SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Quarter Ended April 29, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from -------
to -------
Commission File Number: 0-13351
NOVELL, INC.
(Exact name of registrant as specified in its charter)
Delaware 87-0393339
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1555 N. Technology Way
Orem, Utah 84057
(Address of principal executive offices and zip code)
(801) 429-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO ___
As of May 27, 1995 there were 369,087,692 shares of the registrant's common
stock outstanding.
Part I. Financial Information, Item 1. Financial Statements
NOVELL, INC.
CONSOLIDATED UNAUDITED CONDENSED BALANCE SHEETS
Apr. 29, Oct. 29,
Dollars in thousands, except per share data 1995 1994
- --------------------------------------------------------------------------
ASSETS
Current assets
Cash and short-term investments $1,118,887 $ 861,809
Receivables, less allowances
($95,548 - April; $82,934 - October) 399,353 391,342
Inventories 29,542 32,221
Prepaid expenses 57,912 69,324
Deferred income taxes 96,145 98,435
- --------------------------------------------------------------------------
Total current assets 1,701,839 1,453,131
Property, plant and equipment, net 383,700 394,682
Other assets 120,865 115,668
- --------------------------------------------------------------------------
Total assets $2,206,404 $1,963,481
==========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 88,297 $ 67,176
Accrued compensation 87,918 81,639
Accrued marketing liabilities 73,606 66,800
Other accrued liabilities 97,168 121,165
Income taxes payable 66,372 78,139
Deferred revenue 49,598 47,801
- --------------------------------------------------------------------------
Total current liabilities 462,959 462,720
Minority interests 16,925 13,774
Shareholders' equity
Common stock, par value $.10 a share
Authorized - 600,000,000 shares
Issued - 368,580,439 shares-April
364,354,887 shares-October 36,858 36,436
Additional paid-in capital 699,176 645,419
Retained earnings 990,486 805,132
- --------------------------------------------------------------------------
Total shareholders' equity 1,726,520 1,486,987
- --------------------------------------------------------------------------
Total liabilities and
shareholders' equity $2,206,404 $1,963,481
==========================================================================
See notes to consolidated unaudited condensed financial statements.
NOVELL, INC.
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF INCOME
Fiscal Quarter Ended Six Months Ended
-------------------- --------------------
Amounts in thousands, Apr. 29, Apr. 30, Apr. 29, Apr. 30,
except per share data 1995 1994 1995 1994
- ----------------------------------------------------------------------------------
Net sales $529,508 $534,930 $1,022,733 $1,023,208
Cost of sales 124,455 145,397 241,330 249,174
- ----------------------------------------------------------------------------------
Gross profit 405,053 389,533 781,403 774,034
Operating expenses
Sales and marketing 148,374 126,661 288,177 252,881
Product development 93,000 82,917 182,817 166,460
General and administrative 35,794 42,364 69,764 86,391
Nonrecurring charges -- -- -- 14,969
- ----------------------------------------------------------------------------------
Total operating expenses 277,168 251,942 540,758 520,701
Income from operations 127,885 137,591 240,645 253,333
Other income (expense)
Investment income 15,037 7,912 24,604 18,861
Other, net 1,240 (692) 1,498 (939)
- ----------------------------------------------------------------------------------
Other income, net 16,277 7,220 26,102 17,922
- ----------------------------------------------------------------------------------
Income before taxes 144,162 144,811 266,747 271,255
Income taxes 48,294 48,447 89,360 80,431
- ----------------------------------------------------------------------------------
Net income $ 95,868 $96,364 $177,387 $190,824
==================================================================================
Weighted average shares outstanding 374,383 368,482 373,205 368,279
==================================================================================
Net income per share $ 0.26 $ 0.26 $0.48 $0.52
==================================================================================
See notes to consolidated unaudited condensed financial statements.
NOVELL, INC.
