Borland Reports Financial Results for Second Quarter of Fiscal Year 2005.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 in platform-independent solutions 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. , today announced financial results for its second quarter ended June June: see month. 30, 2005. Revenues for the second quarter of 2005 were $66.6 million, GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net loss was $17.5 million, or $0.23 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, and Non-GAAP net income was $74,000, or $0.00 per diluted share. Second quarter results were at the high end of Borland's preliminary outlook issued on July July: see month. 7, 2005. GAAP results for the second quarter of 2005 include $15.7 million in charges related to 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). activities, primarily related to exit activities involving a U.S. facility. "We continued to see positive signs in the ALM (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. ) segment of our business as more customers turn to 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. to help maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. the business value of their software," commented Scott Arnold, Interim Chief Executive Officer of Borland. "Our challenge is to accelerate growth in our ALM business while managing our maturing products. Our efforts for the remainder of 2005 will focus squarely square·ly adv. 1. Mathematics At right angles: sawed the beam squarely. 2. In a square shape. 3. on executing our ALM growth strategy." Business Outlook Management provided the following financial guidance: For the quarter ending September September: see month. 30, 2005, on a GAAP basis: --Revenues in the range of $60 to $66 million. --Forecast net loss per share in the range of $(0.13) to $(0.06), including $(0.01) in 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. . For the quarter ending September 30, 2005, on a Non-GAAP basis: --Forecast net loss per share in the range of $(0.08) to $(0.01). The following table shows our Non-GAAP anticipated results for the quarter ending September 30, 2005 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. Our Non-GAAP anticipated results exclude restructuring costs, 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. and acquisition-related expenses, as applicable.
Estimated per Share
--------------------
Low High
------- -------
(unaudited)
GAAP net loss $(0.13) $(0.06)
Restructuring costs, amortization of intangible
assets and acquisition-related expenses(1) 0.05 0.05
------ ------
Non-GAAP net loss $(0.08) $(0.01)
====== ======
(1) Includes $0.01 for restructuring costs and $0.04 for
amortization of intangible assets and acquisition-related
expenses.
Earnings Conference Call Information Borland Software Corporation's second quarter 2005 teleconference and simultaneous Webcast is scheduled to begin at 2:30 p.m. PT, on Tuesday Tuesday: see week. , August 2, 2005. To access the live Webcast, please visit the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of Borland's website. 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 August 16, 2005. The replay number is (800) 405-2236 or (303) 590-3000, with passcode 11035779. The archived Webcast will also be available on our website. 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 profit, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (loss), net income (loss) and net income (loss) per share, which exclude as applicable restructuring, amortization of intangible assets, acquisition-related expenses, gains and losses on sales of investments, and the related tax effect, 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 Consistency can refer to:
Borland excludes restructuring charges, 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, (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 gross profit, operating income (loss), net income (loss) and net income (loss) per share. Expenses related to restructuring 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 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 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 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. 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. 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 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, 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 and anticipated financial performance in the coming quarter. 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, among others, our ability to sell multi-product solutions for the application development lifecycle; the effects of a longer sales cycle as we increase our focus on larger enterprise customers; our ability to maintain revenue levels in our legacy product lines; the effects that altered spending priorities will have on our financial results; market acceptance and adoption of our products and services including our enterprise software development platform/solution; our ability to enhance the quality and scalability How much a system can be expanded. See scalable. scalability - How well a solution to some problem will work when the size of the problem increases. For example, a central server of some kind with ten clients may perform adequately but with a thousand clients it of our products to meet the needs of our customers; 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 latest 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. , and its latest quarterly report on Form 10-Q Form 10-Q See 10-Q. , copies of which may be obtained from http://www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . Borland is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. Information contained in our website is not incorporated by reference in, or made part of this press release.
BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
June 30, December 31,
2005 2004
--------- ---------
ASSETS
Cash, cash equivalents and short-term
investments $189,722 $221,198
Accounts receivable, net 50,631 62,924
Property and equipment, net 17,038 16,117
Goodwill and acquired intangibles 191,420 195,020
Other assets 22,815 20,024
-------- --------
Total assets $471,626 $515,283
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deferred revenues $ 50,426 $ 51,647
Other current liabilities 79,389 80,923
-------- --------
Total current liabilities 129,815 132,570
Other long-term liabilities 15,670 6,333
Stockholders' equity 326,141 376,380
-------- --------
Total liabilities and stockholders' equity $471,626 $515,283
======== ========
BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
-------- ------- -------- --------
License and other revenues $ 38,159 $54,134 $ 81,723 $104,954
Service revenues 28,405 22,392 56,165 44,431
-------- ------- -------- --------
Total revenues 66,564 76,526 137,888 149,385
-------- ------- -------- --------
Cost of license and other
revenues 1,997 1,643 4,875 4,474
Cost of service revenues 9,631 5,801 18,959 11,803
Amortization of acquired
intangibles 2,521 2,375 5,033 4,936
-------- ------- -------- --------
Cost of revenues 14,149 9,819 28,867 21,213
-------- ------- -------- --------
Gross profit 52,415 66,707 109,021 128,172
-------- ------- -------- --------
Selling, general and
administrative expenses 40,970 42,219 83,262 82,794
Research and development
expenses 14,069 17,195 28,698 33,986
Restructuring, amortization
of other intangibles and
acquisition-related
expenses 16,577 1,214 17,725 2,953
-------- ------- -------- --------
Total operating expenses 71,616 60,628 129,685 119,733
-------- ------- -------- --------
Operating income (loss) (19,201) 6,079 (20,664) 8,439
Gain on sale of investment -- -- 4,680 --
Interest and other income
(expense), net 1,287 (245) 2,507 23
-------- ------- -------- --------
Income (loss) before income
taxes (17,914) 5,834 (13,477) 8,462
Income tax provision
(benefit) (368) 2,988 575 4,903
-------- ------- -------- --------
Net income (loss) $(17,546) $ 2,846 $(14,052) $ 3,559
======== ======= ======== ========
Net income (loss) per share:
Net income (loss) per share
-- basic $ (0.23) $ 0.04 $ (0.18) $ 0.04
======== ======= ======== ========
Net income (loss) per share
-- diluted $ (0.23) $ 0.03 $ (0.18) $ 0.04
======== ======= ======== ========
Shares used in computing
basic net income (loss) per
share 77,421 80,381 78,897 80,594
======== ======= ======== ========
Shares used in computing
diluted net income (loss)
per share 77,421 81,798 78,897 82,247
======== ======= ======== ========
BORLAND SOFTWARE CORPORATION
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
Three Months Ended
June 30, 2005
--------------------------------
GAAP Non-GAAP Non-GAAP
Adjust-
ments
--------- --------- --------
License and other revenues $ 38,159 $ -- $38,159
Service revenues 28,405 -- 28,405
-------- -------- -------
Total revenues 66,564 -- 66,564
-------- -------- -------
Cost of license and other revenues 1,997 -- 1,997
Cost of service revenues 9,631 -- 9,631
Amortization of acquired
intangibles(a) 2,521 (2,521) --
-------- -------- -------
Cost of revenues 14,149 (2,521) 11,628
-------- -------- -------
Gross profit 52,415 2,521 54,936
-------- -------- -------
Selling, general and
administrative expenses 40,970 -- 40,970
Research and development expenses 14,069 -- 14,069
Restructuring, amortization
of other intangibles and
acquisition-related expenses(b) 16,577 (16,577) --
-------- -------- -------
Total operating expenses 71,616 (16,577) 55,039
-------- -------- -------
Operating income (loss) (19,201) 19,098 (103)
Gain on sale of investment(c) -- -- --
Interest and other income
(expense), net 1,287 -- 1,287
-------- -------- -------
Income (loss) before income taxes (17,914) 19,098 1,184
Income tax provision (benefit)(d) (368) 1,478 1,110
-------- -------- -------
Net income (loss) $(17,546) $ 17,620 $ 74
======== ======== =======
Net income (loss) per share:
Net income (loss) per share
-- basic $ (0.23) $ 0.23 $ 0.00
======== ======== =======
Net income (loss) per share
-- diluted $ (0.23) $ 0.23 $ 0.00
======== ======== =======
Shares used in computing
basic net income (loss)
per share 77,421 -- 77,421
======== ======== =======
Shares used in computing
diluted net income (loss)
per share(e) 77,421 430 77,851
======== ======== =======
Three Months Ended
June 30, 2004
------------------------------
GAAP Non-GAAP Non-GAAP
Adjust-
ments
-------- -------- --------
License and other revenues $54,134 $ -- $54,134
Service revenues 22,392 -- 22,392
------- ------- -------
Total revenues 76,526 -- 76,526
------- ------- -------
Cost of license and other revenues 1,643 -- 1,643
Cost of service revenues 5,801 -- 5,801
Amortization of acquired intangibles(a) 2,375 (2,375) --
------- ------- -------
Cost of revenues 9,819 (2,375) 7,444
------- ------- -------
Gross profit 66,707 2,375 69,082
------- ------- -------
Selling, general and
administrative expenses 42,219 -- 42,219
