Boole & Babbage continues earnings growth in Q3; Q3 license revenue growth was 16%; before the impact of 1994's $3.2 million purchased R&D write-off, net income from operations increased 28% and related EPS increased 21% to $.41.

SAN JOSE, Calif.--(BUSINESS WIRE)--July 31, 1995--Boole & Babbage, Inc. (NASDAQ:BOOL) today announced that revenues for its third quarter of fiscal 1995 increased by 13% to $37,368,000 compared with fiscal 1994 revenues of $33,029,000. Before the impact in 1994 of the $3,251,000 pre-tax write-off of purchased research & development in connection with the acquisition of the Ensign product line of UNIX systems management applications, operating income increased 17% to $3,359,000 compared to last year's third quarter. Related net income rose by 28% to $3,166,000 with earnings per share increasing 21% to $.41 compared to $.34 last year. Including the purchased R&D write-off, reported earnings per share increased by 1,267%.

For the nine months ended June 30, 1995, licensing revenue was up by 25% with total revenue up 18%. Before 1994's R&D write-off, operating income increased by 22% to $11,584,000 with related net income up by 33% and earnings per share up by 25% to $1.31 compared to $1.05 last year. Including this R&D write-off, reported earnings per share increased by 77%.

"Our client/server product line grew sequentially for the fifth consecutive quarter and had record revenues with a year-to-year growth rate of 47%," said Paul E. Newton, president and CEO. "Our mainframe products also showed steady growth with an 11% increase over 1994. We are pleased with those results since both product areas were up against what were record levels in the same quarter last year. Helped by a weaker U.S. Dollar, we showed strong license growth of approximately 35% in our international markets. However, in North America, where we planned for incremental growth from new products, our new licenses decreased by 20%.

"The decrease in North America was basically attributable to fewer large deals than planned combined with a slower startup of our two new client/server products. In an effort to fix some execution issues in this channel, we realigned some management positions and trimmed several headcounts. We believe these actions will help restore revenue growth while containing costs in the short-term.

"This past quarter we conducted a very successful user group meeting where we had some very informative and enthusiastic presentations from customers on their use of our technology. We also held our first CIO conference which was designed to help us gain exposure at higher levels within our customer organizations. By any measure, both of these customer-oriented events were extremely successful and showed that users view Boole as an increasingly strategic vendor.

"For the traditional mainframe markets, we announced two new products which will analyze application performance and monitor applications across multiple systems, thus improving overall efficiency. We also aggressively alerted Legent customers that we represent an attractive alternative to the merger with Computer Associates. In each of these cases, we expect to win new customers as well as gain additional revenue from our existing customer base.

"Led by record results from COMMAND/POST, we were quite active in the client/server area. We signed additional product and service alliances and, after quarter's end, rolled out a new version of Ensign featuring a significantly enhanced GUI and program scripts which add to the product's plug-and-go implementation capability in multisite, multiplatform environments. We also hired some additional industry-experienced talent that should strengthen our capabilities in the emerging market for distributed systems management.

"So, as we head into our final quarter of the year, we are looking for higher revenue levels from our new client/server products along with a steady performance from our existing products. Combined with cost controls, this is a formula for solid results," Newton concluded.

Boole & Babbage is the worldwide leader in Enterprise Automation software for distributed systems. The Company is committed to supporting open systems and the growing client/server market to help IS organizations reduce costs and increase systems availability. Strategic alliances are maintained with Hewlett-Packard, IBM and other industry leaders to ensure Boole & Babbage customers receive the most powerful, efficient computing solutions.

Following are highlights of fiscal 1995's third quarter and year to date results: -0-

                          Boole & Babbage
        Condensed Consolidated Statements of Income (Unaudited)
              (In thousands, except per share amounts)

                                                  Nine Months
                         Q395        Q394       FY95       FY94

Revenues                $37,368     $33,029   $113,194   $96,169
Costs and expenses       34,009      30,164    101,610    86,654
   Operating income       3,359       2,865     11,584     9,515
Purchased R&D                --      (3,251)        --    (3,251)
Other income              1,037         719      2,784     1,410
  Pretax income           4,396         333     14,368     7,674

Income taxes              1,230         105      4,320     2,380
Tax rate                   28.0%       31.0%      30.0%     31.0%
  Net income            $ 3,166         228    $10,048    $5,294
Earnings per share
 -- operating              $.41        $.34      $1.31     $1.05
Earnings per share
 -- reported               $.41        $.03      $1.31      $.74
Shares outstanding        7,775       7,270      7,650     7,165

                          Boole & Babbage
           Condensed Consolidated Balance Sheets (Unaudited)

                            June 30,      Dec. 31,    June 30,
                              1995          1994        1994

Cash                        $ 38,616      $ 36,564      $ 32,409
Trade receivables             22,520        24,842        18,480
Lease and other receivables   50,963        41,228        32,462
Furniture and equipment        7,924         8,181         8,706
Capitalized software          12,948        13,610        14,505
Other                         16,037        13,489        11,185
   Total Assets             $149,008      $137,914      $117,747

Accrued expenses            $ 28,200      $ 30,633      $ 25,248
Other liabilities              4,000         5,560         7,256
Deferred maint. income        55,242        50,241        41,936
Stockholders' equity          61,566        51,480        43,307
   Total Liabilities and
    Equity                  $149,008      $137,914      $117,747

CONTACT: Boole & Babbage, San Jose

Arthur Knapp, 408/526-3333 (Chief Financial Officer)

email: [e-mail]