Press Room
Press Release
Novell Reports Financial Results for Second Fiscal Quarter 2008
WALTHAM, Mass.
29 May 2008
Novell, Inc. (NASDAQ: NOVL) today announced financial results for its second fiscal quarter ended April 30, 2008. For the quarter, Novell reported net revenue of $236 million. This compares to net revenue of $232 million for the second fiscal quarter 2007. Income from operations for the second fiscal quarter 2008 was $2 million, compared to a loss from operations of $12 million for the second fiscal quarter 2007. Income from continuing operations in the second fiscal quarter 2008 was $6 million, or $0.02 per share. This compares to a loss from continuing operations of $1 million, or $0.00 loss per share, for the second fiscal quarter 2007. Foreign currency exchange rates favorably impacted revenue by $8 million, unfavorably impacted operating expenses by $9 million and negatively impacted income from operations by $1 million yearover- year.
On a non-GAAP basis, income from operations for the second fiscal quarter 2008 was $16 million. This compares to non-GAAP income from operations of $9 million in the year-ago quarter. Non- GAAP income from continuing operations for the second fiscal quarter 2008 was $21 million, or $0.06 per share. This compares to non-GAAP income from continuing operations of $16 million, or $0.05 per share, for the second fiscal quarter 2007.
For the second fiscal quarter 2008, Novell reported $30 million of product revenue from Open Platform Solutions of which $29 million was from Linux* Platform Products, up 31% year-over-year. Product revenue from Identity and Security Management was $31 million of which Identity and Access Management was $27 million, up 13% year-over-year. Product revenue from Systems and Resource Management was $41 million, up 15% year-over-year. Workgroup product revenue of $92 million was down 1% year-over-year.
“Our business continues to gain momentum, with strong product revenue growth in Linux, Identity and Systems and Resource Management,” said Ron Hovsepian, President and CEO of Novell. “We are encouraged by our results and remain confident we will achieve our financial objectives for fiscal 2008.”
Cash, cash equivalents and short-term investments were $1.4 billion at April 30, 2008, down from $1.8 billion in the year-ago quarter, primarily due to the acquisition of PlateSpin and the repurchase of a portion of our debentures. Days sales outstanding in accounts receivable was 66 days at the end of the second fiscal quarter 2008, up from 64 days at the end of the year-ago quarter. Total deferred revenue was $702 million at the end of the second fiscal quarter 2008, up from $700 million at the end of the year-ago quarter. Cash flow from operations was a negative $18 million for the second fiscal quarter 2008. This compares to negative cash flow from operations of $29 million in the second fiscal quarter 2007.
During the quarter, Novell repurchased a portion of its outstanding 0.5% senior convertible debentures due 2024. To date, $135 million of cash has been used for these activities. Novell has not repurchased any shares of common stock under the share repurchase program that it announced on May 13, 2008.
Full details on Novell's reported results, including a reconciliation of the non-GAAP results, are included in the financial schedules that are a part of this release.
Financial Outlook
Novell management reiterates the following financial guidance:For the full fiscal year 2008:
- Net revenue is expected to be between $940 million and $970 million.
- Non-GAAP operating margin is expected to be between 7% and 9%, excluding all acquisitionrelated intangible asset amortization.
Conference Call Notification and Web Access Detail
A live Webcast of a Novell conference call to discuss the quarter will be broadcast at 5:00 PM ET May 29, 2008, from Novell's Investor Relations Web page:http://www.novell.com/company/ir/qresults/. The domestic conference call dial-in number is 866-335-5255, password “Novell”, and the international dial-in number is +1-706-679-2263, password “Novell”.
The call will be archived on the Novell Web site approximately two hours after its conclusion and will remain on the Web site until June 13, 2008. The call will also be available for telephone playback through midnight ET, June 13, 2008. The domestic toll-free replay number is 800-642-1687, and the international replay number is +1-706-645-9291. Replay listeners must enter conference ID number 45769805.
A copy of this press release is posted on Novell's Web site at: http://www.novell.com/company/ir/qresults/.