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended
----------------------
Apr. 29, Apr. 30,
Amounts in thousands 1995 1994
- ---------------------------------------------------------------------------
Cash flows from operating activities
Net income $ 177,387 $ 190,824
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Write-off of purchased research and development -- 14,969
Depreciation and amortization 46,211 40,898
WordPerfect fiscal year conversion -- (39,856)
Stock plans income tax benefits 15,409 14,278
(Increase) decrease in receivables (8,011) 48,479
Decrease (increase) in inventories 2,679 (2,303)
Decrease (increase) in prepaid expenses 11,412 (1,841)
Decrease (increase) in deferred income taxes 3,523 (19,004)
Increase in current liabilities 239 11,404
- ----------------------------------------------------------------------------
Net cash provided from operating activities 248,849 257,848
- ----------------------------------------------------------------------------
Cash flows from financing activities
Issuance of common stock, net 35,909 17,473
Borrowings -- 24,531
- ----------------------------------------------------------------------------
Net cash provided from financing activities 35,909 42,004
- ----------------------------------------------------------------------------
Cash flows from investing activities
Expenditures for property, plant and equipment (32,532) (41,417)
(Increase) in short-term investments (145,429) (166,557)
Other 4,852 3,116
- ----------------------------------------------------------------------------
Net cash used by investing activities (173,109) (204,858)
- ----------------------------------------------------------------------------
Total increase in cash and cash equivalents $ 111,649 $94,994
Cash and cash equivalents - beginning of period 228,426 383,596
- ----------------------------------------------------------------------------
Cash and cash equivalents - end of period 340,075 478,590
Short-term investments - end of period 778,812 502,158
- ----------------------------------------------------------------------------
Cash and short-term investments - end of period $1,118,887 $980,748
============================================================================
See notes to consolidated unaudited condensed financial statements.
NOVELL, INC.
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
A. Quarterly Financial Statements
The accompanying consolidated unaudited condensed financial
statements have been prepared in accordance with the
instructions to Form 10-Q but do not include all of the
information and footnotes required by generally accepted
accounting principles and should therefore, be read in
conjunction with the Company's fiscal 1994 Annual Report to
Shareholders. These statements do include all normal recurring
adjustments which the Company believes necessary for a fair
presentation of the statements. The interim operating results
are not necessarily indicative of the results for a full year.
B. Mergers, Acquisitions, and Strategic Investments
In June 1994, the Company completed a merger with WordPerfect
Corporation (WordPerfect) whereby WordPerfect was merged
directly into Novell. Approximately 51 million shares of Novell
common stock were exchanged for all of the outstanding common
stock of WordPerfect. In addition, outstanding employee stock
options to purchase WordPerfect common stock were converted into
options to purchase approximately 8 million shares of Novell
common stock. The transaction was accounted for as a pooling of
interests and therefore, all prior period financial statements
presented have been restated as if the merger took place at the
beginning of such periods.
In order to conform WordPerfect's year end to Novell's fiscal
year end, the consolidated statement of income for fiscal 1994
includes two months (November and December 1993) for WordPerfect
which are also included in the consolidated statement of income
for the fiscal year ended October 30, 1993. Accordingly, an
adjustment has been made in fiscal 1994 to retained earnings for
the duplication of net income of $40 million for such two month
period. Other results of operations for such two month period
of WordPerfect include net sales of $137 million, income before
taxes of $35 million, and income tax benefits of $5 million.
Additionally, in June 1994, the Company acquired from Borland
International, Inc. its Quattro Pro spreadsheet product line for
$110 million of cash and assumed liabilities of $10 million, and
purchased a three year license to reproduce and distribute up to
one million copies of current and future versions of Borland's
Paradox relational database product for $35 million of cash.
The transaction was accounted for as a purchase and, on this
basis, resulted in a one-time write-off of $114 million for
purchased research and development.
C. Cash and Short-term Investments
The Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities in the first quarter
of fiscal 1995.
All marketable debt and equity securities are included in cash and
short-term investments and are considered available-for-sale and
carried at fair market value. Such securities are anticipated to
be used for current operations and are therefore classified as
current assets, even though some maturities may extend beyond one
year.
The following is a summary of cash and short-term investments, all of
which are considered available-for-sale.
