Exhibit 99.1
FOR IMMEDIATE RELEASE
December 3, 2009
Novell Reports Financial Results for Fourth Fiscal Quarter and Full Fiscal Year 2009
WALTHAM, Mass. – December 3, 2009 – Novell, Inc. (NASDAQ: NOVL) today announced financial results for its fourth fiscal quarter and full fiscal year ended October 31, 2009. For the quarter, Novell reported net revenue of $216 million. This compares to net revenue of $245 million for the fourth fiscal quarter of 2008. GAAP loss from operations for the fourth fiscal quarter of 2009 was $259 million, which included a $279 million non-cash impairment charge to goodwill and intangible assets. This compares to GAAP loss from operations of $6 million for the fourth fiscal quarter of 2008. GAAP net loss in the fourth fiscal quarter of 2009 was $256 million, or $0.74 loss per share. This compares to GAAP net loss of $16 million, or $0.05 loss per share, for the fourth fiscal quarter of 2008. In the fourth fiscal quarter of 2009, foreign currency exchange rates negatively impacted net revenue by $2 million, did not materially impact operating expenses and negatively impacted the loss from operations by $1 million compared to the same period last year.
On a non-GAAP basis, income from operations for the fourth fiscal quarter of 2009 was $37 million. This compares to non-GAAP income from operations of $32 million in the same period last year. Non-GAAP net income for the fourth fiscal quarter of 2009 was $38 million, or $0.11 per share. This compares to non-GAAP net income of $22 million, or $0.06 per share, for the fourth 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.”
For the full fiscal year 2009, Novell reported net revenue of $862 million and GAAP loss from operations of $206 million, which included a $279 million non-cash impairment charge to goodwill and intangible assets. Comparatively, net revenue for the full fiscal year 2008 was $957 million and GAAP income from operations was $5 million. GAAP net loss for the full fiscal year 2009 was $213 million, or $0.62 loss per share, compared to a net loss of $9 million, or $0.02 loss per share, for the full fiscal year 2008. In the full fiscal year 2009, foreign currency exchange rates unfavorably impacted net revenue by $17 million, positively impacted operating expenses by $32 million and favorably impacted income from operations by $15 million compared to the prior fiscal year.
On a non-GAAP basis, income from operations for the full fiscal year 2009 was $139 million. This compares to non-GAAP income from operations of $97 million in the prior fiscal year. Non-GAAP net income for the full fiscal year 2009 was $117 million, or $0.34 per share. This compares to non-GAAP net income of $91 million, or $0.26 per share, for the full fiscal year 2008.
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For the fourth fiscal quarter of 2009, Novell reported $41 million of product revenue from Open Platform Solutions, of which $39 million was from Linux Platform Products, up 14% compared to product revenue from Linux Platform Products in the same period last year. Product revenue from Identity and Security Management was $32 million, of which Identity, Access and Compliance Management was $30 million, down 14% compared to product revenue from Identity, Access and Compliance Management in the same period last year. Product revenue from Systems and Resource Management was $40 million, down 10% compared to the same period last year. Workgroup product revenue of $78 million decreased 15% compared to the same period last year.
For the full fiscal year 2009, Novell reported $157 million of product revenue from Open Platform Solutions, of which $149 million was from Linux Platform Products, up 21% compared to product revenue from Linux Platform Products in the prior fiscal year. Product revenue from Identity and Security Management was $121 million, of which Identity, Access and Compliance Management was $112 million, down 10% compared to product revenue from Identity, Access and Compliance Management in the prior fiscal year. Product revenue from Systems and Resource Management was $161 million, down 6% compared to the prior fiscal year. Workgroup product revenue of $319 million decreased 13% compared to the prior fiscal year.
“While it was a challenging year in terms of revenue, we worked hard to improve our cost structure, deliver innovative solutions, and expand our partner ecosystem while delivering a significant improvement in non-GAAP operating margin, which increased to 16% from 10% last year,” said Ron Hovsepian, President and CEO of Novell. “As we move into 2010, we will focus on invoicing growth as we pursue opportunities in our current markets as well as new opportunities in the emerging market of Intelligent Workload Management.”