Non-GAAP Financial Measures
We supplement our consolidated unaudited condensed financial statements presented in accordance with GAAP with certain non-GAAP financial measures. These non-GAAP measures include adjusted income from operations, operating margin, income from continuing operations, net income, income per share from continuing operations and net income per share both of which are based on an adjusted number of diluted weighted average shares. We provide non-GAAP financial measures to enhance an overall understanding of our current financial performance and prospects for the future and enable investors to evaluate our performance in the same way that management does. Management uses these same non-GAAP financial measures to evaluate performance, allocate resources, and determine bonuses. The non-GAAP financial measures do not replace the presentation of our GAAP financial results, but they eliminate expenses and gains that are unusual, that are excluded from analysts' consensus estimates, and/or that arise outside of the ordinary course of business, such as, but not limited to, stock-based compensation expenses, acquisition-related intangible asset amortization, restructuring expenses, asset impairments, litigation judgments and settlements, the write-off of acquired in-process research and development, and gains (losses) on the sale of business operations, long-term investments, and property, plant and equipment.Legal Notice Regarding Forward-Looking Statements
This press release includes statements that are not historical in nature and that may be characterized as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act, including those related to future financial and operating results, future opportunities, the benefits and synergies of the company's brands, strategies and acquisitions, and the growth of the market for Linux Platform Products, Identity and Access Management, and Systems and Resource Management. You should be aware that Novell's actual results could differ materially from those contained in the forward-looking statements, which are based on current expectations of Novell management and are subject to a number of risks and uncertainties, including, but not limited to, Novell's ability to transform its business through the implementation of its strategic plan, Novell's ability to realize the benefits anticipated from the Microsoft transaction and other transactions, Novell's ability to realize the benefits anticipated from its restructuring plan, and the expected charges to be incurred and payments to be made under the restructuring plan, Novell's ability to achieve its expense targets, Novell's success in executing its Linux Platform Products, Identity and Access Management, and Systems and Resource Management strategies, Novell's ability to take a competitive position in the Linux Platform Products, Identity and Access Management, and Systems and Resource Management industries, business conditions and the general economy, market opportunities, potential new business strategies, competitive factors, sales and marketing execution, shifts in technologies or market demand, Novell's ability to integrate acquired operations and employees, and the other factors described in Novell's Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 21, 2007. Novell disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this press release except as required by the securities laws.About Novell
Novell, Inc. (Nasdaq: NOVL) delivers the best engineered, most interoperable Linux platform and a portfolio of integrated IT management software that helps customers around the world reduce cost, complexity and risk. With our infrastructure software and ecosystem of partnerships, Novell harmoniously integrates mixed IT environments, allowing people and technology to work as one. For more information, visit www.novell.com.
* Linux is a registered trademark of Linus Torvalds. All other third-party trademarks are the property of their respective owners.
Press Contact
Ian Bruce
Novell, Inc.
Telephone: +1 781 464-8034
Email: ibruce@novell.com
Investor Relations Contact
Susan Walker White
Novell, Inc.
Telephone: 800-317-3195
Email: swhite@novell.com
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Novell, Inc. |
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| Assets | Apr 30, 2008 | Oct 31, 2007 | ||||||
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| Current assets: | ||||||||
| Cash and cash equivalents | $1,003,398 | $1,079,819 | ||||||
| Short-term investments | 427,322 | 777,818 | ||||||
| Restricted cash | 52,124 | - | ||||||
| Receivables, net | 176,676 | 208,318 | ||||||
| Prepaid expenses | 54,910 | 53,316 | ||||||
| Other current assets | 29,260 | 35,065 | ||||||
| Total current assets | 1,743,690 | 2,154,336 | ||||||
|
||||||||
| Property, plant and equipment, net | 183,743 | 180,537 | ||||||
| Long-term investments | 42,088 | 37,304 | ||||||
| Goodwill | 596,978 | 404,612 | ||||||
| Intangible assets, net | 58,033 | 33,572 | ||||||
| Deferred income taxes | 27,321 | 14,518 | ||||||
| Other assets | 27,470 | 29,515 | ||||||
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| Total assets | $2,679,323 | $2,854,394 | ||||||
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| Liabilities and Stockholders' Equity | ||||||||
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| Current liabilities: | ||||||||
| Accounts payable | $40,841 | $45,135 | ||||||
| Accrued compensation | 88,348 | 112,794 | ||||||
| Other accrued liabilities | 98,849 | 122,850 | ||||||
| Income taxes payable | 7,244 | 46,724 | ||||||
| Deferred revenue | 450,945 | 494,615 | ||||||
| Total current liabilities | 686,227 | 822,118 | ||||||
|
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| Deferred income taxes | 1,361 | 884 | ||||||
| Other long-term liabilities | 40,502 | - | ||||||
| Long-term deferred revenue | 250,629 | 273,066 | ||||||
| Senior convertible debentures | 479,394 | 600,000 | ||||||
|
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| Total liabilities | 1,458,113 | 1,696,068 | ||||||
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| Stockholders' equity | 1,221,210 | 1,158,326 | ||||||
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| Total liabilities and stockholders' equity | $2,679,323 | $2,854,394 | ||||||
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