25.8) Total open platform solutions 33,558 13.7 133,126 13.9 38,816 18.0 39,941 18.5 1,125 2.9 6,383 19.0 Identity and security management Identity, access and compliance management Software licenses 15,747 6.4 53,956 5.6 8,475 3.9 7,542 3.5 (933) (11.0) (8,205) (52.1) Maintenance and subscriptions 17,816 7.3 70,321 7.4 19,401 9.0 20,729 9.6 1,328 6.8 2,913 16.4 --------- ----- ----------- ----- --------- ----- --------- ----- ---------- ------- ---------- ------- 33,563 13.7 124,277 13.0 27,876 12.9 28,271 13.1 395 1.4 (5,292) (15.8) Other identity and security management Software licenses 820 0.3 2,667 0.3 716 0.3 387 0.2 (329) (45.9) (433) (52.8) Maintenance and subscriptions 2,495 1.0 10,301 1.1 1,734 0.8 1,607 0.7 (127) (7.3) (888) (35.6) --------- ----- ----------- ----- --------- ----- --------- ----- ---------- ------- ---------- ------- 3,315 1.4 12,968 1.4 2,450 1.1 1,994 0.9 (456) (18.6) (1,321) (39.8) Total identity and security management 36,878 15.0 137,245 14.3 30,326 14.1 30,265 14.0 (61) (0.2) (6,613) (17.9) Systems and resource management Software licenses 15,439 6.3 48,126 5.0 8,520 4.0 7,527 3.5 (993) (11.7) (7,912) (51.2) Maintenance and subscriptions 31,671 12.9 122,040 12.8 31,566 14.6 32,469 15.0 903 2.9 798 2.5 Total systems and resource management 47,110 19.2 170,166 17.8 40,086 18.6 39,996 18.5 (90) (0.2) (7,114) (15.1) Workgroup OES and NetWare-related Software licenses 9,493 3.9 39,379 4.1 5,622 2.6 5,129 2.4 (493) (8.8) (4,364) (46.0) Maintenance and subscriptions 41,890 17.1 166,496 17.4 39,210 18.2 40,058 18.5 848 2.2 (1,832) (4.4) --------- ----- ----------- ----- --------- ----- --------- ----- ---------- ------- ---------- ------- 51,383 21.0 205,875 21.5 44,832 20.8 45,187 20.9 355 0.8 (6,196) (12.1) Collaboration Software licenses 7,135 2.9 28,320 3.0 3,391 1.6 4,468 2.1 1,077 31.8 (2,667) (37.4) Maintenance and subscriptions 21,657 8.8 85,462 8.9 20,978 9.7 21,877 10.1 899 4.3 220 1.0 --------- ----- ----------- ----- --------- ----- --------- ----- ---------- ------- ---------- ------- 28,792 11.7 113,782 11.9 24,369 11.3 26,345 12.2 1,976 8.1 (2,447) (8.5) Other workgroup Software licenses 4,369 1.8 16,371 1.7 3,495 1.6 1,894 0.9 (1,601) (45.8) (2,475) (56.6) Maintenance and subscriptions 6,811 2.8 28,911 3.0 6,655 3.1 7,091 3.3 436 6.6 280 4.1 --------- ----- ----------- ----- --------- ----- --------- ----- ---------- ------- ---------- ------- 11,180 4.6 45,282 4.7 10,150 4.7 8,985 4.2 (1,165) (11.5) (2,195) (19.6) Total workgroup 91,355 37.3 364,939 38.2 79,351 36.8 80,517 37.3 1,166 1.5 (10,838) (11.9) Total software licenses, maintenance and subscriptions Software licenses 53,003 21.6 188,983 19.8 30,250 14.0 27,020 12.5 (3,230) (10.7) (25,983) (49.0) Maintenance and subscriptions 155,898 63.6 616,493 64.5 158,329 73.4 163,699 75.8 5,370 3.4 7,801 5.0 --------- ----- ----------- ----- --------- ----- --------- ----- ---------- ------- ---------- ------- Total product revenue 208,901 85.2 805,476 84.2 188,579 87.5 190,719 88.3 2,140 1.1 (18,182) (8.7) --------- ----- ----------- ----- --------- ----- --------- ----- ---------- ------- ---------- ------- Services 36,284 14.8 151,037 15.8 27,016 12.5 25,365 11.7 (1,651) (6.1) (10,919) (30.1) --------- ----- ----------- ----- --------- ----- --------- ----- ---------- ------- ---------- ------- Total net revenue $245,185 100.0 $ 956,513 100.0 $215,595 100.0 $216,084 100.0 $ 489 0.2 $(29,101) (11.9) ========= ===== =========== ===== ========= ===== ========= ===== ========== ======= ========== ======= 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, Access and Compliance Management > Identity Manager > SecureLogin > Access Manager > Sentinel Other Identity and Security Management > eDirectory Systems and Resource Management > ZENworks Suite > ZENworks Patch Management > ZENworks Asset Management > ZENworks Linux Management > ZENworks Configuration Management > PlateSpin > Managed Objects Workgroup Open Enterprise Server and NetWare-Related > Open Enterprise Server (OES) > NetWare > Cluster Services Collaboration > GroupWise > Teaming + Conferencing Other Workgroup > BorderManager Services > Professional Services > Technical Support Services > Training Services