Borland Announces Third Quarter 2003 Financial Results.Business Editors/High-Tech Writers SCOTTS VALLEY, Calif.--(BUSINESS WIRE)--Oct. 23, 2003 Borland Software Corporation (company) Borland Software Corporation - A company that sells a variety of PC software development and database systems. Borland was founded in 1983 and initially became famous for their low-cost software, particularly Turbo Pascal, Turbo C, and Turbo Prolog. (Nasdaq NM: BORL) today announced financial results for its third quarter of 2003. Revenues for the third quarter were $70.6 million, an increase of 16% over $60.7 million reported in the third quarter of 2002, and a decrease of 7% from $76.3 million in the second quarter of 2003. Net loss for the third quarter, including various non-operating charges, was $12.2 million, or $(0.15) per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, which compares to a net loss of $5.0 million, or $(0.06) per diluted share, in the second quarter of 2003, and to net income of $5.0 million, or $0.07 per diluted share, reported in the third quarter of 2002. Net income, excluding various non-operating charges, was $148,000, or break-even on a per share basis, which compares to net income of $3.5 million, or $0.04 per diluted share, for the second quarter of 2003, and to $6.3 million, or $0.09 per diluted share, for the third quarter of 2002. Non-operating charges included, as applicable, restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , acquisition-related expenses, in-process research and development and other charges of $12.8 million in the third quarter of 2003, $1.4 million in the third quarter of 2002, and $8.5 million in the second quarter of 2003. The company generated $5.3 million in cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses and closed the third quarter of 2003 with $207.2 million in cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. equivalents. "Our independent and integrated application lifecycle management The administration and control of an application from inception to its demise. It embraces requirements management, system design, software development and configuration management and implies an integrated set of tools for developing and controlling the project. solutions continue to resonate res·o·nate v. res·o·nat·ed, res·o·nat·ing, res·o·nates v.intr. 1. To exhibit or produce resonance or resonant effects. 2. well in the marketplace, and we are more convinced con·vince tr.v. con·vinced, con·vinc·ing, con·vinc·es 1. To bring by the use of argument or evidence to firm belief or a course of action. See Synonyms at persuade. 2. than ever that our strategy will drive long term growth," said Borland's president and chief executive officer, Dale Dale , Sir Henry Hallett 1875-1968. British physiologist. He shared a 1936 Nobel Prize for work on the chemical transmission of nerve impulses, particularly for the isolation and study of acetylcholine (1914). L. Fuller. "The third quarter was challenging as we continued to work through the transition of our sales force from a point-product sale to a solution sale. To accelerate that transition, we've we've Contraction of we have. we've have made some very positive organizational changes and management additions that I believe will act as the foundation for Borland's next phase of growth." In calculating net income, excluding various non-operating charges, Borland (Borland Software Corporation, Austin, TX, www.borland.com) A software company founded as Borland International in 1983 by Philippe Kahn. The company is noted for its language and development products. It also popularized the desktop accessory for DOS PCs with its Sidekick program. utilizes a Non-GAAP financial measure of net income that excludes, as applicable, restructuring, amortization of intangible assets, acquisition-related expenses, in-process research and development and other charges ("Non-GAAP net income"). Investors are encouraged to review the reconciliation of Non-GAAP financial measures to the most directly comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measures as provided below. Business Outlook Management provided the following financial guidance: For the quarter ending December December: see month. 31, 2003, on a GAAP basis: -- The Company expects that revenues will be within the range $71 - $75 million. -- Forecast earnings per share should be in the range of $(0.06) to $(0.04). For the quarter ending December 31, 2003, on a Non-GAAP basis: -- Forecast earnings per share should be in the range of $0.03 to $0.05. The following table shows our Non-GAAP anticipated results for the quarter ending December 31, 2003 reconciled rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. to the GAAP anticipated results for the quarter ending December 31, 2003. Our Non-GAAP anticipated results exclude, as applicable, amortization of intangible assets, acquisition-related expenses, and other charges.