Gross Gross Fair
Cost at Unrealized Unrealized Market Value at Cost at
(Dollars in thousands) Apr. 29, 1995 Gains Losses Apr. 29, 1995 Oct. 29, 1994
- ----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents
Cash $ 106,289 $ -- $-- $ 106,289 $101,331
Repurchase agreements 18,904 18,904 19,309
Tax exempt money market fund 61,989 -- -- 61,989 29,394
Taxable money market investments 56,818 -- -- 56,818 13,357
Municipal securities 96,075 -- -- 96,075 65,035
- ----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents $ 340,075 $ -- $-- $ 340,075 $228,426
- ----------------------------------------------------------------------------------------------------------------
Short-term investments
Municipal securities $ 178,155 $ 295 $-- $ 178,450 $201,491
Money market mutual funds 45,291 -- -- 45,291 104,388
Money market preferreds 446,000 67 -- 446,067 306,700
Mutual funds 78,658 -- 32 78,626 13,017
Equity securities 14,039 16,339 -- 30,378 7,787
- ---------------------------------------------------------------------------------------------------------------
Short-term investments $ 762,143 $16,701 $32 $ 778,812 $633,383
- ---------------------------------------------------------------------------------------------------------------
Cash and short-term investments $1,102,218 $16,701 $32 $1,118,887 $861,809
- ---------------------------------------------------------------------------------------------------------------
During the first six months of fiscal 1995 the Company had
realized gains of $3 million on the sale of securities compared
to realized gains in the first six months of fiscal 1994 of $7
million.
D. Income Taxes
The Company's estimated effective tax rate for the first six
months of fiscal 1995 was 33.5%. Excluding non-tax deductible
one-time charges related to the write-off of purchased research
and development of $15 million in fiscal 1994 and adjusting
fiscal 1994 to reflect a provision for income taxes as if
WordPerfect and its S corporation subsidiaries had never been S
corporations, the Company's effective tax rate would have been
34% in fiscal 1994. The Company paid cash amounts for income
taxes of $76 million and $66 million, in the first six months of
fiscal 1995 and 1994, respectively.
E. Commitments and Contingencies
The Company currently has a $10 million unsecured revolving bank
line of credit, with interest at the prime rate. The line can
be used for either letter of credit or working capital purposes.
The line is subject to the terms of a loan agreement containing
financial covenants and restrictions, none of which are expected
to significantly affect the Company's operations. At April 29,
1995 there were no borrowings, letter of credit acceptances or
commitments under such line.
The Company has an additional $10 million credit facility with
another bank which is not subject to a loan agreement.
At April 29, 1995 standby letters of credit of approximately
$100,000 were outstanding under this agreement.
On November 10, 1993, a suit was filed against Novell and
certain of its officers and directors alleging violation of
federal securities laws. Another lawsuit alleging similar
claims was filed August 26, 1994. Both lawsuits were brought as
purported class actions on behalf of purchasers of Novell common
stock. On February 22, 1995 the plaintiffs amended November
10, 1993 lawsuit was dismissed with prejudice and the plaintiffs
have appealed that ruling. Novell does not believe that the
resolution of the either lawsuit will have a material
adverse effect on its financial position or results of
operations.
The Company is a party to a number of additional legal
proceedings arising in the ordinary course of business. The
Company believes the ultimate resolution of the claims will not
have a material adverse effect on its financial position or
results of operations.
F. International Sales
The Company markets internationally through distributors who
sell to dealers and end users. For the six months ended April
29, 1995 and April 30, 1994, sales to international customers
were approximately $470 million and $439 million, respectively.
In the first six months of fiscal 1995 and fiscal 1994, 56% and
61%, respectively, of international sales were to European
countries. No one foreign country accounted for 10% or more of
total sales in either period. Except for one multi-national
distributor, which accounted for 18% of revenue in the first six
months of 1995 and 11% of revenue in the first six months of
fiscal 1994, no customer accounted for more than 10% of revenue
in any period.
G. Net Income Per Share
Net income per share is computed using the weighted average
number of common shares outstanding during the periods,
including common stock equivalents (unless antidilutive).
Common stock equivalents consist of outstanding stock options.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Introduction
Novell's business is connecting people with other people and the
information they need, enabling them to act on it anytime, anyplace.
