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| Press Release |
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Novell Reports Third Fiscal Quarter 1997 Results |
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PROVO, UT., -- August 21, 1997 -- Novell, Inc. (NASDAQ:NOVL) today reported revenue of $90 million and a net loss of $122 million, or ($0.35) per share, for its third fiscal quarter ended July 31, 1997. These results reflect decisions the company announced on May 28 to lower product inventories in its indirect distribution channel and to take a restructuring charge as it reduced its workforce by 18 percent. The restructuring charge of $55 million contributed ($0.10) per share, after tax, to the reported loss. Dr. Eric Schmidt, Novell chairman and chief executive officer, said: "The third quarter was an opportunity to take aggressive steps to stabilize Novell's business and set the stage for restoring revenue and profitability. Lower operating expenses, realigned resources, and improved information systems make Novell a tighter and more accountable $1 billion company. With these actions behind us, our focus is to deliver Internet products to make Novell a pure Internet/intranet software leader by summer 1998." Novell reported revenue of $365 million and earnings of $0.17 per share in the third fiscal quarter of 1996. "However, given our third quarter 1997 actions, comparisons with previous periods are not indicative of Novell's market strength or opportunities," said Dr. Schmidt. Novell's third quarter revenue was reduced from recent periods primarily due to actions the company took in response to changing market conditions. During the third quarter, the company did not ship products to its indirect distribution channel except to accommodate product exchanges and returns. This action brought channel inventory of boxed software products in line with current market demand. Third quarter revenue was derived principally from sales to large network users through Novell's major account, corporate, and volume license programs. Among the customers licensing Novell products in the third quarter were KPMG Peat Marwick, Safeway Stores, Foundation Health Systems, Saatchi & Saatchi, UBS Switzerland, and the 36-campus State of Minnesota Department of State Colleges and Universities. Novell reduced its workforce by approximately 1,000 employees in the quarter, bringing total headcount to approximately 4,800 worldwide. This reduction, coupled with an associated consolidation of facilities, is expected to lower operating expenses by $100 million annually, beginning in the fourth fiscal quarter of 1997. On the balance sheet, cash and short-term investments were $1.1 billion at the end of the third quarter, approximately equal to the prior period and year-end 1996. Founded in 1983, Novell (NASDAQ:NOVL) is the world's leading provider of network software. The company offers a wide range of network solutions, education, and support for distributed network, Internet, and small-business markets. Information about Novell's complete range of products and services can be accessed on the World Wide Web at http://www.novell.com. Forward looking statements in this release are made under the Safe Harbor Reform Act of 1996. These statements are based on current expectations and actual results may differ materially due to risks, uncertainties, and other factors. Additional information covering factors that could cause results to differ materially from projected statements can be found in Novell's 10-K and 10-Q filings, as well as the annual report.
Novell Contact: Consolidated Unaudited Condensed Statements of Operations (In thousands, except per share data)
Third Fiscal Quarter Ended Nine Months Ended
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Jul 31, 1997 Jul 27, 1996 Jul 31, 1997 Jul 27, 1996
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Net sales $90,074 $365,091 $738,028 $991,190
Cost of sales 61,671 75,618 214,817 240,243
___________ ____________ ___________ __________
Gross profit 28,403 289,473 523,211 750,947
Operating expenses
Sales and marketing 97,769 124,853 341,727 375,610
Product development 69,428 60,345 209,625 208,701
General and administrative 33,711 34,299 110,959 107,568
Restructuring charges 55,335 -- 55,335 18,442
___________ ___________ ___________ __________
Total operating expenses 256,243 219,497 717,646 710,321
Income (loss) from operations (227,840) 69,976 (194,435) 40,626
Other income (expense)
Investment income 14,619 15,558 41,154 41,715
Gain on sale of assets -- -- -- 19,815
Other, net (4,736) (822) (11,079) (5,110)
___________ ___________ __________ __________
Other income, net 9,883 14,736 30,075 56,420
___________ ___________ __________ __________
Income (loss) before taxes (217,957) 84,712 (164,360) 97,046
Income taxes (96,312) 25,953 (78,893) 30,085
___________ ___________ ___________ __________
Net income (loss) ($121,645) $58,759 ($85,467) $66,961
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Weighted average shares O/S 349,381 352,129 348,127 362,052
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Net income (loss) per share ($0.35) $0.17 ($0.25) $0.18
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Novell, Inc. Consolidated Unaudited Condensed Balance Sheets (In thousands)
ASSETS Jul 31, 1997 Oct 26, 1996
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Current assets
Cash and short-term investments $1,055,867 $1,024,755
Receivables, net 177,058 452,327
Inventories 15,668 16,837
Prepaid expenses 61,602 59,009
Deferred& refundable income taxes 142,880 37,831
___________ ___________
Total current assets 1,453,075 1,590,759
Property, plant and equipment, net 386,144 394,684
Other assets 48,297 64,023
___________ ___________
Total assets $1,887,516 $2,049,466
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LIABILITIES& SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $64,522 $96,933
Accrued compensation 50,227 54,731
Accrued marketing liabilities 28,639 48,402
Other accrued liabilities 102,614 118,133
Income taxes payable -- --
Deferred revenue 63,688 46,573
___________ ___________
Total current liabilities 309,690 364,772
Minority interests 24,311 17,035
Put warrants -- 52,150
Shareholders' equity 1,553,515 1,615,509
___________ ___________
Total liabilities and shareholders' equity $1,887,516 $2,049,466
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