Estimated per
Share
---------------
Low High
------- -------
(unaudited)
GAAP net loss $(0.06) $(0.04)
Amortization of intangible assets 0.07 0.07
Acquisition-related expenses 0.02 0.02
------- -------
Non-GAAP net income $0.03 $0.05
======= =======
Earnings Conference Call Information The Borland Software Corporation third quarter teleconference and simultaneous webcast is scheduled to begin at 2:30 p.m., Pacific Time, on Thursday Thursday: see week. , October October: see month. 23, 2003. To access the live webcast, please visit Borland's website at www.corporate-ir.net/ireye/ir_site.zhtml?ticker ticker An automated quotation system on which security transactions are reported after they occur on an exchange floor. Even though the newer systems are electronic and no longer actually tick, the name of the old mechanical device has stuck. =BORL&script (1) A program written in a general-purpose programming language. Such languages are typically interpreted and less comprehensive than full-blown compiled languages. See scripting language and interpreter. =2100 at least 30 minutes prior to the scheduled time In rallying, the Scheduled Time of any crew is the time, calculated at the beginning of the event, that they should arrive at any given control. It is different from Due Time in that Due Time is dynamic, ie it can change throughout the event as competitors drop time; whereas to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. any necessary audio or plug-in An auxiliary program that works with a major software package to enhance its capability. For example, plug-ins are widely used in image editing programs such as Photoshop to add a filter for some special effect. software. A replay will be available approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. two hours after the conference call ends, and will be available through midnight November November: see month. 3, 2003. The replay number is (888) 286-8010, or (617) 801-6888 for international callers, and the passcode is 22452144. Separately, the archived Webcast will be available on our website following the call. Any financial or statistical information posted on the company's website in connection with the teleconference will be available at: www.corporate-ir.net/ireye/ir_site.zhtml?ticker=BORL&script=2100. Non-GAAP Financial Measures Borland continues to provide all information required in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting practices (GAAP), but it believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, Borland uses Non-GAAP financial measures of its performance internally to evaluate its ongoing operations and to allocate To reserve a resource such as memory or disk. See memory allocation. resources within the organization. Borland's management does not itself, nor does it suggest that investors should, consider such Non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The Non-GAAP financial measures used by Borland may not be consistent with the presentation of similar companies in Borland's industry. However, Borland presents such Non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Borland's operating results in a manner that focuses on what it believes to be its ongoing business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . Borland's management believes it is useful for itself and investors to review both GAAP information that includes the expenses, charges, gains, and losses mentioned below and the Non-GAAP measure of net income that excludes such charges to have a better understanding of the overall performance of Borland's business and its ability to perform in subsequent periods. Borland computes its Non-GAAP financial measure of net income by adjusting GAAP net income to exclude, as applicable, the impact of restructuring, amortization of intangible assets, acquisition-related expenses, in-process research and development, and certain income and one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges and benefits. Management believes that the inclusion of this Non-GAAP financial measure provides consistency Consistency can refer to:
Borland excludes restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , including (i) employee severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and other termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. benefits, (ii) lease termination costs and other expenses associated with exiting a facility, and (iii) other costs associated with terminating contracts, from its Non-GAAP financial measure of net income. Expenses related to restructuring have, in some cases, had a significant cash impact and effect on net income as measured in accordance with GAAP. However, Borland's management believes such restructuring charges are periodic costs incurred to realign re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. its operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. with its anticipated future revenues and consequently, does not consider these restructuring costs as a normal component of its expenses related to ongoing operations. As a result, Borland's management believes it is useful for itself and investors to review both GAAP information that includes such charges and Non-GAAP measures of net income that exclude these charges to have a better understanding of the overall performance of Borland's ongoing business operations and its performance in the periods presented. In accordance with GAAP, Borland regularly amortizes the remaining value of certain intangible assets over various