Novell is a leading provider of networking and application software.
The Company's software products provide the distributed
infrastructure, network services, advanced network access and network
applications required to make networked information and computing an
integral part of everyone's daily life.
Over the past several years, the Company has issued common stock or
paid cash to acquire technology companies, invested cash in other
technology companies, and formed strategic alliances with still other
technology companies. Novell undertook all of these transactions to
promote a pervasive computing environment, and in many cases to also
broaden the Company's business as a system and application software
supplier.
In June 1994, the Company completed a merger with WordPerfect
Corporation (WordPerfect), whereby WordPerfect was merged directly
into Novell. Approximately 51 million shares of Novell common stock
were exchanged for all of the outstanding common stock of
WordPerfect. In addition, the outstanding employee stock options to
purchase WordPerfect common stock were converted into options to
purchase approximately 8 million shares of Novell common stock. The
transaction was accounted for as a pooling of interests and
therefore, all prior financial statements presented herein have been
restated as if the merger took place at the beginning of such
periods.
Additionally, in June 1994, the Company acquired from Borland
International, Inc. its Quattro Pro spreadsheet product line for $110
million of cash and assumed liabilities of $10 million, and purchased
a three year license to reproduce and distribute up to one million
copies of current and future versions of Borland's Paradox relational
database product for $35 million of cash. The transaction was
accounted for as a purchase and, on this basis, resulted in a one-
time write-off of $114 million for purchased research and
development.
The Company will continue to look for similar acquisitions,
investments or strategic alliances which it believes complement its
overall business strategy.
Results of Operations
Net Sales
Q2 Q2 YTD YTD
1995 Change 1994 1995 Change 1994
- --------------------------------------------------------------------------------------
Net sales (millions) $530 -1% $535 $1,023 -- $1,023
======================================================================================
During the second quarter of fiscal 1994, the Company sold a one time fully
paid license for UNIX technology to Sun Microsystems for $81 million.
Excluding this transaction, net sales grew by 17% in the second quarter of
fiscal 1995 compared to the second quarter of fiscal 1994 and by 8% in the
first six months of fiscal 1995 compared to the first six months of fiscal
1994.
With the acquisition of WordPerfect in fiscal 1994, Novell redefined
itself into four product groups, all within the software industry. They
are the NetWare Systems Group (NSG), the Novell Applications Group (NAG),
the UNIX Systems Group (USG), and the Information Access and Management
Group (IAMG). While revenue decreased slightly from the second quarter
of fiscal 1994 to the second quarter of fiscal 1995 and remained flat in
the first six months of fiscal 1995 compared to the first six months of
fiscal 1994, analysis of the individual product groups characterizes the
changes that have occurred.
NSG revenues grew by 7% in the second quarter of fiscal 1995 compared to
the like period in fiscal 1994 and by 12% in the first six months of
fiscal 1995 compared to the first six months of fiscal 1994. Most
of the growth was in the NetWare 4 product family, partially offset by a
decrease in the NetWare 3 product family.
NAG revenues increased by 25% in the second quarter of fiscal 1995
compared to the second quarter of fiscal 1994 and remained flat during
the first six months of fiscal 1995 compared to the first six months
of fiscal 1994. The increase in the second quarter of fiscal 1995 compared
to the second quarter of fiscal 1994 is the result of revenue increases in
the PerfectOffice suite as well as GroupWare applications, partially offset
by a decrease in standalone WordPerfect products. Even thought NAG revenue
remained flat for the first six months of fiscal 1995 compared to the first
six months of fiscal 1994, the first six months of fiscal 1995 had higher
PerfectOffice suite and GroupWare applications revenues, offset by lower
standalone WordPerfect product revenues compared to the first six months of
fiscal 1994.
