Borland Reports Strong Fourth Quarter and Fiscal Year 2004 Results; Annual Profits Up More Than 250%; Record Number of $1M-plus Transactions.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), 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 fourth quarter and fiscal year ended December December: see month. 31, 2004. Revenues for the fourth quarter of 2004 were $82.5 million, up 11% from $74.0 million reported in the fourth quarter of 2003. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income for the fourth quarter of 2004 was $8.0 million, or $0.10 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, as compared to a GAAP net loss of $5.7 million, or ($0.07) per share, reported in the fourth quarter of 2003. On a Non-GAAP basis, net income for the fourth quarter of 2004 was $11.4 million, or $0.14 per diluted share, an increase of 145% as compared to the net income of $4.7 million, or $0.06 per diluted share, reported in the fourth quarter of 2003. Also on a Non-GAAP basis, 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 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. of $12.5 million and delivered operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 15.1%. This represents a significant increase over Non-GAAP operating income of $5.5 million and operating margins of 7.4% reported in the fourth quarter of 2003. Revenues for fiscal year ended December 31, 2004 reached $309.5 million, up 5% over revenues of $295.2 million for the year ended December 31, 2003. GAAP net income for fiscal year 2004 reached $11.4 million, or $0.14 per diluted share, up from a net loss of $40.5 million, or ($0.51) per share, reported for 2003. On a Non-GAAP basis, net income for fiscal year 2004 increased to $30.3 million, or $0.37 per share, as compared to net income of $8.5 million, or $0.10 per diluted share, for fiscal 2003. "We are pleased with our financial results for the fourth quarter, which marks the close of a strong year," commented 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. "Growth in the fourth quarter resulted from our success in translating design wins to major enterprise ALM deployments. In 2004, we nearly tripled the number of million dollar transactions as compared to 2003. Also during the year, we were successful at 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. more strategically with our customers and broadening broad·en tr. & intr.v. broad·ened, broad·en·ing, broad·ens To make or become broad or broader. broad our relationship with global name brand companies like British Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , Nokia Nokia (nō`kēä), town (1996 pop. 26,326), Western Finland prov., SW Finland, on Lake Näsijärvi. It is an industrial community where wood and rubber products are manufactured. , Ericsson Er·ics·son , John 1803-1889. American engineer and inventor who built the first ironclad warship, the Monitor (1862), which engaged the Confederate Merrimack in a famous naval battle of the Civil War (March 9, 1862). , and many others. We remain focused on helping customers to solve their most critical issues and embrace software delivery optimization to achieve the highest value from their software." "We delivered a strong year of progress in 2004, increasing revenue each quarter, effectively managing costs, improving operating margins, and exceeding our bottom line estimates each and every quarter," stated 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 drove better profitability through management rigor rigor /rig·or/ (rig´er) [L.] chill; rigidity. rigor mor´tis the stiffening of a dead body accompanying depletion of adenosine triphosphate in the muscle fibers. and greater precision in our forecasting. Additionally, we made progress in shifting our go-to-market model and believe we are well positioned to drive growth in 2005 as we close more large deals that deliver more value to customers." In calculating Non-GAAP net income and operating income, Borland utilizes a financial measure of operating income, net income and net income per share that exclude 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 benefit, as applicable. 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 March 31, 2005, on a GAAP basis: --The company expects revenues will be in the range of $77 to $81 million. --Forecast earnings per share should be in the range of $0.03 to $0.05 For the quarter ending March 31, 2005, on a Non-GAAP basis: --Forecast earnings per share should be in the range of $0.07 to $0.09.
The following table shows our Non-GAAP anticipated results for the
quarter ending March 31, 2005 reconciled to the GAAP anticipated
results. Our Non-GAAP anticipated results exclude amortization of
intangible assets.