periods. However, these amortization expenses result in no ongoing cash expenditures and otherwise have no material impact on Borland's ongoing business operations. Similarly, from time to time, Borland undertakes strategic acquisitions and investments. The expenses related to such acquisitions and investments may or may not result in a significant cash impact or effect on net income as measured in accordance with GAAP, but their impact is not directly related to Borland's ongoing business activities in such periods. Consequently, Borland excludes the amortization of intangible assets, acquisition-related expenses and in-process research and development expenses, as well as certain one-time charges that do not relate to ongoing operations, from its Non-GAAP financial measures. Borland believes that examination of both GAAP information that includes such charges and Non-GAAP financial measures that exclude such expenses provides management with a comparative measure between product lines when allocating available resources. Borland believes that if it did not provide such Non-GAAP financial information, investors would not have all the necessary data to analyze an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. Borland's ongoing operations. About Borland Borland Software Corporation (Nasdaq NM: BORL) is a world leader in platform independent software development and deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. solutions that are designed to accelerate the entire application development lifecycle. By connecting managers, testers, designers, developers, and implementers in real time, Borland's software is designed to enable enterprises worldwide to define and sustain their competitive advantage. For more information, visit: http://www.borland.com or the Borland Developer Network at http://bdn.borland.com. All Borland brand and product names are trademarks or registered trademarks of Borland Software Corporation in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and other countries. All other marks are the property of their respective owners. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. including statements regarding Borland's strategic focus and near-term near-term adj. Of, for, or involving a short period of time in the near future. and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. outlook. Such forward-looking statements are based on current expectations that involve a number of uncertainties and risks that may cause actual events or results to differ materially. Factors that could cause actual events or results to differ materially include, but are not limited to: our ability to sell multi-product solutions for the application development lifecycle; our ability to integrate new members of our executive management and sales management Sales Management Role and Goal Importance of sales management is critical for any commercial organization. Expanding business in not possible without increasing sales volumes, and effective sales management goal is to organize sales team work in such a manner that ensures a teams; the changing nature of the markets in which we operate, namely the maturing of certain target markets and the uncertainty regarding the growth in other target markets; the effect of some of our competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. making products that compete with our products available to their customers for no or a very low fee; the ability to successfully integrate acquisitions and to absorb absorb To offset sell orders or a new security offering with buy orders. the costs associated with acquisitions; market acceptance of new or enhanced products or services developed, marketed or sold by Borland; and general industry trends, general economic factors and capital market conditions. These and other risks may be detailed from time to time in Borland's periodic reports filed with the Securities and Exchange Commission, including, but not limited to, its 2002 Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , its quarterly reports on Form 10-Q Form 10-Q See 10-Q. , and other SEC filings, copies of which may be obtained from http://www.sec.gov/. Borland is under no obligation to (and expressly disclaims any such obligation to) update any of the information in this press release if any forward-looking statement later turns out to be inaccurate whether as a result of new information, future events or otherwise. Financial Tables Follow
BORLAND SOFTWARE CORPORATION CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
Three Months Ended Nine Months Ended
------------------ -------------------
Sept 30, Sept 30, Sept 30, Sept 30,
2003 2002 2003 2002
--------- -------- --------- ---------
Revenues
Licenses and other $51,531 $50,295 $164,961 $148,058
Services 19,042 10,425 56,252 29,461
--------- -------- --------- ---------
Total revenues 70,573 60,720 221,213 177,519
Cost of revenues
Licenses and other 3,433 4,241 9,544 11,318
Services 6,967 5,173 20,890 15,563
--------- -------- --------- ---------
Cost of revenues 10,400 9,414 30,434 26,881
Gross profit 60,173 51,306 190,779 150,638
Operating expenses
Research and development 15,604 12,732 49,032 37,392
Selling, general and
administrative 43,441 32,713 136,328 95,848
Restructuring, amortization of
intangibles and acquisition-
related expenses 12,840 1,386 39,222 4,472
--------- -------- --------- ---------
Total operating expenses 71,885 46,831 224,582 137,712
Operating income (loss) (11,712) 4,475 (33,803) 12,926
Interest income, net and other 777 1,884 2,900 5,314