Cash, cash equivalents and short-term investments were $983 million at October 31, 2009, up from $921 million last quarter. Days sales outstanding in accounts receivable was 75 days at the end of the fourth fiscal quarter of 2009, up from 72 days at the end of the year-ago quarter. Total deferred revenue was $689 million at the end of the fourth fiscal quarter of 2009, down from $730 million at the end of the year-ago quarter. For the full fiscal year 2009, cash flow from operations was $69 million. This compares to cash flow from operations of $56 million for the full fiscal year 2008.
Further details on Novell’s reported results are included in the financial schedules that are a part of this release.
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Financial Outlook
Novell management issues the following guidance:
For the first fiscal quarter of 2010:
- Net revenue is expected to be between $200 million and $210 million
- Non-GAAP operating margin is expected to be between 14% and 16%
- Invoicing growth is expected to improve from first fiscal quarter 2009 levels
Conference Call Notification and Web Access Detail
A one-hour conference call with Novell management to discuss the quarter and the year will be broadcast at 5:00PM ET on December 3, 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 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 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; operating margins; progress of growth businesses; invoicing growth; profitability; short-term and long-term trends; 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. Forward-looking statements forecasting growth in financial metrics are predicated on assumptions regarding improvements in the overall economy and the markets served by the Company and in which the Company operates, the timing of which are impossible to accurately predict. 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 SLESTM 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 page at 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 and SLES is a trademark 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 6 of 12 Novell, Inc. Consolidated Unaudited Condensed Statements of Operations (In thousands, except per share data) Fiscal Quarter Ended Fiscal Year Ended --------------------------------- --------------------------------- Oct 31, 2009 Oct 31, 2008 Oct 31, 2009 Oct 31, 2008 -------------- -------------- -------------- -------------- Net revenue: Software licenses $ 31,382 $ 51,362 $ 116,919 $ 188,983 Maintenance and subscriptions 159,902 159,656 640,745 616,493 Services (1) 24,351 33,718 104,521 151,037 -------------- -------------- -------------- -------------- Total net revenue 215,635 244,736 862,185 956,513 -------------- -------------- -------------- -------------- Cost of revenue: Software licenses 3,464 4,791 11,140 17,230 Maintenance and subscriptions 14,120 12,865 53,036 49,114 Services 30,085 39,587 122,655 168,895 -------------- -------------- -------------- -------------- Total cost of revenue 47,669 57,243 186,831 235,239 -------------- -------------- -------------- -------------- Gross profit 167,966 187,493 675,354 721,274 -------------- -------------- -------------- -------------- Operating expenses: Sales and marketing 68,760 90,858 295,998 368,719 Product development 45,756 50,455 181,383 191,547 General and administrative 26,948 27,014 102,172 110,723 Other operating expenses (2) 285,636 25,509 302,293 45,509 -------------- -------------- -------------- -------------- Total operating expenses 427,100 193,836 881,846 716,498 (Loss) income from operations (259,134) (6,343) (206,492) 4,776 Operating margin % -120.2% -2.6% -23.9% 0.5% Other income, net: Interest income, net 3,208 7,416 15,275 41,223 Other (2,392) (15,546) (12,757) (23,121) -------------- -------------- -------------- -------------- Total other income, net 816 (8,130) 2,518 18,102 -------------- -------------- -------------- -------------- (Loss) income from continuing operations before taxes (258,318) (14,473) (203,974) 22,878 Income tax (benefit) expense (2,629) 3,291 10,666 35,217 -------------- -------------- -------------- -------------- Loss from continuing operations (255,689) (17,764) (214,640) (12,339) Income from discontinued operations before taxes - 1,473 1,904 2,758 Income tax benefit on discontinued operations - - - (836) -------------- -------------- -------------- -------------- Income from discontinued operations - 1,473 1,904 3,594 Net loss $ (255,689) $ (16,291) $ (212,736) $ (8,745) ============== ============== ============== ============== Basic loss per share: Continuing operations $ (0.74) $ (0.05) $ (0.62) $ (0.04) Net loss $ (0.74) $ (0.05) $ (0.62) $ (0.02) Weighted average shares 347,043 345,038 345,493 350,207 (1) Services includes professional services, technical support and training services. (2) See Page 9 of 12 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 7 of 12 