Novell Reports Financial Results for Fourth Fiscal Quarter and Full Fiscal Year 2010

Top Quote Novell Reports Financial Results for Fourth Fiscal Quarter and Full Fiscal Year 2010. End Quote
  • (1888PressRelease) December 03, 2010 - Novell, Inc. (NASDAQ: NOVL) today announced financial results for its fourth fiscal quarter and full fiscal year ended October 31, 2010. For the quarter, Novell reported net revenue of $207 million. This compares to net revenue of $216 million for the fourth fiscal quarter of 2009. GAAP income from operations for the fourth fiscal quarter of 2010 was $22 million. This compares to GAAP loss from operations of $259 million for the fourth fiscal quarter of 2009, which included a $279 million non-cash impairment charge to goodwill and intangible assets. GAAP net income in the fourth fiscal quarter of 2010 was $322 million, or $0.91 per share, which included $308 million in non-cash tax provision benefits, principally to release a valuation allowance for certain net deferred tax assets. This compares to a GAAP net loss of $256 million, or a $0.74 loss per share, for the fourth fiscal quarter of 2009. Foreign currency exchange rates favorably impacted net revenue by $1 million, operating expenses by $1 million and income from operations by $2 million compared to the same period last year.

    On a non-GAAP basis, income from operations for the fourth fiscal quarter of 2010 was $38 million. This compares to non-GAAP income from operations of $37 million in the same period last year. Non-GAAP net income for the fourth fiscal quarter of 2010 was $25 million, or $0.07 per share. This compares to non-GAAP net income of $38 million, or $0.11 per share, for the fourth fiscal quarter of 2009. A reconciliation of GAAP to non-GAAP results is provided in the financial schedules as part of this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

    For the full fiscal year 2010, Novell reported net revenue of $812 million and GAAP income from operations of $84 million. Comparatively, net revenue for the full fiscal year 2009 was $862 million and GAAP loss from operations was $206 million, which included a $279 million non-cash impairment charge to goodwill and intangible assets. GAAP net income for the full fiscal year 2010 was $378 million or $1.07 per share, which included $308 million in non-cash tax provision benefits, principally to release a valuation allowance for certain net deferred tax assets. This compares to a net loss of $213 million, or a $0.62 loss per share, for the full fiscal year 2009. Foreign currency exchange rates favorably impacted net revenue by $4 million and unfavorably impacted operating expenses by $10 million and income from operations by $6 million compared to the prior fiscal year.

    On a non-GAAP basis, income from operations for the full fiscal year 2010 was $131 million. This compares to non-GAAP income from operations of $139 million in the prior year. Non-GAAP net income for the full fiscal year 2010 was $97 million, or $0.27 per share. This compares to non-GAAP net income of $117 million, or $0.34 per share, for the full fiscal year 2009.

    "I am pleased with our fourth quarter performance," said Ron Hovsepian, President and CEO of Novell. "We continue to see strong performance from our Linux business with invoicing for Linux, excluding Microsoft certificates, up over 40% from the year ago period and the prior fiscal year. We also saw some stabilization in the Collaboration Solutions business with invoicing decreasing 3% over the year ago period. In addition, we continue to invest in the business while improving our GAAP and non-GAAP operating margins, which were 11% and 19%, respectively, for the quarter. Finally, we were profitable on a GAAP net income basis for the quarter and for the full year, even excluding discrete tax items."

    Cash, cash equivalents and short-term investments were $1.1 billion at October 31, 2010, up from $1.0 billion last quarter. Days sales outstanding in accounts receivable was 76 days at the end of the fourth fiscal quarter of 2010, up from 75 days at the end of the year-ago quarter. Total deferred revenue was $651 million at the end of the fourth fiscal quarter of 2010, down from $689 million at the end of the year-ago quarter. For the fourth fiscal quarter of 2010, cash flow from operations was $52 million. This compares to cash flow from operations of $51 million for the fourth fiscal quarter of 2009. For the full fiscal year 2010, cash flow from operations was $76 million. This compares to cash flow from operations of $69 million for the full fiscal year 2009.

    Further details on Novell's reported results are included in the financial schedules that are a part of this release.

    In addition, as previously publicly disclosed, Novell entered into an Agreement and Plan of Merger, dated as of November 21, 2010, with Attachmate Corporation, a Washington corporation, and Longview Software Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Attachmate, upon the terms and subject to the conditions of which, Longview will be merged with and into Novell, with Novell continuing as the surviving corporation and a wholly-owned subsidiary of Attachmate.
    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, adjusted operating margin, adjusted income from continuing operations, adjusted net income, adjusted income per share from continuing operations and adjusted net income per share. We provide non-GAAP financial measures to enhance an overall understanding of our current financial performance and prospects for the future and to 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 compensation. The non-GAAP financial measures do not replace the presentation of our GAAP financial results, but they eliminate expenses and gains that are excluded from most analysts' consensus estimates, that are unusual, and/or that arise outside of the ordinary course of business, such as, but not limited to, those related to stock-based compensation, acquisition-related intangible asset amortization, restructuring, asset impairments, litigation judgments and settlements, strategic alternatives review, and the sale of business operations, long-term investments, and property, plant and equipment.
    Legal Notice Regarding Forward-Looking Statements

