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Novell Reports Fourth Fiscal Quarter 1998 Results: |
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Revenue of $298 Million and Earnings of $0.12 Per Share PROVO, Utah November 24, 1998 Novell, Inc. (NASDAQ:NOVL) today reported revenue of $298 million for its fourth fiscal quarter ended October 31, 1998, an 11 percent increase over the $269 million recorded in the fourth quarter of fiscal 1997. Fourth quarter net income was $42 million, up $35 million from the comparable quarter of 1997. Earnings on a diluted basis were $0.12 per share, compared with $0.02 in the year-earlier period. For the full fiscal year 1998, revenue was $1.084 billion, compared with $1.007 billion in fiscal 1997. Net income for the year was $102 million, compared to a ($78 million) loss for the prior year. Earnings per share on a diluted basis were $0.29 for the year, compared with a loss of ($0.22) per share in fiscal 1997, which included a ($0.10) per share loss due to restructuring. Dr. Eric Schmidt, Novell chairman and CEO said: "Our strategy is clearly working. Initial customer response to NetWare 5 and new Novell partnerships demonstrate that the market increasingly recognizes that directory is vital to managing information resources in an Internet world." During the fourth fiscal quarter, revenue from directory-enabled servers, consisting of NetWare 4 and NetWare 5, totaled $150 million, a 16 percent increase from the fourth quarter of 1997. Associated network infrastructure and application software contributed $83 million, up 30 percent from the year-ago quarter. Of this, directory-enabled network applications increased 49 percent to $54 million on the strength of Z.E.N.works and ManageWise management software and GroupWise collaboration products. Revenue from customer service, network training, and consulting for network solutions totaled $37 million, a 22 percent increase from the year-earlier period. Record sales to large network customers in the fourth quarter led Novell's seasonally strongest period. Major account license programs were up 53 percent, compared to the year earlier quarter, to $152 million. The largest of these agreements typically involve decisions to deploy Novell Directory Services (NDS) to support diverse networks that include thousands of Windows NT Workstations and hundreds of NT Servers. Representative directory decisions in the quarter included license agreements from accounts as varied as Régime d'Assurance Chômage, the unemployment agency in France; Royal Bank of Scotland; the U.S. Immigration and Naturalization Service; and Telstra in Australia. Fourth quarter revenue on a geographic basis was $179 million in the United States, up 23 percent year- over-year. In Europe, Middle East, and Africa, revenue was up 9 percent to $81 million. Revenue from Asia Pacific was down 39 percent over the prior year period to $21 million. In the Canada and the Americas region, outside the U.S., revenue was up 9 percent to $17 million. On the balance sheet, cash and short-term investments were $1.007 billion at the end of fiscal 1998, compared with $1.033 billion at the end of fiscal 1997. The major source of cash for the year was from operations which contributed $294 million. The primary use of cash for the year was for share repurchase. On June 5, 1998, Novell's board of directors authorized the company to repurchase up to 10 percent, or approximately 35 million shares, of Novell common stock over twelve months. To date, the company spent $245 million to purchase and retire 21 million shares of common stock.
Business Outlook Novell's business objective, over the longer-term, is to achieve growth as directory deployments in business networks increase the market potential for directory-enabled applications. In addition to having moved to open Internet standards with NetWare 5, Novell is also bringing to market new directory-enabled applications that it expects will ultimately span from systems management to commerce services on the network.The company intends to expand the value of directory solutions through the integration of varied network resources with Novell Directory Services (NDS). Recent agreements with Cisco, Lucent Technologies, and Nortel are examples of this. In the case of these partners, NDS provides the basis for remote management of switches and routers. Novell's deferred revenue continued to expand in the fourth quarter, reflecting the strong growth in Novell's multi-product license programs for large network accounts. The backlog of deferred revenue for future recognition reached $142 million at the end of the fourth quarter, up $67 million from the year-earlier quarter and up $39 million from the third quarter of 1998. Novell recognizes licensing revenue from software maintenance and service contracts over periods that typically run for 24 months. Royalties from the licensing of Tuxedo transaction processing software totaled $36 million in fiscal 1998. A $12 million payment in the fourth quarter marked the end of these royalties.
About Novell Novell, Inc. (NASDAQ:NOVL) is the leading provider of network software enabled by directory services. Novell Internet solutions make networks more manageable and secure and reduce the total cost of ownership for organizations of every kind and size. Novell's worldwide channel, developer, education and technical support programs are the most extensive in the network computing industry.For information on Novell's complete range of products and services, contact Novell's Customer Response Center at (888) 321-4CRC (4272), or visit Novell's Web site at http://www.novell.com. Investors can obtain financial and corporate information at Novell's investor relations Web site at http://www.novell.com/company/ir. Press may access Novell announcements and company information on the World Wide Web at http://www.novell.com/pressroom. 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.
Press Contacts:
Jonathan Cohen
Novell, Inc.
Fourth Fiscal Quarter Ended Fiscal Year Ended
___________________________ _________________
Oct 31, 1998 Oct 31, 1997 Oct 31, 1998 Oct 31, 1997
____________ ____________ ____________ ____________
Net sales $297,579 $269,283 $1,083,887 $1,007,311
Cost of sales 65,650 62,630 238,649 277,446
____________ ____________ ____________ ____________
Gross profit 231,929 206,653 845,238 729,865
Operating expenses
Sales and marketing 92,457 101,767 386,114 443,494
Product development 54,963 73,053 225,247 282,680
General& administrative 35,429 37,402 135,431 148,360
Restructuring charges -- -- - 55,335
____________ ____________ ____________ ____________
Total operating expenses 182,849 212,222 746,792 929,869
Income (loss) from operations 49,080 (5,569) 98,446 (200,004)
Other income, net 9,280 19,359 43,188 49,434
____________ ____________ ____________ ____________
Income (loss) before taxes 58,360 13,790 141,634 (150,570)
Income taxes 16,341 6,619 39,658 (72,274)
____________ ____________ ____________ ____________
Net income (loss) $42,019 $7,171 $101,976 ($78,296)
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Weighted average shares:
Basic* 345,871 349,686 350,525 348,149
Diluted* 354,105 353,337 356,437 349,429
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Net income (loss) per share:
Basic* $0.12 $0.02 $0.29 ($0.22)
Diluted* $0.12 $0.02 $0.29 ($0.22)
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* The Company has always reported net income per share on a diluted basis.
The calculation of diluted net income per share includes the effect of common
stock equivalents such as outstanding stock options, while the calculation of
basic net income per share does not.
Consolidated Unaudited Condensed Balance Sheets (In thousands)
ASSETS Oct 31, 1998 Oct 31, 1997
____________ ____________
Current assets
Cash and short-term investments $1,007,167 $1,033,473
Receivables, net 266,463 234,358
Inventories 3,562 10,656
Prepaid expenses 63,165 57,685
Deferred& refundable income taxes 95,343 134,210
____________ ____________
Total current assets 1,435,700 1,470,382
Property, plant and equipment, net 346,196 373,865
Other assets 142,216 66,402
____________ ____________
Total assets $1,924,112 $1,910,649
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LIABILITIES& SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $77,987 $82,759
Accrued compensation 52,348 51,397
Accrued marketing liabilities 16,383 27,728
Other accrued liabilities 62,206 85,157
Income taxes payable 64,057 --
Deferred revenue 141,714 74,915
____________ ____________
Total current liabilities 414,695 321,956
Minority interests 15,919 23,276
Shareholders' equity 1,493,498 1,565,417
____________ ____________
Total liabilities and shareholders' equity $1,924,112 $1,910,649
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