Novell, Inc. Consolidated Unaudited Condensed Balance Sheets (In thousands) Oct 31, 2009 Oct 31, 2008 -------------- -------------- Assets Current assets: Cash and cash equivalents $ 591,656 $ 680,034 Short-term investments 391,809 387,813 Restricted cash 53,033 52,701 Receivables, net 177,898 193,088 Prepaid expenses 33,915 34,365 Current deferred tax assets 5,521 5,685 Other current assets 26,747 32,006 -------------- ------------- Total current assets 1,280,579 1,385,692 Property, plant and equipment, net 170,459 174,978 Long-term investments 10,303 14,972 Goodwill 356,033 582,117 Intangible assets, net 36,621 53,320 Deferred income taxes 26,717 36,244 Other assets 22,196 22,026 -------------- ------------- Total assets $ 1,902,908 $ 2,269,349 ============== ============= Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 37,628 $ 36,982 Accrued compensation 101,031 102,317 Other accrued liabilities 97,154 108,929 Income taxes payable - 22,563 Senior convertible debentures - 125,668 Deferred revenue 495,245 503,174 -------------- ------------- Total current liabilities 731,058 899,633 Deferred income taxes 8,403 11,725 Other long-term liabilities 35,399 43,587 Long-term deferred revenue 193,526 226,876 -------------- ------------- Total liabilities 968,386 1,181,821 Stockholders' equity 934,522 1,087,528 -------------- ------------- Total liabilities and stockholders' equity $ 1,902,908 $ 2,269,349 ============== =============
Page 8 of 12 Novell, Inc. Consolidated Unaudited Condensed Statements of Cash Flows (In thousands) Fiscal Quarter Ended Fiscal Year Ended ------------------------------- ------------------------------- Oct 31, 2009 Oct 31, 2008 Oct 31, 2009 Oct 31, 2008 -------------- -------------- -------------- -------------- Cash flows from operating activities Net loss $ (255,689) $ (16,291) $ (212,736) $ (8,745) Adjustments to reconcile net loss to net cash provided by operating activities: Stock-based compensation expense 5,683 8,448 25,881 33,818 Depreciation and amortization 9,657 12,065 40,675 42,892 Change in accounts receivable allowances 827 (649) 444 (254) Utilization of previously reserved acquired net operating losses 2,125 - 2,580 5,026 Purchased in-process research and development - - - 2,700 Net gain on sale of property, plant and equipment (2,199) - (2,199) - Gain on debenture repurchases - (4,062) (11) (4,606) Gain on discontinued operations, before taxes - (1,473) (1,904) (2,653) Impairment of investments - 15,536 5,466 30,024 Gain on sale of previously impaired long-term investments (300) (1,969) (300) (1,969) Impairment of goodwill and intangible assets 279,135 7,664 279,135 7,664 (Gain) loss on sale of subsidiaries - (117) (16) 3,694 Changes in current assets and liabilities, excluding the effect of acquisitions and dispositions 12,179 56,469 (68,245) (51,721) -------------- -------------- ------------- -------------- Net cash provided by operating activities 51,418 75,621 68,770 55,870 -------------- -------------- ------------- -------------- Cash flows from investing activities Purchases of property, plant and equipment (7,324) (9,193) (22,087) (37,716) Net proceeds from the sale of property, plant and equipment 10,748 - 10,748 - Short-term investment activity (5,199) (3,337) 5,100 355,923 Long-term investment activity 300 3,020 4,209 24,757 Change in restricted cash (25) (291) (332) (52,701) Net cash proceeds from sale of discontinued operations - 1,473 1,036 564 Net cash proceeds (distributions) from subsidiary sales - 6,256 - (171) Cash paid for acquisitions, net of cash acquired - - (48,472) (219,553) Purchases of intangible assets - (6,000) - (12,000) Other 1,330 (9,347) 7,228 (5,793) -------------- -------------- ------------- -------------- Net cash (used in) provided by investing activities (170) (17,419) (42,570) 53,310 -------------- -------------- ------------- -------------- Cash flows from financing activities Issuances of common stock 641 679 3,566 13,297 Excess tax effects from stock-based compensation 13 1,691 (2,775) 18,500 Common stock repurchases/retirements - (22,157) - (66,820) Debt (repayment) issuance (4,087) 4,795 (4,658) 4,795 Debenture repurchases - (314,043) (125,537) (456,500) -------------- -------------- ------------- -------------- Net cash used in financing activities (3,433) (329,035) (129,404) (486,728) -------------- -------------- ------------- -------------- Increase (decrease) in cash and cash equivalents 47,815 (270,833) (103,204) (377,548) Effect of foreign currency exchange rate fluctuations 6,977 (22,970) 14,826 (22,237) Cash and cash equivalents - beginning of period 536,864 973,837 680,034 1,079,819 -------------- -------------- ------------- -------------- Cash and cash equivalents - end of period $ 591,656 $ 680,034 $ 591,656 $ 680,034 ============== ============== ============= ============== Revisions were made to prior period amounts in order to conform to the current period's presentation.