Estimated per Share
------------------------
Low High
---------- ---------
(unaudited)
GAAP net income $0.03 $0.05
Aggregate amortization of intangible assets 0.04 0.04
------------------------
Non-GAAP net income $0.07 $0.09
========== =========
Earnings Conference Call Information Borland Software Corporation's fourth quarter 2004 teleconference and simultaneous Webcast is scheduled to begin at 2:30 p.m. PT, on Tuesday Tuesday: see week. , February February: see month. 1, 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 February 15, 2005. The replay number is (800) 405-2236 or (303) 590-3000, with passcode 11021174. 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 uses calculations of Non-GAAP operating income, net income and net income per share, which exclude as applicable restructuring, amortization of intangible assets, acquisition-related expenses, in-process research and development, and the related tax benefit, 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 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, (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 operating income, 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 operating income and 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 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 platform-independent solutions for 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 In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. the business value of software. To learn more about delivering quality software, on time and within budget, visit: http://www.borland.com. All 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. 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 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, but are not limited to: our ability to sell multi-product solutions for the application development lifecycle; the effects that altered spending priorities will have on our financial results; 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; delays in product shipments 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)
Dec. 31, 2004 Dec. 31, 2003
------------- -------------
ASSETS
Cash, cash equivalents and
short-term investments $221,198 $202,646
Accounts receivable, net 62,924 54,989
Property and equipment, net 16,117 20,377
Goodwill and acquired intangibles 195,677 210,055
Other assets 19,202 23,722
-------- --------
Total assets $515,118 $511,789
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deferred revenues $ 51,647 $ 48,330
Other current liabilities 80,100 88,435
-------- --------
Total current liabilities 131,747 136,765
Other long-term liabilities 6,334 7,156
Stockholders' equity 377,037 367,868
--------- ---------
Total liabilities and stockholders' equity $515,118 $511,789
======== =========
BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
Three Months Ended Year Ended
------------------ --------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2004 2003 2004 2003
-------- -------- --------- ---------
Revenues
Licenses and other $56,004 $54,083 $214,021 $219,044
Services 26,511 19,940 95,527 76,192
------- ------- -------- --------
Total revenues 82,515 74,023 309,548 295,236
------- ------- -------- --------
Cost of revenues
Licenses and other 2,780 3,106 9,426 12,650
Services 7,905 6,008 25,963 26,898
Amortization of acquired
intangibles 2,394 4,391 9,718 18,055
------- ------- -------- --------
Total cost of revenues 13,079 13,505 45,107 57,603
------- ------- -------- --------
Gross profit 69,436 60,518 264,441 237,633
------- ------- -------- --------
Operating expenses
Selling, general and
administrative 42,537 41,722 167,833 171,355
Research and development 16,803 17,727 68,093 73,454
Restructuring, amortization
of other intangibles and
acquisition-related
expenses 1,605 7,200 9,841 32,758
------- ------- -------- --------
Total operating expenses 60,945 66,649 245,767 277,567
------- ------- -------- --------
Operating income (loss) 8,491 (6,131) 18,674 (39,934)
Interest income, net and other 947 460 1,734 3,361
------- ------- -------- --------
Income (loss) before taxes 9,438 (5,671) 20,408 (36,573)
Provision for income taxes 1,467 21 9,038 3,971
------- ------- -------- --------
Net income (loss) $ 7,971 $(5,692) $ 11,370 $(40,544)
======= ======= ======== ========
Net income (loss) per share -
Basic $ 0.10 $ (0.07) $ 0.14 $ (0.51)