USG revenues decreased by 74% in the second quarter of fiscal 1995 compared
to the second quarter of fiscal 1994 and decreased by 64% in the
first six months of fiscal 1995 compared to the first six months of fiscal
1994. The decreases were attributable to a one time fully paid license for
UNIX technology to Sun Microsystems for $81 million during the second
quarter of fiscal 1994. Excluding this one-time license in fiscal 1994,
USG revenues grew by 8% in the second quarter of fiscal 1995 compared to
the second quarter of fiscal 1994 and decreased by 2% in the first six
months of fiscal 1995 compared to the first six months of fiscal 1994.
IAMG revenues increased by 26% in the second quarter of fiscal 1995
compared to the second quarter of fiscal 1994. The increase was a result
of increases across all IAMG product lines. IAMG revenues also increased
by 6% in the first six months of fiscal 1995 compared to the first six
months of fiscal 1994. The increase is a result of higher shipments of
network management products.
Excluding the one-time license fee in fiscal 1994, international sales
represented 46% of total sales in the first six months of fiscal 1995
compared to 47% in the first six months of fiscal 1994.
Gross Profit
Q2 Q2 YTD YTD
1995 Change 1994 1995 Change 1994
- --------------------------------------------------------------------------------
Gross profit (millions) $405 4% $390 $781 1% $774
Percentage of net sales 76% 73% 76% 76%
================================================================================
In connection with the Sun Microsystems transaction described above,
the Company revalued the software and other intangibles remaining on the
balance sheet related to the USL acquisition in fiscal 1993. Accordingly,
$35 million of costs associated with the sale of the license to Sun
Microsystems were charged to cost of sales during the second quarter
of fiscal 1994.
Excluding the Sun Microsystems revenue and the related costs, the gross
profit percentage would have been 76% in the second quarter of fiscal 1994
and 77% in the first six months of fiscal 1994.
Excluding the Sun Microsystems revenue and related costs impact in fiscal
1994, the gross profit margin is flat for the second quarters of fiscal 1995
and fiscal 1994 and slightly down for the first six months of fiscal 1995
compared to the first six months in fiscal 1994. Future fluctuations in
the gross profit margin will be primarily attributable to price changes,
changes in sales mix by product or distribution channel, and special
product promotions. The Company expects the gross profit margin in fiscal
1995 to not vary significantly from the gross profit margin in fiscal
1994.
Operating Expenses
Q2 Q2 YTD YTD
1995 Change 1994 1995 Change 1994
- ------------------------------------------------------------------------------------------
Sales and marketing (millions) $ 148 17% $127 $288 14% $ 253
Percentage of net sale 28% 24% 28% 25%
- ------------------------------------------------------------------------------------------
Product development (millions) $93 12% $ 83 $183 10% $ 166
Percentage of net sales 18% 16% 18% 16%
- ------------------------------------------------------------------------------------------
General and administrative (millions) $ 36 -16% $ 42 $ 70 -19% $ 86
Percentage of net sales 7% 8% 7% 8%
- ------------------------------------------------------------------------------------------
Nonrecurring charges (millions) -- -- -- -- -- $ 15
Percentage of net sales -- -- -- 1%
- ------------------------------------------------------------------------------------------
Total operating expenses (millions) $277 10% $252 $541 4% $521
Percentage of net sales 52% 47% 53% 51%
==========================================================================================
Excluding the Sun Microsystems revenues in fiscal 1994, sales and
marketing expenses were flat at 28% of net sales in the second quarter of
both fiscal 1994 and 1995. On the same basis, sales and marketing
expenses increased from 27% of net sales in the first six months of fiscal
1994 to 28% of net sales in the first six months of fiscal 1995. This
increase is attributable to relatively higher corporate and product
marketing expenses, partially offset by lower domestic and international
selling expenses. Sales and marketing expenses fluctuate as a percentage
of net sales in any given period due to product promotions, advertising or
other discretionary expenses.
Excluding the Sun Microsystems revenue in fiscal 1994, product development
expenses remained flat at 18% of net sales in both the second quarter of
fiscal 1995 compared to the second quarter of fiscal 1994 as well as in
the first six months of fiscal 1995 compared to the first six months of
fiscal 1994.