Page 9 of 12 Novell, Inc. Unaudited Non-GAAP Adjusted Income From Operations (In thousands, except per share data) Fiscal Quarter Ended Fiscal Year Ended ------------------------------- ------------------------------- Oct 31, 2009 Oct 31, 2008 Oct 31, 2009 Oct 31, 2008 -------------- -------------- -------------- -------------- GAAP (loss) income from operations $ (259,134) $ (6,343) $ (206,492) $ $ 4,776 -------------- -------------- -------------- -------------- Adjustments: Stock-based compensation expense: Cost of revenue 512 926 2,649 3,621 Sales and marketing 1,659 2,734 7,015 10,134 Product development 1,721 2,463 9,332 10,363 General and administrative 1,791 2,325 6,885 9,700 -------------- -------------- -------------- -------------- Sub-total 5,683 8,448 25,881 33,818 -------------- -------------- -------------- -------------- Acquisition-related intangible asset amortization: Cost of revenue 2,098 3,183 9,984 9,217 Sales and marketing 2,706 1,341 7,296 3,771 -------------- -------------- -------------- -------------- Sub-total 4,804 4,524 17,280 12,988 -------------- -------------- -------------- -------------- Other operating expenses (income): Restructuring expenses 8,700 17,316 25,200 28,645 IT outsourcing transition costs - - 173 - Litigation-related expense - 500 - 1,250 Purchased in-process research and development - - - 2,700 Acquisition integration costs - 146 - 1,556 (Gain) loss on sale of subsidiaries - (117) (16) 3,694 Net gain on sale of property, plant and equipment (2,199) - (2,199) - Impairment of goodwill and intangible assets 279,135 7,664 279,135 7,664 -------------- -------------- -------------- -------------- Sub-total 285,636 25,509 302,293 45,509 -------------- -------------- -------------- -------------- Total operating adjustments 296,123 38,481 345,454 92,315 Non-GAAP income from operations $ 36,989 $ 32,138 $ 138,962 $ 97,091 ============== ============== ============== ============== Operating margin % 17.2% 13.1% 16.1% 10.2% - ------------------------------------------------------------------------------------------------------------------------------ Novell, Inc. Unaudited Non-GAAP Adjusted Net Income (In thousands, except per share data) Fiscal Quarter Ended Fiscal Year Ended ------------------------------- ------------------------------- Oct 31, 2009 Oct 31, 2008 Oct 31, 2009 Oct 31, 2008 -------------- -------------- -------------- -------------- GAAP net loss $ (255,689) $ (16,291) $ (212,736) $ (8,745) -------------- -------------- -------------- -------------- Operating adjustments (detailed above) 296,123 38,481 345,454 92,315 Non-operating expenses (income) adjustments: Gain on debenture repurchases - (4,062) (11) (4,606) Impairment of investments - 15,536 5,466 30,024 Gain on sale of previously impaired long-term investments (300) (1,969) (300) (1,969) -------------- -------------- -------------- -------------- Sub-total (300) 9,505 5,155 23,449 -------------- -------------- -------------- -------------- Total pre-tax adjustments 295,823 47,986 350,609 115,764 Income tax adjustments (2,130) (8,020) (19,219) (12,065) Income from discontinued operations, net of taxes - (1,473) (1,904) (3,594) -------------- -------------- -------------- -------------- Total net adjustments 293,693 38,493 329,486 100,105 Non-GAAP net income and non-GAAP income from continuing operations $ 38,004 $ 22,202 $ 116,750 $ 91,360 ============== ============== ============== ============== GAAP net loss per share $ (0.74) $ (0.05) $ (0.62) $ (0.02) Total adjustments detailed above 0.85 0.11 0.96 0.28 -------------- -------------- -------------- -------------- Non-GAAP net income per share and non-GAAP income from continuing operations per share $ 0.11 $ 0.06 $ 0.34 $ 0.26 ============== ============== ============== ============== GAAP weighted average shares 347,043 345,038 345,493 350,207 Change from basic to diluted weighted average shares 1,707 1,111 2,328 1,461 -------------- -------------- -------------- -------------- Non-GAAP weighted average shares 348,750 346,149 347,821 351,668 ============== ============== ============== ============== Revisions were made to prior period amounts in order to conform to the current period's presentation.