    This press release may include 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, targets, and prospects; future opportunities; market leadership and positioning; short-term and long-term trends; the macroeconomic environment; customer priorities; timing of realization of projections; functionality, characteristics, quality and performance capabilities of Novell's products and technology; and results achievable and benefits attainable through deployment of Novell's products and provision of services. Forward-looking statements forecasting growth in financial metrics are predicated on assumptions regarding improvements in the overall economy and the markets served by the Company and in which the Company operates, the timing of which are impossible to accurately predict. Actual results may differ materially from the results discussed in or implied by such forward-looking statements, which are based upon information that is currently available to us and/or management's current expectations and speak only as of the date hereof. We are subject to a number of risks, including, among others, risks relating to: uncertainty introduced by the review of various alternatives to enhance stockholder value authorized by our Board, indirect sales, growth rates of our business units, renewal of SUSEŽ Linux Enterprise Server subscriptions with customers who have received certificates from Microsoft, decline rates of Open Enterprise Server and NetWareŽ revenue, development of products and services, the intelligent workload management market, software vulnerabilities, delays in product releases, reliance on open source software, adequacy of renewal rates, uncertain economic conditions, competition, rapid technological changes, failure to expand brand awareness, adequacy of technical support, pricing pressures, system failures, integration of acquisitions, industry consolidation, challenges resulting from a global business, foreign research and development operations, loss of key employees, intellectual property infringement, litigation matters, unpredictable financial results, impairments, the timing of revenue recognition, our investments and effective use of our cash.

    A detailed discussion of these and other factors that could affect our results is included in our SEC filings, including, but not limited to, our Quarterly Report on Form 10-Q for the period ended April 30, 2010 filed with the SEC on June 8, 2010 and our Current Report on Form 8-K filed with the SEC on November 22, 2010 (as amended), which may be obtained by calling (800) 317- 3195, or at our Investor Relations web page at: www.novell.com/company/ir.

    We expressly disclaim any obligation, except as required by law, or undertaking to update or revise any forward-looking statements contained in this press release to reflect any change of expectations with regard thereto or to reflect any change in events, conditions, or circumstances on which any such forward-looking statement is based, in whole or in part.
    Additional Information About the Merger and Where to Find It

    In connection with the merger, Novell intends to file relevant materials with the SEC, including a proxy statement. Investors and security holders of Novell are urged to read these documents (if and when they become available) and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information about Novell, the merger and the other parties to the merger. Investors and security holders may obtain these documents (and any other documents filed by Novell and Attachmate with the SEC) free of charge at the SEC's website at http://www.sec.gov. In addition, the documents filed with the SEC by Novell may be obtained free of charge by directing such request to: Novell Investor Relations at 1-800-317-3195 or from the investor relations portion of Novell's website at http://www.novell.com/company/ir/. Investors and security holders are urged to read the definitive proxy statement and the other relevant materials when they become available before making any voting or investment decision with respect to the merger.

    Novell and its directors and executive officers may be deemed to be participants in the solicitation of proxies from Novell's stockholders in respect of the merger. Information regarding Novell's directors and executive officers is contained in Novell's Annual Report on Form 10-K for the fiscal year ended October 31, 2009, its proxy statement for its 2010 Annual Meeting of Stockholders, dated February 26, 2010, and subsequent filings which Novell has made with the SEC. Stockholders may obtain additional information about the directors and executive officers of Novell and their respective interests with respect to the merger by security holdings or otherwise, which may be different than those of Novell's stockholders generally, by reading the definitive proxy statement and other relevant documents regarding the merger, when filed with the SEC. Each of these documents is, or will be, available as described above.
    About Novell

    Novell, Inc. (Nasdaq: NOVL), a leader in Intelligent Workload Management, helps organizations securely deliver and manage computing services across physical, virtual and cloud computing environments. We help customers reduce the cost, complexity, and risk associated with their IT systems through our solutions for identity and security, systems management, collaboration and Linux based operating platforms. With our infrastructure software and ecosystem of partnerships, Novell integrates mixed IT environments, allowing people and technology to work as one. For more information, visit www.novell.com.

    NetWare, Novell, the Novell logo, the N Logo, and SUSE are registered trademarks and WorkloadIQ is a trademark of Novell, Inc. in the United States and other countries. All third party trademarks are the property of their respective owners.
    Press Contacts

    Robert Kain
    Novell, Inc
    Telephone: 800-317-3195
    Email: rkain ( @ ) novell dot com

    Ian Bruce
    Novell, Inc.
    Telephone: +1 781 464-8034
    Email: ibruce ( @ ) novell dot com

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