Borland Reports Final Financial Results for First Quarter 2006.CUPERTINO Cu·per·ti·no A city of western California west of San Jose. It has an electronics industry. Population: 50,000. , Calif. -- 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:BORL), the global leader for Software Delivery Optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. (SDO SDO Service Data Object SDO Solar Dynamics Observatory (satellite) SDO Software Delivery Optimization (Borland) SDO Sub Divisional Officer (india) ), today announced final financial results for the first quarter ended March 31, 2006. In addition, the company filed its Quarterly Report on Form 10-Q Form 10-Q See 10-Q. . For the first quarter, 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. reported revenue of $69.6 million, GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net loss of $8.9 million, or $(0.12) per share, and Non-GAAP net loss of $3.9 million, or $(0.05) per share. GAAP net loss for the first quarter includes $638,000 related to the amortization of intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. , $1,589,000 in acquisition and other transaction charges and $2,841,000 of stock-based compensation, including charges related to the implementation of FAS123R. Since the close of the first quarter, Borland completed the acquisition of Segue Software Segue Software Incorporated (NASDAQ: SEGU) is a leader in quality optimization solutions through their automated software testing products like SilkTest. Segue was founded in 1988. The company has 200 employees worldwide and over $30 million in annual revenue. and used approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $105 million in cash. Non-GAAP Financial Measures Borland provides 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 principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP), but it believes that evaluating its ongoing operating results may be difficult to understand if limited to reviewing only GAAP financial measures. Internally, Borland reviews its Non-GAAP consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statement of operations See Income statement. , including calculations of Non-GAAP gross net income (loss) and net income (loss) per share, which exclude as applicable 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 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. , stock-based compensation charges, amortization of intangible and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. , acquisition-related expenses, acquired in-process research and development expense, gains and losses on sales of investments, and the related tax effect and other tax expense not related to ongoing operations, 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. 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 management believes to be Borland's 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 . Management believes that the inclusion of Non-GAAP financial measures provides consistency and comparability with past reports of financial results and historically provided comparability to similar companies in Borland's industry. Investors should note, however, that the Non-GAAP financial measures used by Borland may not be the same Non-GAAP financial measures as, and may not be calculated in the same manner as, that of other companies. Borland's management believes it is useful for the company and investors to review both GAAP information that includes the expenses, charges, gains, and losses mentioned below and the Non-GAAP consolidated statement of operations, including calculations of Non-GAAP net income (loss) and net income (loss) per share that exclude such charges to have a better understanding of the overall performance of Borland's business and its ability to perform in subsequent periods. Whenever Borland uses such a Non-GAAP financial measure, it provides a reconciliation of Non-GAAP financial measures to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these Non-GAAP financial measures to their most directly comparable GAAP financial measure. Borland excludes restructuring charges, including (i) employee severance and other termination benefits, (ii) lease termination costs and other expenses associated with exiting a facility, (iii) disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → , and (iv) other costs associated with terminating contracts, from its Non-GAAP consolidated statement of operations, including its calculations of Non-GAAP net income (loss) and net income (loss) per share. Expenses related to severance and 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). have, in some cases, had a significant cash impact and effect on Borland's results of operations, including its net income (loss) as measured in accordance with GAAP. However, Borland's management believes such severance and restructuring charges 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 severance and 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 financial measures 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 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. 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 and the gains and losses on investments that are ultimately sold or otherwise disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of may or may not result in a significant cash impact or effect on net income (loss) as measured in accordance with GAAP, but their impact is not directly related to Borland's ongoing business activities in such periods. Borland believes that examination of both GAAP information that includes such charges and Non-GAAP financial measures that exclude such expenses provide management with information valuable to 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. On January January: see month. 1, 2006, Borland commenced expensing stock-based compensation in accordance with Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). ("FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). ") Statement No. 123R, Share-Based Payment ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R"). Prior to January 1, 2006, Borland accounted for stock based compensation plans using the intrinsic value Intrinsic Value 1. The value of a company or an asset based on an underlying perception of the value. 2. For call options, this is the difference between the underlying stock's price and the strike price. method of accounting in accordance with Accounting Principles Board The Accounting Principles Board (APB) is the former authoritative body of the American Institute of Certified Public Accountants (AICPA). It was created by the American Institute of Certified Public Accountants in 1959 and issued pronouncements on accounting principles until 1973, Opinion No. 25, Accounting for Stock Issued to Employees ("APB APB See Accounting Principles Board (APB). 25"), and its related interpretations. Under the provisions of APB 25, no compensation expense was recognized with respect to purchases of Borland's common stock under its employee stock purchase plan or when stock options were granted with exercise prices equal to or greater than market value on the date of grant. The implementation of SFAS 123R has not had a significant cash impact but has had a significant impact on net income (loss) as measured in accordance with GAAP. Borland believes the examination of both GAAP information that includes the stock-based compensation expense as determined pursuant to SFAS 123R and Non-GAAP measures that exclude such expenses are valuable in comparing Borland's financial performance in comparison to prior periods and in decision making with respect to resource allocation resource allocation Managed care The constellation of activities and decisions which form the basis for prioritizing health care needs . About Borland Founded in 1983, Borland Software Corporation (NASDAQ:BORL) is the global leader in Software Delivery Optimization. The company provides the software and services that align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. the people, processes and technology required to maximize the business value of software. To learn more about delivering quality software, on time and within budget, visit: http://www.borland.com. Borland and all other Borland brand and product names are service marks, 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.
BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
March 31, December 31,
ASSETS 2006 2005
------ ---------- ------------
Cash and cash equivalents and short-term
investments $ 173,074 $ 175,078
Accounts receivable, net 48,225 54,405
Property and equipment, net 17,815 17,837
Goodwill and acquired intangibles, net 190,951 191,237
Other assets 25,364 25,973
---------- ------------
Total assets $ 455,429 $ 464,530
========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deferred revenues $ 52,193 $ 55,470
Other current liabilities 82,791 81,606
---------- ------------
Total current liabilities 134,984 137,076
Other long-term liabilities 14,683 15,514
Stockholders' equity 305,762 311,940
---------- ------------
Total liabilities and stockholders' equity $ 455,429 $ 464,530
========== ============
BORLAND SOFTWARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
Three Months
Ended March 31,
-----------------
2006 2005
-------- --------
License and other revenues $39,395 $43,564
Service revenues 30,177 27,760
-------- --------
Total revenues 69,572 71,324
-------- --------
Cost of license and other revenues 2,231 2,878
Cost of service revenues 13,041 9,381
Amortization of acquired intangibles 525 2,512
-------- --------
Cost of revenues 15,797 14,771
-------- --------
Gross profit 53,775 56,553
-------- --------
Selling, general and administrative 46,204 42,292
Research and development 15,405 14,629
Restructuring, amortization of other intangibles
and acquisition-related expenses 1,050 1,095
-------- --------
Total operating expenses 62,659 58,016
-------- --------
Operating loss (8,884) (1,463)
Gain on sale of investment -- 4,680
Interest and other income, net 1,342 1,220
-------- --------
Income (loss) before income taxes (7,542) 4,437
Income tax provision 1,397 943
-------- --------
Net income (loss) $(8,939) $ 3,494
======== ========
Net income (loss) per share:
Net income (loss) per share - basic $ (0.12) $ 0.04
Net income (loss) per share - diluted $ (0.12) $ 0.04
Shares used in computing basic net income (loss)
per share 76,640 80,373
Shares used in computing diluted net income (loss)
per share 76,640 81,590
BORLAND SOFTWARE CORPORATION
NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
Three Months Ended Three Months Ended
March 31, 2006 March 31, 2005
--------------------------- ---------------------------
Non-GAAP Non-GAAP
Adjust- Non- Adjust- Non-
GAAP ments GAAP GAAP ments GAAP
-------- --------- -------- -------- --------- --------
Licenses and
other
revenues $39,395 $ -- $39,395 $43,564 $ -- $43,564
Service
revenues 30,177 -- 30,177 27,760 -- 27,760
-------- --------- -------- -------- --------- --------
Total net
revenues 69,572 -- 69,572 71,324 -- 71,324
-------- --------- -------- -------- --------- --------
Cost of
licenses and
other
revenues 2,231 -- 2,231 2,878 -- 2,878
Cost of
service
revenues (a) 13,041 (121) 12,920 9,381 (53) 9,328
Amortization
of acquired
intangibles
(b) 525 (525) -- 2,512 (2,512) --
-------- --------- -------- -------- --------- --------
Cost of
revenues 15,797 (646) 15,151 14,771 (2,565) 12,206
-------- --------- -------- -------- --------- --------
Gross
profit 53,775 646 54,421 56,553 2,565 59,118
-------- --------- -------- -------- --------- --------
Selling,
general and
adminis-
trative
expenses (c) 46,204 (2,896) 43,308 42,292 -- 42,292
Research and
development
expenses (a) 15,405 (476) 14,929 14,629 -- 14,629
Restructuring,
amortization
of other
intangibles
and
acquisition-
related
expenses (d) 1,050 (1,050) -- 1,095 (1,095) --
-------- --------- -------- -------- --------- --------
Total
operating
expenses 62,659 (4,422) 58,237 58,016 (1,095) 56,921
-------- --------- -------- -------- --------- --------
Operating
income (loss) (8,884) 5,068 (3,816) (1,463) 3,660 2,197
Gain on sale
of investment
(e) -- -- -- 4,680 (4,680) --
Interest and
other income,
net 1,342 -- 1,342 1,220 -- 1,220
-------- --------- -------- -------- --------- --------
Income (loss)
before income
taxes (7,542) 5,068 (2,474) 4,437 (1,020) 3,417
Income tax
provision (f) 1,397 -- 1,397 943 (25) 918
-------- --------- -------- -------- --------- --------
Net income
(loss) $(8,939) $ 5,068 $(3,871) $ 3,494 $ (995) $ 2,499
======== ========= ======== ======== ========= ========
Net income
(loss) per
share:
Net income
(loss) per
share -
basic $ (0.12) $ 0.07 $ (0.05) $ 0.04 $ (0.01) $ 0.03
Net income
(loss) per
share -
diluted $ (0.12) $ 0.07 $ (0.05) $ 0.04 $ (0.01) $ 0.03
Shares used
in
computing
basic net
income
(loss) per
share 76,640 76,301 80,373 80,373
Shares used
in
computing
diluted net
income
(loss) per
share 76,640 76,301 81,590 81,590
Non-GAAP results for the three months ended March 31, 2006 and
2005 exclude the following items, which are included in
Borland's Consolidated Statements of Operations when presented
in accordance with GAAP:
(a) Stock-based compensation charges
(b) Amortization of intangible assets resulting from
acquisitions
(c) Stock-based compensation charges and transaction costs
relating to the acquisition of Segue and the
divestiture of our IDE products
(d) Restructuring expenses and reversals, amortization of
other intangible assets and acquisition-related
employee retention expenses
(e) Gain resulting from the sale of an equity investment
(f) Income tax effect on Non-GAAP items and other tax
expense not related to ongoing operations
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