Page 10 of 12 Novell, Inc. Consolidated Unaudited Condensed Segment Results (in thousands, except per share data) Fiscal Quarter Ended October 31, 2009 ----------------------------------------------------------------------------------------------------------- Identity Systems Open Platform and Security and Resource Common Solutions % Management % Management % Workgroup % Unallocated Total % ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Net revenue: Software licenses $ 21 0.0 $ 10,786 26.2 $ 8,623 18.8 $ 11,952 14.2 $ - $ 31,382 14.6 Maintenance and subscriptions 40,990 92.1 21,387 52.0 31,812 69.3 65,713 78.1 - 159,902 74.2 Services 3,497 7.9 8,919 21.7 5,443 11.9 6,492 7.7 - 24,351 11.3 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Total net revenue 44,508 100.0 41,092 100.0 45,878 100.0 84,157 100.0 - 215,635 100.0 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Cost of revenue: Software licenses 1 0.0 1,372 3.3 1,128 2.5 570 0.7 393 3,464 1.6 Maintenance and subscriptions 2,106 4.7 2,722 6.6 4,164 9.1 3,132 3.7 1,996 14,120 6.5 Services 5,818 13.1 9,277 22.6 5,383 11.7 9,386 11.2 221 30,085 14.0 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Total cost of revenue 7,925 17.8 13,371 32.5 10,675 23.3 13,088 15.6 2,610 47,669 22.1 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Gross profit 36,583 82.2 27,721 67.5 35,203 76.7 71,069 84.4 (2,610) 167,966 77.9 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Operating expenses: Sales and marketing - - - - - - - - 68,760 68,760 31.9 Product development 13,581 30.5 10,156 24.7 11,340 24.7 8,958 10.6 1,721 45,756 21.2 General and administrative - - - - - - - - 26,948 26,948 12.5 Other operating expenses - - - - - - - - 285,636 285,636 132.5 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Total operating expenses 13,581 30.5 10,156 24.7 11,340 24.7 8,958 10.6 383,065 427,100 198.1 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Income (loss) from operations $ 23,002 51.7 $ 17,565 42.7 $ 23,863 52.0 $ 62,111 73.8 $(385,675) $(259,134) (120.2) ============= ===== ============ ===== ============ ===== =========== ===== =========== =========== ======= 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 October 31, 2008 ----------------------------------------------------------------------------------------------------------- Identity Systems Open Platform and Security and Resource Common Solutions % Management % Management % Workgroup % Unallocated Total % ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Net revenue: Software licenses $ - - $ 16,042 31.9 $ 13,650 27.3 $ 21,670 21.1 $ - $ 51,362 21.0 Maintenance and subscriptions 36,849 88.5 21,283 42.3 31,467 62.9 70,057 68.2 - 159,656 65.2 Services 4,809 11.5 12,976 25.8 4,914 9.8 11,019 10.7 - 33,718 13.8 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Total net revenue 41,658 100.0 50,301 100.0 50,031 100.0 102,746 100.0 - 244,736 100.0 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Cost of revenue: Software licenses - - 2,036 4.0 1,210 2.4 788 0.8 757 4,791 2.0 Maintenance and subscriptions 2,476 5.9 2,701 5.4 2,790 5.6 2,547 2.5 2,351 12,865 5.3 Services 7,215 17.3 14,540 28.9 4,512 9.0 12,319 12.0 1,001 39,587 16.2 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Total cost of revenue 9,691 23.3 19,277 38.3 8,512 17.0 15,654 15.2 4,109 57,243 23.4 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Gross profit 31,967 76.7 31,024 61.7 41,519 83.0 87,092 84.8 (4,109) 187,493 76.6 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Operating expenses: Sales and marketing - - - - - - - - 90,858 90,858 37.1 Product development 14,438 34.7 10,448 20.8 12,342 24.7 10,764 10.5 2,463 50,455 20.6 General and administrative - - - - - - - - 27,014 27,014 11.0 Other operating expenses - - - - - - - - 25,509 25,509 10.4 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Total operating expenses 14,438 34.7 10,448 20.8 12,342 24.7 10,764 10.5 145,844 193,836 79.2 ------------- ----- ------------ ----- ------------ ----- ----------- ----- ----------- ----------- ------- Income (loss) from operations $ 17,529 42.1 $ 20,576 40.9 $ 29,177 58.3 $ 76,328 74.3 $(149,953) $ (6,343) (2.6) ============= ===== ============ ===== ============ ===== =========== ===== =========== =========== ======= Revisions were made to prior period amounts in order to conform to the current period's presentation.
