Borland Reports Strong Financial Results for Second Quarter 2004; Company Achieves $76.5 Million in Revenue, GAAP Earnings of $0.03 per share and Non-GAAP Earnings of $0.08 per share.SCOTTS VALLEY, 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) today announced financial results for its second quarter of 2004. Revenues for the second quarter of 2004 were $76.5 million, and GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income for the second quarter of 2004 was $2.8 million, or $0.03 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. This compares to revenues of $72.9 million and GAAP net income of $713,000, or $0.01 per diluted share, reported in the prior quarter and revenues of $76.3 million and a GAAP net loss of $5.0 million, or $(0.06) per diluted share, reported in the second quarter of 2003. Non-GAAP net income for the second quarter of 2004 was $6.5 million, or $0.08 per diluted share, which compares to Non-GAAP net income of $4.8 million, or $0.06 per diluted share, reported in the prior quarter, and Non-GAAP net income of $3.5 million, or $0.04 per diluted share, reported in the second quarter of 2003. 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. generated $12.8 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 second quarter of 2004 with $213.5 million in cash, cash equivalents 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. investments. "While we are pleased to report strong financial performance and execution across our business in the quarter, we believe there is still much opportunity for improvement," 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. "I'm I'm Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in proud of our continued success at converting design wins into major, multi-product ALM engagements. The British Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. relationship announced today is a good example of our success at strategically aligning a·lign v. a·ligned, a·lign·ing, a·ligns v.tr. 1. To arrange in a line or so as to be parallel: align the tops of a row of pictures; aligned the car with the curb. with our customers, enabling them to capture new opportunities faster. Our ALM strategy is playing out in many of the ways we had envisioned and we are excited about the opportunities ahead." "We achieved solid 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. and cash flow in the quarter as a result of our relentless focus on managing costs and increasing leverage in our sales model," said Borland's senior vice president and chief financial officer, Kenneth R. Hahn Hahn , Otto 1879-1968. German chemist. He won a 1944 Nobel Prize for his work on atomic fission. Noun 1. Hahn - German chemist who was co-discoverer with Lise Meitner of nuclear fission (1879-1968) Otto Hahn . "We have taken the right steps to improve our operating model Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. and will continue to balance those improvements with opportunities to increase revenue. We believe our sales strategies and broader product suites are starting to take hold in the market and we remain confident in the 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. prospects for our business." In calculating Non-GAAP net income, Borland utilizes a financial measure of net income (loss) that excludes 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 the related tax effect ("Non-GAAP Net Income"). Investors are encouraged to review the reconciliation of Non-GAAP financial measures to the most directly comparable GAAP measures as provided below. Business Outlook Management provided the following financial guidance: For the quarter ending September September: see month. 30, 2004, on a GAAP basis: --The company expects revenues will be in the range of $75 - $78 million. --Forecast earnings per share should be in the range of $0.00 to $0.02 For the quarter ending September 30, 2004, on a non-GAAP basis: --Forecast earnings per share should be in the range of $0.05 to $0.07. The following table shows our Non-GAAP anticipated results for the quarter ending September 30, 2004 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 amortization of intangible assets and acquisition-related expenses.
Estimated per Share
---------------------
Low High
-------- ---------
(unaudited)
GAAP net income $0.00 $0.02
Aggregate amortization of intangible assets and
acquisition-related expenses(1) 0.05 0.05
---------------------
Non-GAAP net income $0.05 $0.07
======== =========
(1) Includes $0.04 for amortization of intangible assets and $0.01
for acquisition-related expenses.
Earnings Conference Call Information Borland Software Corporation second quarter 2004 teleconference and simultaneous Webcast is scheduled to begin at 2:30 p.m. PT, on Thursday Thursday: see week. , July July: see month. 22, 2004. To access the live Webcast, please visit 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 or the main page of the investor relations Investor relations The process by which the corporation communicates with its investors. section of Borland's web site 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 August 5, 2004. The replay number is (800) 405-2236 or (303) 590-3000, with passcode 11002376. Separately, the archived Webcast will 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 uses calculations of Non-GAAP net income and net income per share, each of which excludes restructuring, amortization of intangible assets, acquisition-related expenses, in-process research and development, 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 this Non-GAAP net income calculation 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 net income and net income per share calculations. 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 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: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 enables 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, near-term near-term adj. Of, for, or involving a short period of time in the near future. and long-term outlook, anticipated financial performance in the coming quarter, and the anticipated benefit to British Telecommunications from using Borland solutions. 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; market acceptance of new or enhanced products or services developed, marketed or sold by us; 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, Borland's 2003 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.
BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
June 30, December 31,
2004 2003
---------- -------------
ASSETS
Cash, cash equivalents and short-term
investments $213,494 $202,646
Accounts receivable, net 45,414 54,989
Property and equipment, net 17,950 20,377
Goodwill and acquired intangibles 202,316 210,055
Other assets 22,373 23,722
---------- -------------
Total assets $501,547 $511,789
========== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deferred revenues $50,382 $48,330
Other current liabilities 72,975 82,733
---------- -------------
Total current liabilities 123,357 131,065
Other long-term liabilities 12,876 12,856
Stockholders' equity 365,314 367,868
---------- -------------
Total liabilities and stockholders' equity $501,547 $511,789
========== =============
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, June 30, June 30,
2004 2003 2004 2003
--------- -------- --------- ---------
Revenues
Licenses $54,134 $56,622 $104,954 $113,431
Services 22,392 19,648 44,431 37,209
--------- -------- --------- ---------
Total revenues 76,526 76,270 149,385 150,640
--------- -------- --------- ---------
Cost of revenues
Licenses and other 1,643 3,012 4,474 6,111
Services 5,801 7,324 11,803 13,923
Amortization of acquired
intangibles 2,375 4,752 4,936 9,069
--------- -------- --------- ---------
Total cost of revenues 9,819 15,088 21,213 29,103
--------- -------- --------- ---------
Gross profit 66,707 61,182 128,172 121,537
--------- -------- --------- ---------
Operating expenses
Research and development 17,195 17,702 33,986 37,946
Selling, general and
administrative 42,219 44,395 82,794 88,369
Restructuring, amortization
of other intangibles and
acquisition-related expenses 1,214 3,758 2,953 17,313
--------- -------- --------- ---------
Total operating expenses 60,628 65,855 119,733 143,628
--------- -------- --------- ---------
Operating income (loss) 6,079 (4,673) 8,439 (22,091)
Interest and other
income (expense) (245) 889 23 2,123
--------- -------- --------- ---------
Income (loss) before taxes 5,834 (3,784) 8,462 (19,968)
Provision for income taxes 2,988 1,185 4,903 2,693
--------- -------- --------- ---------
Net income (loss) $2,846 $(4,969) $3,559 $(22,661)
========= ======== ========= =========
Net income (loss) per share
- Basic $0.04 $(0.06) $0.04 $(0.28)
Net income (loss) per share
- Diluted $0.03 $(0.06) $0.04 $(0.28)
Shares used in computing basic
net income (loss) per share 80,381 80,547 80,594 79,729
Shares used in computing
diluted net income (loss) per
share 81,798 80,547 82,247 79,729
BORLAND SOFTWARE CORPORATION
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
Three Months Ended Six Months Ended
------------------ -------------------
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
--------- -------- --------- ---------
Revenues
Licenses $54,134 $56,622 $104,954 $113,431
Services 22,392 19,648 44,431 37,209
--------- -------- --------- ---------
Total revenues 76,526 76,270 149,385 150,640
--------- -------- --------- ---------
Cost of revenues
Licenses and other 1,643 3,012 4,474 6,111
Services 5,801 7,324 11,803 13,923
Amortization of acquired
intangibles -- -- -- --
--------- -------- --------- ---------
Total cost of revenues 7,444 10,336 16,277 20,034
--------- -------- --------- ---------
Gross profit 69,082 65,934 133,108 130,606
--------- -------- --------- ---------
Operating expenses
Research and development 17,195 15,457 33,986 33,428
Selling, general and
administrative 42,219 46,640 82,794 92,887
Restructuring, amortization
of other intangibles and
acquisition-related expenses -- -- -- --
--------- -------- --------- ---------
Total operating expenses 59,414 62,097 116,780 126,315
--------- -------- --------- ---------
Operating income 9,668 3,837 16,328 4,291
Interest and other
income (expense) (245) 889 23 2,123
--------- -------- --------- ---------
Income before taxes 9,423 4,726 16,351 6,414
Provision for income taxes (1) 2,921 1,185 5,069 2,693
--------- -------- --------- ---------
Net income $6,502 $3,541 $11,282 $3,721
========= ======== ========= =========
Net income per share - Basic $0.08 $0.04 $0.14 $0.05
Net income per share - Diluted $0.08 $0.04 $0.14 $0.05
Shares used in computing basic
net income per share 80,381 80,547 80,594 79,729
Shares used in computing
diluted net income per share 81,798 82,821 82,247 82,404
(1) For the three and six months ended June 30, 2004, we have
presented Non-GAAP income including the tax effect of the Non-GAAP
adjustments. For the three and six months ended June 30, 2003, we did
not make Non-GAAP adjustments to the tax provision, as we had a
negative effective tax rate on a GAAP basis.
Reconciliation
In calculating Non-GAAP net income and net income per share,
Borland utilizes a Non-GAAP financial measure. Investors are
encouraged to review the reconciliation of Non-GAAP net income and net
income per share to the most directly comparable GAAP measures as
provided below.
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2004 2003 2004 2003
-------- -------- -------- --------
(in thousands, except per share data, unaudited)
GAAP net income (loss) $2,846 $(4,969) $3,559 $(22,661)
Restructuring (591) (79) (677) 5,323
Amortization of intangible
assets 3,539 5,903 7,290 11,226
Acquisition-related expenses 641 2,686 1,276 5,233
In-process research and
development -- -- -- 4,600
Tax effect on Non-GAAP
items (1) 67 -- (166) --
-------- -------- -------- --------
Non-GAAP net income $6,502 $3,541 $11,282 $3,721
Basic Non-GAAP net income
per share $0.08 $0.04 $0.14 $0.05
Shares used in computing basic
net income per share 80,381 80,547 80,594 79,729
Diluted Non-GAAP net income
per share $0.08 $0.04 $0.14 $0.05
Shares used in computing
diluted net income per share 81,798 82,821 82,247 82,404
(1) For the three and six months ended June 30, 2004, we have
presented Non-GAAP income including the tax effect of the Non-GAAP
adjustments. For the three and six months ended June 30, 2003, we did
not make Non-GAAP adjustments to the tax provision, as we had a
negative effective tax rate on a GAAP basis.
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