Net income (loss) per share -
Diluted $ 0.10 $ (0.07) $ 0.14 $ (0.51)
Shares used in computing
basic net income (loss)
per share 80,505 80,681 80,425 80,249
Shares used in computing
diluted net income (loss)
per share 82,932 80,681 82,052 80,249
BORLAND SOFTWARE CORPORATION
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
Three Months Ended Year Ended
------------------ --------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2004 2003 2004 2003
-------- -------- --------- ---------
Revenues
Licenses and other $56,004 $54,083 $214,021 $219,044
Services 26,511 19,940 95,527 76,192
------- ------- -------- --------
Total revenues 82,515 74,023 309,548 295,236
------- ------- -------- --------
Cost of revenues
Licenses and other 2,780 3,106 9,426 12,650
Services 7,905 6,008 25,963 26,898
Amortization of acquired
intangibles - - - -
------- ------- -------- --------
Total cost of revenues 10,685 9,114 35,389 39,548
------- ------- -------- --------
Gross profit 71,830 64,909 274,159 255,688
------- ------- -------- --------
Operating expenses
Selling, general and
administrative 42,537 41,722 167,833 171,355
Research and development 16,803 17,727 68,093 73,454
Restructuring, amortization
of other intangibles
and acquisition-related
expenses - - - -
------- ------- -------- --------
Total operating expenses 59,340 59,449 235,926 244,809
------- ------- -------- --------
Operating income 12,490 5,460 38,233 10,879
Interest income, net and
other 947 460 1,734 2,860
------- ------- -------- --------
Income before taxes 13,437 5,920 39,967 13,739
Provision for income taxes(1) 1,999 1,255 9,715 5,205
------- ------- -------- --------
Net income $11,438 $ 4,665 $ 30,252 $ 8,534
======= ======= ======== ========
Net income per share -
Basic $ 0.14 $ 0.06 $ 0.38 $ 0.11
Net income per share -
Diluted $ 0.14 $ 0.06 $ 0.37 $ 0.10
Shares used in computing
basic net income per share 80,505 80,681 80,425 80,249
Shares used in computing
diluted net income per share 82,932 82,159 82,052 82,422
(1) For the three months and years ended December 31, 2004 and
2003, we have presented Non-GAAP income including the tax
effect of the Non-GAAP adjustments.
Reconciliations
In calculating Non-GAAP operating income, net income
and net income per share, Borland utilizes a Non-GAAP financial
measure. Investors are encouraged to review the reconciliation of
Non-GAAP operating income, net income and net income per share to
the most directly comparable GAAP measures as provided below.
RECONCILIATION OF NON-GAAP OPERATING INCOME
Three Months Ended Year Ended
December 31, December 31,
------------------ -------------------
2004 2003 2004 2003
------- ------- ------- --------
(in thousands, unaudited)
GAAP operating income (loss) $ 8,491 $(6,131) $18,674 $(39,934)
Restructuring and other
expenses (14) 4,116 2,851 13,091
Amortization of intangible
assets 3,558 5,566 14,399 22,560
Acquisition-related expenses 455 1,909 2,309 10,562
In-process research and
development -- -- -- 4,600
------- ------- ------- --------
Non-GAAP operating income $12,490 $ 5,460 $38,233 $ 10,879
======= ======= ======= ========
RECONCILIATION OF NON-GAAP NET INCOME AND NET INCOME PER SHARE
Three Months Ended Year Ended
December 31, December 31,
------------------ -------------------
2004 2003 2004 2003
------- ------- ------- --------
(in thousands, except per share data, unaudited)
GAAP net income (loss) $ 7,971 $(5,692) $11,370 $(40,544)
Restructuring and other
expenses (14) 4,116 2,851 13,091
Amortization of intangible
assets 3,558 5,566 14,399 22,560
Acquisition-related expenses 455 1,909 2,309 10,562
In-process research and
development -- -- -- 4,600
Gain on investment -- -- -- (501)
Tax effect on Non-GAAP
items (1) (532) (1,234) (677) (1,234)
------- ------- ------- --------
Non-GAAP net income $11,438 $ 4,665 $30,252 $ 8,534
======= ======= ======= ========
Basic Non-GAAP net income
per share $ 0.14 $ 0.06 $ 0.38 $ 0.11
Shares used in computing basic
net income per share 80,505 80,681 80,425 80,249
Diluted Non-GAAP net income
per share $ 0.14 $ 0.06 $ 0.37 $ 0.10
Shares used in computing
diluted net income per share 82,932 82,159 82,052 82,422
(1) For the three months and years ended December 31, 2004 and
2003, we have presented Non-GAAP income including the tax
effect of the Non-GAAP adjustments.
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