Novell Reports First Quarter Fiscal 1995 Results

Orem, UT -- February 27, 1995 -- Novell, Inc. (NASDAQ:NOVL) today reported earnings for its first fiscal quarter ended January 28, 1995 of $82 million, or $0.22 per share, on revenue of $493 million. After adjusting Novell's 1994 results to reflect its merger with WordPerfect Corporation, revenue increased slightly, both compared to the first fiscal quarter in 1994 and sequentially from the fourth fiscal quarter in 1994. Comparative per share earnings were $0.26 in the first fiscal quarter of 1994, and $0.06 in the fourth fiscal quarter of 1994.

Robert J. Frankenberg, Novell chairman and chief executive officer, said: "Our results reflect significant progress following the rapid consolidation of the WordPerfect and Novell organizations. In the first fiscal quarter we began to see operating expense savings from the consolidation. In addition, we achieved revenue growth in the quarter from what we anticipate will become significant new product cycles based on strong demand for NetWare 4.1 and PerfectOffice 3.

"Our growth in profitability from the fourth quarter of last year results primarily from rapidly bringing together the Novell and WordPerfect organizations. We've reduced employment by almost 20 percent, or 1,750 positions, since mid-year 1994. We continue to manage costs carefully. Our goal is to increase profitability from operations through the remainder of 1995.

"On the strength of NetWare 4 sales in the quarter, NetWare Systems Group revenue grew 19 percent over last year to $258 million. The market is moving quickly from our older product, NetWare 3, to NetWare 4. Shipments of NetWare 4.1 in the weeks following its December launch accounted for almost 30 percent of total NetWare revenue in the quarter. Before the end of 1995, we expect NetWare 4 sales to become the primary contributor to NetWare revenue.

"Total Application Group revenue grew 8 percent sequentially from the fourth fiscal quarter 1994, but was down 18 percent from the first quarter of 1994," Frankenberg said. With strong PerfectOffice suite and GroupWise product offerings we expect growth from these new segments to offset declines in stand-alone and DOS applications. Early indications are that purchases of our PerfectOffice suite, which only began shipping in late December, are already moving us to the number two position in that market. It's a compelling product and customers now know it."

Revenue from the United States accounted for 55 percent of total net revenue, approximately the same as in the corresponding period in 1994. Europe, Middle East and Africa represented 28 percent of revenue, Asia/Pacific 12 percent and the Americas 5 percent.

On the balance sheet, cash and short term investments rose by $99 million to $961 million during the quarter.

Novell, Inc.
Consolidated Unaudited Condensed Statements of Income
(In thousands, except per share data)

First Fiscal Quarter Ended

January 28,
1995January 29,
1994____________________Net sales$493,225$488,278Cost of
sales116,875103,777--------------------------------Gross
profit376,350384,501Operating expensesSales and
marketing139,803126,220Product development89,81783,543General and
administrative33,97044,027Nonrecurring
charges--14,969--------------------------------Total operating
expenses263,590268,759--------------------------------Income from
operations112,760115,742Other income (expense)Investment
income9,56710,949Other, net258(247)--------------------------------Other
income, net9,82510,702--------------------------------Income before
taxes122,585126,444Income
taxes41,06631,984--------------------------------Net income $
81,519$94,460==================Net income per share$     0.22$
0.26==================Weighted average   shares
outstanding372,027368,076==================

January 28,
1995
October 29,
1994____________________ASSETSCash and short-term investments$
  961,270$   861,809Receivables,
net421,592391,342Inventories26,50432,221Pre-paid
expenses57,47269,324Deferred income
taxes102,05598,435--------------------------------Total current assets
1,568,8931,453,131Property, plant and equipment,
net382,414394,682Other
assets104,635115,668--------------------------------Total
assets$2,055,942$1,963,481==================LIABILITIES And
SHAREHOLDERS' EQUITYAccounts payable$    94,117$
67,176Accrued compensation74,73781,639Accrued marketing
liabilities63,91766,800Other accrued liabilities92,828121,165Income taxes
payable78,33178,139Deferred
revenue43,26047,801--------------------------------Total current
liabilities447,190462,720Minority interests15,26813,774Shareholders'
equity1,593,4841,486,987--------------------------------Total liabilities and
shareholders' equity$2,055,942$1,963,481==================

Annual Growth Factors

(Thousands except per share, percentages and employee data)

First
Three Months
FY 1995
First
Three Months
FY 1994
Change
 '95 / '94Net sales$493,225$488,278+1%Net
income81,51994,460-14%Net income per share0.220.26-15%Return on
sales16.5%19.3%-2.8 pts
Sales by geographyUnited States$271,318$271,019--% of total
sales55%56%International 221,907217,259+2%% of total
sales45%44%Total assets$2,055,942$1,820,790+13%Shareholders'
equity1,593,4841,317,116+21%Annualized return on   average
equity21.2%30.7%-9.5 pts
Weighted average shares outstanding372,027368,076+1%Common
share count at
    end of period365,576360,401+1%Book value per common
   share$4.36$3.65+19%Number of employees7,8089,350-16%
Annualized revenue per employee
$243
$197
+23%
Annualized net income per
    employee
$40$38+5%