Novell Announces Second Quarter Fiscal 1995 Results

Press Release

Orem, UT -- May 24, 1995 -- Novell, Inc. (NASDAQ:NOVL) today reported earnings for its second fiscal quarter ended April 29, 1995 of $96 million, or $0.26 per share, compared to an adjusted $0.18 in the second fiscal quarter of 1994. Net revenue for the quarter was $530 million, up 17 percent from adjusted revenue in the comparable period in fiscal 1994. For the first six months of fiscal 1995, earnings increased to $177 million, or $0.48 per share, compared to an adjusted $0.43 earned during the first six months of last year. Net revenue for the first half of fiscal 1995 was $1.023 billion, up from $943 million for the same period of 1994. The above results for fiscal 1994 have been adjusted to exclude second quarter nonrecurring revenue of a one time $81 million license fee for UNIX system technology and associated expenses of $35 million, which increased net income by $30 million and earnings per share by $0.08. Robert J. Frankenberg, Novell chairman and chief executive officer, said: "We are achieving revenue growth across all of Novell's network software product categories. Year-to-date NetWare network operating system revenue is up 17 percent over 1994, with NetWare 4 now accounting for 33% of total NetWare sales. We continue to see the smooth transition of our core business to NetWare 4. UnixWare related revenues are benefiting from the recent release of UnixWare 2. NetWare and UnixWare systems software products accounted for 51 percent of revenue in the quarter.

"Applications also recorded excellent revenue growth to $160 million. We are experiencing growth from the PerfectOffice suite, as well as standalone WordPerfect offerings for Windows, Macintosh and UNIX. We continue to achieve significant gains in Novell's GroupWise network-based messaging system. We are especially gratified by GroupWise wins that have us replacing competitive offerings in large accounts.

"In addition, the results indicate initial success in our intentions to build market demand for network protocol, communication and management products from our Information Access and Management Group. New products such as ManageWise, co-branded with Intel, added to market leading LAN WorkPlace TCP/IP and NetWare host communication networking software to account for 11 percent of Novell revenue."

For the first six months of fiscal 1995, 54 percent of Novell revenue was from the U.S. The Asia Pacific region represented 14 percent of revenue, Europe 27 percent and the Americas 5 percent. On the balance sheet shareholder's equity has increased to $1.727 billion at the end of the second fiscal quarter 1995, from $1.487 billion at the end of Novell's fiscal 1994.

Novell Inc.'s business is connecting people with other people and the information they need, enabling them to act on it anytime, anyplace. Novell is the world's leading network software provider. The company's software products provide the distributed network infrastructure, network services, advanced network access and network applications required to make pervasive computing an integral part of everyone's daily life.

Company Contact:
Peter Troop
Novell, Inc.
408-577-8975

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

Second
Fiscal Quarter Ended                     Six Months Ended



                  April 29,       Apr 30,       April 29,        Apr 30,
                      1995       1994 as            1995         1994 as
                                Adjusted*                      Adjusted*

Net sales         $529,508      $454,430       $1,022,733     $  942,708
Cost of sales      124,455       110,397          241,330        214,174

Gross profit       405,053       344,033          781,403        728,534

Operating expenses
Sales and Mkting    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

Total operating
Expenses            277,168      251,942          540,758        505,732

Income from
Operations          127,885       92,091          240,645        222,802

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
Income taxes        144,162       99,311          266,747        240,724
Provision for
Income taxes         48,294       33,204           89,360         80,736

Net income         $ 95,868     $ 66,107      $   177,387     $  159,988

Net income
Per share         $     .26     $    .18      $       .48     $      .43
                  =========     ========      ===========     ==========

Weighted average shares
Outstanding         374,383      368,482          373,205        368,279
                  =========     ========      ===========     ==========




* Fiscal 1994 results normalize income taxes and exclude all nonrecurring
  items including revenue from a one-time UNIX license of $81 million and
  $35 million in associated expenses.

Novell, Inc.
Consolidated Unaudited Condensed Balance Sheets
(In thousands)

                                      April 29,            October 29,
                                           1995                   1994

ASSETS

Cash and short-term investments       $1,118,887           $  861,809
 Receivables, net                        399,353              391,342
 Inventories                              29,542               32,221
 Pre-paid                                 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

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                   1,726,520            1,486,987

Total liabilities and
shareholders' equity                  $2,206,404           $1,963,481
                                      ==========           ==========