Page 11 of 12 Novell, Inc. Unaudited Trended Segment Revenue by Software Licenses and Maintenance and Services (In thousands) Fiscal Year Fiscal Year Change from Q4 2008 % 2008 % Q3 2009 % Q4 2009 % 2009 % Q4 2008 to Q4 2009 FY 2008 to FY 2009 --------- ----- ----------- ----- --------- ----- --------- ----- ----------- ----- ------------------ ------------------ Open platform solutions Linux platform products Software licenses $ - - $ - - $ - - $ - - $ - - $ - - $ - - Maintenance and subscriptions 34,301 14.0 123,386 12.9 38,240 17.7 39,011 18.1 149,162 17.3 4,710 13.7 25,776 20.9 --------- ----- ----------- ----- --------- ----- --------- ----- ----------- ----- ---------- ------- ---------- ------- 34,301 14.0 123,386 12.9 38,240 17.7 39,011 18.1 149,162 17.3 4,710 13.7 25,776 20.9 Other open platform products Software licenses - - 164 0.0 73 0.0 21 0.0 125 0.0 21 - (39) (23.8) Maintenance and subscriptions 2,548 1.0 9,576 1.0 1,628 0.8 1,979 0.9 7,592 0.9 (569) (22.3) (1,984) (20.7) --------- ----- ----------- ----- --------- ----- --------- ----- ----------- ----- ---------- ------- ---------- ------- 2,548 1.0 9,740 1.0 1,701 0.8 2,000 0.9 7,717 0.9 (548) (21.5) (2,023) (20.8) Total open platform solutions 36,849 15.1 133,126 13.9 39,941 18.5 41,011 19.0 156,879 18.2 4,162 11.3 23,753 17.8 Identity and security management Identity, access and compliance management Software licenses 15,439 6.3 53,956 5.6 7,542 3.5 10,360 4.8 31,908 3.7 (5,079) (32.9) (22,048) (40.9) Maintenance and subscriptions 19,370 7.9 70,321 7.4 20,729 9.6 19,606 9.1 80,340 9.3 236 1.2 10,019 14.2 --------- ----- ----------- ----- --------- ----- --------- ----- ----------- ----- ---------- ------- ---------- ------- 34,809 14.2 124,277 13.0 28,271 13.1 29,966 13.9 112,248 13.0 (4,843) (13.9) (12,029) (9.7) Other identity and security management Software licenses 603 0.2 2,667 0.3 387 0.2 426 0.2 1,965 0.2 (177) (29.4) (702) (26.3) Maintenance and subscriptions 1,913 0.8 10,301 1.1 1,607 0.7 1,781 0.8 6,837 0.8 (132) (6.9) (3,464) (33.6) --------- ----- ----------- ----- --------- ----- --------- ----- ----------- ----- ---------- ------- ---------- ------- 2,516 1.0 12,968 1.4 1,994 0.9 2,207 1.0 8,802 1.0 (309) (12.3) (4,166) (32.1) Total identity and security management 37,325 15.3 137,245 14.3 30,265 14.0 32,173 14.9 121,050 14.0 (5,152) (13.8) (16,195) (11.8) Systems and resource management Software licenses 13,650 5.6 48,126 5.0 7,527 3.5 8,623 4.0 33,806 3.9 (5,027) (36.8) (14,320) (29.8) Maintenance and subscriptions 31,467 12.9 122,040 12.8 32,469 15.0 31,812 14.8 126,963 14.7 345 1.1 4,923 4.0 Total systems and resource management 45,117 18.4 170,166 17.8 39,996 18.5 40,435 18.8 160,769 18.6 (4,682) (10.4) (9,397) (5.5) Workgroup OES and NetWare-related Software licenses 10,364 4.2 39,379 4.1 5,129 2.4 5,504 2.6 20,232 2.3 (4,860) (46.9) (19,147) (48.6) Maintenance and subscriptions 41,425 16.9 166,496 17.4 40,058 18.5 38,080 17.7 157,524 18.3 (3,345) (8.1) (8,972) (5.4) --------- ----- ----------- ----- --------- ----- --------- ----- ----------- ----- ---------- ------- ---------- ------- 51,789 21.2 205,875 21.5 45,187 20.9 43,584 20.2 177,756 20.6 (8,205) (15.8) (28,119) (13.7) Collaboration Software licenses 7,424 3.0 28,320 3.0 4,468 2.1 3,827 1.8 14,822 1.7 (3,597) (48.5) (13,498) (47.7) Maintenance and subscriptions 21,928 9.0 85,462 8.9 21,877 10.1 20,477 9.5 85,123 9.9 (1,451) (6.6) (339) (0.4) --------- ----- ----------- ----- --------- ----- --------- ----- ----------- ----- ---------- ------- ---------- ------- 29,352 12.0 113,782 11.9 26,345 12.2 24,304 11.3 99,945 11.6 (5,048) (17.2) (13,837) (12.2) Other workgroup Software licenses 3,882 1.6 16,371 1.7 1,894 0.9 2,621 1.2 14,061 1.6 (1,261) (32.5) (2,310) (14.1) Maintenance and subscriptions 6,704 2.7 28,911 3.0 7,091 3.3 7,156 3.3 27,204 3.2 452 6.7 (1,707) (5.9) --------- ----- ----------- ----- --------- ----- --------- ----- ----------- ----- ---------- ------- ---------- ------- 10,586 4.3 45,282 4.7 8,985 4.2 9,777 4.5 41,265 4.8 (809) (7.6) (4,017) (8.9) Total workgroup 91,727 37.5 364,939 38.2 80,517 37.3 77,665 36.0 318,966 37.0 (14,062) (15.3) (45,973) (12.6) Total software licenses, maintenance and subscriptions Software licenses 51,362 21.0 188,983 19.8 27,020 12.5 31,382 14.6 116,919 13.6 (19,980) (38.9) (72,064) (38.1) Maintenance and subscriptions 159,656 65.2 616,493 64.5 163,699 75.8 159,902 74.2 640,745 74.3 246 0.2 24,252 3.9 --------- ----- ----------- ----- --------- ----- --------- ----- ----------- ----- ---------- ------- ---------- ------- Total product revenue 211,018 86.2 805,476 84.2 190,719 88.3 191,284 88.7 757,664 87.9 (19,734) (9.4) (47,812) (5.9) --------- ----- ----------- ----- --------- ----- --------- ----- ----------- ----- ---------- ------- ---------- ------- Services 33,718 13.8 151,037 15.8 25,365 11.7 24,351 11.3 104,521 12.1 (9,367) (27.8) (46,516) (30.8) --------- ----- ----------- ----- --------- ----- --------- ----- ----------- ----- ---------- ------- ---------- ------- Total net revenue $ 244,736 100.0 $ 956,513 100.0 $ 216,084 100.0 $ 215,635 100.0 $ 862,185 100.0 $(29,101) (11.9) $(94,328) (9.9) ========= ===== =========== ===== ========= ===== ========= ===== =========== ===== ========== ======= ========== ======= Revisions were made to prior period amounts in order to conform to the current period's presentation.
Page 12 of 12 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