Excluding the Sun Microsystems revenue in fiscal 1994, general and
administrative expenses decreased from 9% to 7% of net sales in both the
second quarter of fiscal 1995 compared to the second quarter in fiscal
1994 as well as in the first six months of fiscal 1995 compared to the
first six months of fiscal 1994. The decrease is attributable to lower
legal expenses and a reduction in headcount since the merger with
WordPerfect.
During the first quarter of 1994, the Company wrote off $15 million of
non-tax deductible purchased research and development in connection with
the acquisition of SoftSolutions.
Excluding the Sun Microsystems revenue in fiscal 1994, total operating
expenses, excluding nonrecurring charges, have grown less rapidly than
revenues in both the second quarter of fiscal 1995 compared to the second
quarter in fiscal 1994 as well as in the first six months of fiscal 1995
compared to the first six months of fiscal 1994 due primarily to headcount
reductions.
YTD YTD
1995 Change 1994
- -------------------------------------------------------------------------
Employees 7,572 -19% 9,350
Annualized revenue per employee (000's) $255 34% $191
=========================================================================
Early in fiscal 1994 WordPerfect reduced its workforce by approximately
1,000 employees. Subsequent to the merger between Novell and WordPerfect,
there was an additional reduction in force of approximately 1,100. In the
first quarter of 1995 an additional 650 employees functions were
outsourced as part of the restructuring. As a result of these reductions,
annualized revenue per employee increased 34% in the first six months of
fiscal 1995 compared to the same period in fiscal 1994.
Other Income (Expense)
Q2 Q2 YTD YTD
1995 Change 1994 1995 Change 1994
- ---------------------------------------------------------------------------------------
Other income (expense), net (millions) $16 129% $7 $26 44% $18
Percentage of net sales 3% $1% 3% 2%
=======================================================================================
The primary component of other income (expense) is investment income,
which was $15 million in the second quarter of fiscal 1995 compared to $8
million the second quarter of fiscal 1994. During first six months of
fiscal 1995, investment income was $25 million compared to $19 million in
the first six months of fiscal 1994. The increase is the result of higher
average yields on the Company's higher cash balances as well as increased
capital gains on its investment portfolio. In order to achieve
potentially higher returns, a limited portion of the Company's investment
portfolio is invested in mutual funds which incur some market risk. The
Company believes that the market risk has been limited by diversification
and by use of a funds management timing service which switches funds out
of mutual funds and into money market funds when preset signals occur.
Income Taxes
Q2 Q2 YTD YTD
1995 Change 1994 1995 Change 1994
- --------------------------------------------------------------------------------
Income taxes (millions) $48 -- $48 $89 11% $80
Percentage of net sales 9% 9% 9% 8%
Effective tax rate 34% 34% 33% 30%
================================================================================
The Company's estimated tax rate for fiscal 1995 is 33.5%, which is down
slightly from the fiscal 1994 rate of 34%, excluding the effect of the non-
tax deductible one-time charges related to the write-off of purchased
research and development of $15 million in the first quarter of fiscal 1994
and adjusting to reflect a provision for income taxes as if WordPerfect and
its S corporation subsidiaries had never been S corporations. The higher
effective rate in fiscal 1994 was attributable to non-tax deductible merger
expenses.
Net Income and Net Income Per Share
Q2 Q2 YTD YTD
1995 Change 1994 1995 Change 1994
- ------------------------------------------------------------------------------------
Net income (millions) $96 -- $96 $177 -7% $191
Percentage of net sales 18% 18% 17% 19%
Net income per share $.26 -- $.26 $.48 -8% $.52
====================================================================================
Excluding the impact of nonrecurring items and normalizing income taxes,
net income for the second quarter of fiscal 1995 would remain at $96
million or 18% of net sales compared to $66 million or 15% of net sales in
the second quarter of fiscal 1994. In the first six months of fiscal 1995,
net income would remain at $177 million or 17% of net sales while in the
first six months of fiscal 1994 net income would have been $160 million
or 17% of net sales.