--------- -------- --------- ---------
Income (loss) before taxes (10,935) 6,359 (30,903) 18,240
Provision for income taxes 1,257 1,400 3,950 4,015
--------- -------- --------- ---------
Net income (loss) $(12,192) $4,959 $(34,853) $14,225
========= ======== ========= =========
Income (loss) per share - Basic $(0.15) $0.07 $(0.44) $0.20
Income (loss) per share -
Diluted $(0.15) $0.07 $(0.44) $0.19
Shares used in the calculation
of basic income (loss) per
share 80,858 71,180 80,105 71,295
Shares used in the calculation
of diluted income (loss) per
share 80,858 73,462 80,105 74,646
BORLAND SOFTWARE CORPORATION NON-GAAP CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
Three Months Nine Months
Ended Ended
----------------- -------------------
Sept 30, Sept 30, Sept 30, Sept 30,
2003 2002 2003 2002
-------- -------- --------- ---------
Revenues
Licenses and other $51,531 $50,295 $164,961 $148,058
Services 19,042 10,425 56,252 29,461
-------- -------- --------- ---------
Total revenues 70,573 60,720 221,213 177,519
Cost of revenues
Licenses and other 3,433 4,241 9,544 11,318
Services 6,967 5,173 20,890 15,563
-------- -------- --------- ---------
Cost of revenues 10,400 9,414 30,434 26,881
Gross profit 60,173 51,306 190,779 150,638
Operating expenses
Research and development 15,604 12,732 49,032 37,392
Selling, general and
administrative 43,441 32,713 136,328 95,848
Restructuring, amortization of
intangibles and acquisition-
related expenses (a) --- --- --- ---
-------- -------- --------- ---------
Total operating expenses 59,045 45,445 185,360 133,240
Operating income 1,128 5,861 5,419 17,398
Interest income, net and other 277 1,884 2,400 5,314
-------- -------- --------- ---------
Income before taxes 1,405 7,745 7,819 22,712
Provision for income taxes (b) 1,257 1,400 3,950 4,015
-------- -------- --------- ---------
Net income $148 $6,345 $3,869 $18,697
======== ======== ========= =========
Income per share - Basic $0.00 $0.09 $0.05 $0.26
Income per share - Diluted $0.00 $0.09 $0.05 $0.25
Shares used in the calculation
of basic income per share 80,858 71,180 80,105 71,295
Shares used in the calculation
of diluted income per share 82,778 73,462 82,522 74,646
(a) Non-GAAP net income for the second quarter and nine months ended
September 30, 2003 excludes approximately $12.3 million and $38.7
million, respectively, in, as applicable, restructuring,
amortization of intangible assets, acquisition-related expenses,
in-process research and development, and other charges. Non-GAAP
net income for the second quarter and nine months ended September
30, 2002 excludes approximately $1.4 million and $4.5 million,
respectively, in, as applicable, restructuring, amortization of
intangible assets, acquisition-related expenses, in-process
research and development, and other charges.
(b) In prior years, we presented Non-GAAP net income including the tax
effect of Non-GAAP adjustments. In the current year, we have not
tax affected the Non-GAAP adjustments as we have a negative
effective tax rate on a GAAP basis. Therefore, we have presented
Non-GAAP net income for the quarter and nine months ended
September 30, 2003 including the provision for income taxes on a
GAAP basis. To provide comparability to the current year
presentation, no adjustment was made to the provision for income
taxes included in the Non-GAAP income statement in the quarter and
nine months ended September 30, 2002.
In calculating both net income, excluding various non-operating charges, and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. , excluding various non-operating charges, Borland utilizes a Non-GAAP financial measure of net income and net income per share. Investors are encouraged to review the reconciliation of Non-GAAP financial measures to the most directly comparable GAAP measures as provided below.
Three Months Nine Months
Ended Ended
September 30, September 30,
----------------- ------------------
2003 2002 2003 2002
--------- ------- --------- --------
(in thousands, except per share data,
unaudited)
GAAP net income $(12,192) $4,959 $(34,853) $14,225
Restructuring 3,652 --- 8,975 380
Amortization of intangible assets 5,768 244 16,994 658
Acquisition-related expenses 3,420 1,142 8,653 3,434
Gain on investment (500) --- (500) ---
In-process research and
development --- --- 4,600 ---
--------- ------- --------- --------
Non-GAAP net income $148 $6,345 $3,869 $18,697
Basic Non-GAAP net income per
share $0.00 $0.09 $0.05 $0.26
Shares used in computing basic
net income per share 80,858 71,180 80,105 71,295
Diluted Non-GAAP net income per
share $0.00 $0.09 $0.05 $0.25
Shares used in computing diluted
net income per share 82,778 73,462 82,522 74,646
BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
Sept 30, Dec 31,
2003 2002
--------- -------
ASSETS
Cash, cash equivalents and short-term
investments $207,208 $296,156
Accounts receivable, net 49,672 47,238
Property held for sale 9,935 9,935
Property and equipment, net 10,708 7,966
Goodwill and acquired intangibles 218,220 45,000
Other assets 21,897 26,831
--------- ---------
Total assets $517,640 $433,126
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deferred revenues $43,964 $35,619
Other current liabilities 87,240 82,120
--------- ---------
Total current liabilities 131,204 117,739
Other long-term liabilities 11,911 9,638
Minority interest --- 5,018
Stockholders' equity 374,525 300,731
--------- ---------
Total liabilities and stockholders' equity $517,640 $433,126
========= =========
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