Research and development expenses 17,195 -- 17,195
Restructuring, amortization
of other intangibles and
acquisition-related expenses(b) 1,214 (1,214) --
------- ------- -------
Total operating expenses 60,628 (1,214) 59,414
------- ------- -------
Operating income (loss) 6,079 3,589 9,668
Gain on sale of investment(c) -- -- --
Interest and other income (expense), net (245) -- (245)
------- ------- -------
Income (loss) before income taxes 5,834 3,589 9,423
Income tax provision (benefit)(d) 2,988 (67) 2,921
------- ------- -------
Net income (loss) $ 2,846 $ 3,656 $ 6,502
======= ======= =======
Net income (loss) per share:
Net income (loss) per share
-- basic $ 0.04 $ 0.04 $ 0.08
======= ======= =======
Net income (loss) per share
-- diluted $ 0.03 $ 0.05 $ 0.08
======= ======= =======
Shares used in computing
basic net income (loss)
per share 80,381 -- 80,381
======= ======= =======
Shares used in computing
diluted net income (loss)
per share(e) 81,798 -- 81,798
======= ======= =======
BORLAND SOFTWARE CORPORATION
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
Six Months Ended
June 30, 2005
---------------------------------
GAAP Non-GAAP Non-GAAP
Adjust-
ments
--------- --------- ---------
License and other revenues $ 81,723 $ -- $ 81,723
Service revenues 56,165 -- 56,165
-------- -------- --------
Total revenues 137,888 -- 137,888
-------- -------- --------
Cost of license and other revenues 4,875 -- 4,875
Cost of service revenues 18,959 -- 18,959
Amortization of acquired
intangibles(a) 5,033 (5,033) --
-------- -------- --------
Cost of revenues 28,867 (5,033) 23,834
-------- -------- --------
Gross profit 109,021 5,033 114,054
-------- -------- --------
Selling, general and
administrative expenses 83,262 -- 83,262
Research and development expenses 28,698 -- 28,698
Restructuring, amortization
of other intangibles and
acquisition-related expenses(b) 17,725 (17,725) --
-------- -------- --------
Total operating expenses 129,685 (17,725) 111,960
-------- -------- --------
Operating income (loss) (20,664) 22,758 2,094
Gain on sale of investment(c) 4,680 (4,680) --
Interest and other income
(expense), net 2,507 -- 2,507
-------- -------- --------
Income (loss) before income taxes (13,477) 18,078 4,601
Income tax provision (d) 575 1,453 2,028
-------- -------- --------
Net income (loss) $(14,052) $ 16,625 $ 2,573
======== ======== ========
Net income (loss) per share:
Net income (loss) per share
-- basic $ (0.18) $ 0.21 $ 0.03
======== ======== ========
Net income (loss) per share
-- diluted $ (0.18) $ 0.21 $ 0.03
======== ======== ========
Shares used in computing
basic net income (loss)
per share 78,897 -- 78,897
======== ======== ========
Shares used in computing
diluted net income (loss)
per share(e) 78,897 838 79,735
======== ======== ========
Six Months Ended
June 30, 2004
--------------------------------
GAAP Non-GAAP Non-GAAP
Adjust-
ments
--------- -------- ---------
License and other revenues $104,954 $ -- $104,954
Service revenues 44,431 -- 44,431
-------- ------- --------
Total revenues 149,385 -- 149,385
-------- ------- --------
Cost of license and other revenues 4,474 -- 4,474
Cost of service revenues 11,803 -- 11,803
Amortization of acquired
intangibles(a) 4,936 (4,936) --
-------- ------- --------
Cost of revenues 21,213 (4,936) 16,277
-------- ------- --------
Gross profit 128,172 4,936 133,108
-------- ------- --------
Selling, general and
administrative expenses 82,794 -- 82,794
Research and development expenses 33,986 -- 33,986
Restructuring, amortization
of other intangibles and
acquisition-related expenses(b) 2,953 (2,953) --
-------- ------- --------
Total operating expenses 119,733 (2,953) 116,780
-------- ------- --------
Operating income (loss) 8,439 7,889 16,328
Gain on sale of investment(c) -- -- --
Interest and other income
(expense), net 23 -- 23
-------- ------- --------
Income (loss) before income taxes 8,462 7,889 16,351
Income tax provision (d) 4,903 166 5,069
-------- ------- --------
Net income (loss) $ 3,559 $ 7,723 $ 11,282
======== ======= ========
Net income (loss) per share:
Net income (loss) per share
-- basic $ 0.04 $ 0.10 $ 0.14
======== ======= ========
Net income (loss) per share
-- diluted $ 0.04 $ 0.10 $ 0.14
======== ======= ========
Shares used in computing
basic net income (loss)
per share 80,594 -- 80,594
======== ======= ========
Shares used in computing
diluted net income (loss)
per share(e) 82,247 -- 82,247
======== ======= ========
The above Non-GAAP results exclude the following items, which are
included in Borland's Condensed Consolidated Statements of Operations
when presented in accordance with GAAP:
(a) Amortization of intangible assets resulting from acquisitions
(b) Restructuring expenses and reversals, amortization of other
intangible assets and acquisition-related stock- based
compensation expenses
(c) Gain on the sale of an equity investment
The above Non-GAAP results are adjusted for the following items:
(d) Income tax effect on Non-GAAP items
(e) Dilutive stock options and restricted stock awards in periods
reporting GAAP net loss
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