Liquidity and Capital Resources
YTD Q4
1995 Change 1994
- -----------------------------------------------------------------------------
Cash and short-term investments (millions) $1,119 30% $862
Percentage of total assets 51% 44%
==============================================================================
Cash and short-term investments increased to $1,119 million from April 29,
1995 from $862 million at October 29, 1994. The major reasons for this
increase were the $249 million of cash provided by operating activities,
the $36 million provided by financing activities and the $5 million
provided from other investing activities, partially offset by the $33
million used for capital asset purchases. The Company's principal source
of liquidity has been from operations. At April 29, 1995, the Company's
principal unused sources of liquidity consisted of cash and short-term
ents and available borrowing capacity of approximately $20 million
under its credit facilities. The investment portfolio is diversified among
security types, industry groups, and individual issuers. The Company's
liquidity needs are principally for the Company's financing of accounts
receivable, capital assets, acquisitions and strategic investments and to
have flexibility in a dynamic and competitive operating environment.
During fiscal 1995 the Company has continued to generate cash from
operations. The Company anticipates being able to fund its current
operations and capital expenditures planned for the foreseeable future with
existing cash and short-term investments together with internally generated
funds. Borrowings under the Company's credit facilities, or public
offerings of equity or debt securities are available if the need arises.
As the Company grows, investments will continue in product development in
new and existing areas of technology. Cash may also be used to acquire
technology through purchases and strategic acquisitions. Capital
expenditures in fiscal 1995 are anticipated to be approximately $80
million, but could be reduced if the growth of the Company is less than
presently anticipated.
/PAGE
Part II. Other Information
Except as listed below, all information required by items in Part II is
omitted because the items are inapplicable or the answer is negative.
Item 1. Legal Proceedings.
The information required by this item is incorporated herein by reference
to Footnote E of the Company's financial statements contained in Part I,
Item 1 of this Form 10-Q.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held its Annual Meeting of Shareholders on April 12, 1995 for
the following purposes:
1. To elect nine directors;
2. To approve the adoption of an amendment to the Company's Restated
Certificate of Incorporation to increase the number of shares of Common
Stock that the Company is authorized to issue to 600,000,000 from
400,000,000; and
3. To approve and ratify the adoption of an amendment to the Novell, Inc.
1989 Employee Stock Purchase Plan to increase the shares reserved for
issuance thereunder from 4,000,000 to 8,000,000.
The following tables set forth the outcome of the matters voted upon at the
meeting and the number of votes cast for, against or withheld.
Votes Votes
Proposal 1 For Withheld
- --------------------------------------------------------------------------
Election of Directors
Robert J. Frankenberg 283,958,049 23,052,974
Alan C. Ashton 284,321,454 22,689,569
Bruce W. Bastian 284,150,865 22,866,158
Elaine R. Bond 283,638,514 23,372,709
Jack L. Messman 284,720,973 22,290,050
Kanwal S. Rekhi 282,308,421 24,702,602
Larry W. Sonsini 282,624,166 24,386,857
Ian R. Wilson 276,391,515 30,619,508
John A. Young 284,432,981 22,578,042
=========================================================================
Votes Votes Votes
Proposal 2 For Against Withheld/Abstained
- -------------------------------------------------------------------------------------------
Approval of the Adoption of
an Amendment to the Company's
Certificate of Incorporation 286,599,869 12,838,687 3,051,272
===========================================================================================
Votes Votes Votes
Proposal 3 For Against Withheld/Abstained
- -------------------------------------------------------------------------------------------
Approval and Ratification of
the Adoption of an Amendment
to the Company's 1989 Employee
Stock Purchase Plan 284,334,591 15,802,100 3,296,193
===========================================================================================
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Description
- ------- -----------
27* Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Registrant during the
quarter ended April 29, 1995.
- -----------------------------
*Filed herewith
/PAGE
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Novell,Inc.
-----------
(Registrant)
Date: June 9, 1995 /s/ Robert J. Frankenberg
-----------------------------
Robert J. Frankenberg
Chairman of the Board,
President, Chief Executive
Officer and Director
(Principal Executive Officer)
Date: June 9, 1995 /s/ James R. Tolonen
---------------------------
James R. Tolonen
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: June 9, 1995 /s/ Stephen C. Wise
--------------------------
Stephen C. Wise
Senior Vice President, Finance
(Principal Accounting Officer)