Borland Revenues Increase 10% in 2002 Third Quarter; Operating Income Rises 45%; Borland Expands Management Team.Business Editors/High-Tech Writers SCOTTS VALLEY, Calif.--(BUSINESS WIRE)--Oct. 24, 2002 Borland Software Corporation (company) Borland Software Corporation - A company that sells a variety of PC software development and database systems. Borland was founded in 1983 and initially became famous for their low-cost software, particularly Turbo Pascal, Turbo C, and Turbo Prolog. (Nasdaq NM: BORL) today announced its financial results for the third quarter and nine-month period ended September September: see month. 30, 2002. In a separate release, the company also announced it has expanded and strengthened the management team through the promotion of Frederick Frederick, city, United States Frederick, city (1990 pop. 40,148), seat of Frederick co., NW Md.; settled 1745, inc. 1817. The processing center of a fertile farm and dairying area, it makes beer, household items, optical and glass products, leather goods, A. Ball, formerly Executive Vice President and Chief Financial Officer, to the newly created position of Executive Vice President of Corporate Development and Mergers & Acquisitions and the appointment of 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 as Senior Vice President and Chief Financial Officer. Revenues and 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. Rise in Third Quarter For the 2002 third quarter, revenues increased 10% to $60.7 million from $55.0 million for the third quarter of 2001, and license revenues rose 7% to $50.3 million from $47.0 million a year ago. Revenue growth for the quarter reflects Borland's ongoing leadership position in software application development across all major enterprise platforms. "We are very pleased with our performance this quarter, which marks our tenth consecutive quarter of profitability and 11th consecutive quarter of positive 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 ," said 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. President and Chief Executive Officer Dale L. Fuller. "Our solid financial performance allows companies to invest in our leading technology with the assurance that we will be here tomorrow. Borland has emerged as a safe and smart choice for software application development for enterprises of all sizes." Gross margins were 84% in the third quarters of 2002 and 2001. Using 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 GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), operating income for the third quarter rose 45% to $4.5 million compared with $3.1 million for the third quarter of 2001. On a GAAP basis, third quarter 2002 net income rose 6% to $5.0 million, or $0.07 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, on 73.5 million weighted average shares outstanding. This compares with net income of $4.7 million, or $0.06 per diluted share, on 75.1 million weighted average shares outstanding for the 2001 third quarter. Excluding 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 intangibles, and acquisition-related expenses of $1.4 million in the 2002 third quarter, pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma operating income rose 77% to $5.9 million. This compares with pro forma operating income of $3.3 million, excluding restructuring, amortization of intangibles, and acquisition-related expenses of $0.2 million in the 2001 third quarter. On a pro forma basis, excluding restructuring, amortization of intangibles, and acquisition-related expenses, 2002 third quarter net income rose 25% to $6.0 million, or $0.08 per diluted share, on 73.5 million weighted average shares outstanding, compared with pro forma net income of $4.9 million, or $0.06 per diluted share on 75.1 million weighted average shares outstanding for the third quarter of 2001. "Customers continue to be drawn to Borland's platform-neutral, best-in-class See best-of-class. solutions that increase productivity, accelerate time to market, and lower the total cost of ownership," added Mr. Fuller. "This value proposition is appealing to companies that recognize the strategic value of software development as a means for achieving a competitive advantage in the marketplace. As a result, more and more enterprise customers are standardizing on Borland solutions." Diversified diversified (di·verˑ·s Product Mix Drives Revenue Growth Third quarter revenues were driven by Borland's leadership position in software application development. Borland generates revenues from four main business areas: Java(TM), Rapid Application Development (RAD (1) (Rapid Application Development) Developing systems incrementally and delivering working pieces every three to four months, rather than waiting until the entire project is programmed before implementing it. ), Enterprise, and Services. Java revenues increased 12% over the 2001 third quarter and represented 35% of total third quarter 2002 revenues. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. , Java revenues grew 30% over the same period a year ago, as Borland continues to see strong penetration of its products in the Java development market. The Borland RAD business increased 12% over the 2001 third quarter and represented 31% of total 2002 third quarter revenues. Financial performance in the RAD business is closely aligned with the release of new products. Third quarter revenues benefited from the release of two new products, Borland(R) Delphi(TM) 7 Studio and Borland Kylix(TM) 3. Borland's Enterprise business declined 8% compared with the third quarter of 2001 and generated 17% of total third quarter 2002 revenues. Revenue from this business is derived largely from OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and sales. Also contributing to the Enterprise revenue were sales of its small-footprint databases, Interbase A relational DBMS from Borland that runs under Solaris, Windows and Linux. Available in desktop, server and developer editions, InterBase was designed to handle online complex processing (OLCP) and is used in centralized, small to medium-size businesses. (R) and JDataStore(TM). Services revenues increased 30% compared with the year-ago third quarter and represented 17% of total third quarter 2002 revenues. Borland continues to benefit from a global geographic presence and multiple distribution channels. Compared with the third quarter of 2001, the Americas A·mer·i·cas , the See America. increased 13%, EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. increased 10%, and Asia/Pacific region grew 7%. As a percent of 2002 third quarter revenues, Americas represented 41%, EMEA 38%, and Asia/Pacific 21%. Revenue from the U.S. represented 34% of total revenue. Balance Sheet Strengthens At September 30, 2002, Borland's financial position remains strong, with 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 reaching $309.3 million and no long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . Days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). (DSOs) for the third quarter were 56. This compares with DSOs of 67 in the second quarter of 2002 and 55 days for the third quarter of 2001. Compared with a year ago, deferred revenue increased 27% to $25.8 million from $20.4 million. On a sequential basis, deferred revenues declined by less than $1 million. The company generated cashflow from operations of $8.6 million for the 2002 third quarter compared with $15.7 million for the 2001 third quarter. During the 2002 third quarter, the company repurchased approximately 462,000 shares of Borland common stock at a cost of $3.9 million. Capital expenditures for the 2002 third quarter were $0.4 million compared with $1.1 million in the 2001 third quarter. Depreciation and amortization expenses were $1.8 million for the third quarter versus $1.9 million for the third quarter of 2001. Earnings before interest, taxes, amortization, and depreciation (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) were $8.6 million compared with $7.5 million a year ago. Acquisitions Expand Borland's Presence in Application Development Lifecycle On October October: see month. 7, 2002, Borland announced it had acquired assets of privately held BoldSoft MDE MDE Minnesota Department of Education MDE Maryland Department of the Environment MDE Mississippi Department of Education MDE Michigan Department of Education MDE Model-Driven Engineering MDE Major Depressive Episode MDE Master of Distance Education Aktiebolag Aktiebolag (literally stock company) is the Swedish term for a corporation, i.e. a company that has stocks. When used in company names it is abbreviated AB in Sweden and Ab in Finland. The Finnish language equivalent is osakeyhtiö, or Oy. , a Swedish-based innovator in design-driven development Design Driven Development (D3) is an agile-based process for creating innovative requirements to build better solutions. It works closely with SCRUM and Extreme Programming (XP) for managing and implementing those requirements. Also it can work with non-agile processes such as RUP. , in an all-cash transaction. This next-generation technology is used to accelerate the software development process and improve collaboration Working together on a project. See collaborative software. across the enterprise. With this move, Borland is advancing design-driven development for the Microsoft (Microsoft Corporation, Redmond, WA, www.microsoft.com) The most successful and influential software company. Microsoft's software and Intel's hardware pioneered the PC and revolutionized the computer industry. (R) .NET framework and strongly positioning Borland as the only independent path to .NET. The market for application design-driven development is expected to reach $1.1 billion by 2006 according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. industry analyst research firm IDC. On October 9, 2002, Borland announced an agreement to acquire Starbase Corporation (Nasdaq SC: SBAS (Satellite-Based Augmentation System) See GPS augmentation system. ), for a purchase price of $24 million in cash. Starbase is a leading provider of software configuration management technology with more than 4,200 customers worldwide and is recognized for its industry-leading technology solutions in the areas of requirements management The administration and control of the information needs of users. In order to achieve business objectives within an organization via information systems, user requirements must be defined in a consistent manner, prioritized and monitored. , software configuration management, version control, and collaboration. 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 the acquisition agreement, on October 11, 2002, Borland commenced a cash tender offer for all Starbase shares at a price of $2.75 per share. Executive Vice President of Corporate Strategy and Mergers & Acquisitions Frederick A. Ball stated, "As a leader in software development, Borland provides solutions that accelerate the time it takes to create business applications so that enterprises can compete more effectively in the marketplace. Time-to-market demands continue to compress the development process, making integrated solutions more important than ever. Through the acquisitions of BoldSoft and Starbase Corporation, Borland expects to advance its goal of integrating all phases of software development into a single solution that unifies the design, development, testing, and deployment phases of the software application lifecycle." Revenues Increase 9% for Nine-month Period For the first nine months of 2002, revenues increased 9% to $177.5 million from $162.7 million for the same nine-month period of 2001. License revenues for the 2002 nine-month period rose 8% to $148.1 million from $136.9 million a year ago. Gross margin for the 2002 period was 85% versus 84% in the same nine-month period of 2001. On a GAAP basis, net income for the 2002 nine-month period was $14.2 million, or $0.19 per diluted share, on 74.6 million weighted average shares outstanding, compared with net income of $16.9 million, or $0.23 per diluted share, on 73.7 million weighted average shares outstanding for the 2001 nine-month period. Excluding restructuring, amortization of intangibles, and acquisition-related expenses, pro forma operating income for the 2002 nine-month period increased 36% to $17.4 million compared with $12.8 million for the first nine months of 2001. Pro forma net income for the first nine months of 2002 was $17.7 million, or $0.24 per diluted share, compared with pro forma net income of $17.7 million, or $0.24 per diluted share last year. Forward Guidance for 2002 Fourth Quarter and 2003 Full Year Borland expects revenues to range from $60 million to $64 million in the 2002 fourth quarter. Gross margins for the 2002 fourth quarter are expected to remain in the 83%-85% range, and pro forma operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: are expected to range from 7%-10%. Other income will be impacted by changes in interest rates and changes in the cash balance due to M&A transactions and stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. . Borland's effective tax rate is expected to be 22% for the fourth quarter and to increase to 25% in 2003. Pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per diluted share are expected to be in the range of $0.08 to $0.10 in the fourth quarter of 2002. These projections do not include any impact from Starbase operations on Borland's 2002 fourth quarter financial results. Depending on Borland's stock price performance, weighted average diluted shares outstanding could range from 73 million to 76 million, as determined by the treasury method. Assuming that global economic conditions remain unchanged for the balance of the year, Borland anticipates that total 2002 revenues will increase by approximately 7%-9% over 2001 revenues and gross margins will remain in the 83%-85% range. The company expects 2003 revenues to range from $290 million to $300 million. Gross margins are expected to remain consistent, in the range of 83%-85%. Earnings per diluted share, on a pro forma basis, are expected to range from $0.42 to $0.46. These projections assume the Starbase transaction closes in the 2002 fourth quarter and the anticipated impact of Starbase operations on Borland's calendar year 2003 financial results. Conference Call Information The Borland Software Corporation third quarter 2002 teleconference and simultaneous Webcast is scheduled to begin at 2:30 p.m. Pacific Time, on Thursday Thursday: see week. , October 24, 2002. To access the live Webcast, please visit www.companyboardroom.com or Borland's Website at http://www.borland.com at least 30 minutes prior to the call 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 two-week Webcast replay will be available through November November: see month. 7, 2002, and a two-week audio replay will be available from 5:30 p.m. Pacific Time through midnight November 7, 2002 by dialing (719) 457-0820, passcode #689163. About Borland Borland Software Corporation is a leading provider of technology used to develop, deploy, integrate, and manage software applications. Delivering best-in-class technology solutions dedicated to interoperability The capability of two or more hardware devices or two or more software routines to work harmoniously together. For example, in an Ethernet network, display adapters, hubs, switches and routers from different vendors must conform to the Ethernet standard and interoperate with each other. , Borland allows enterprises of all sizes to move into Web based Coming from a Web server. See Web application. computing computing - computer while leveraging legacy systems. From the Fortune 1000 to the Borland Developer Network comprised of millions of developers around the world, Borland provides customers the freedom to develop applications, deploy them anywhere, and integrate and manage them across the enterprise. Borland solutions enable organizations to increase productivity and deliver higher performance projects faster and on budget, while lowering total cost of ownership. Founded in 1983, Borland is headquartered in Scotts Valley, California Scotts Valley is a small city located in eastern Santa Cruz County, California, United States, about ten miles (16 km) south of San Jose and six miles (10 km) north of the beach in the upland slope of the Santa Cruz Mountains. As of the 2000 census, the city population was 11,385. with operations worldwide. To learn more, visit Borland at http://www.borland.com, the community site at http://community.borland.com, or call Borland at (800) 632-2864. 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. Pro Forma Adjustments Borland provides pro forma operating income, pro forma net income, and pro forma net income per share data as an alternative for understanding the company's operating results. These measures are not in accordance with, or an alternative for, generally accepted accounting principals (GAAP) and may be materially different from pro forma measures used by other companies. Borland computes pro forma net income by adjusting GAAP net income after extraordinary items with the impact of amortization of goodwill and intangibles, acquisition-related expenses, impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. 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. , one-time gains and losses, and extraordinary gains and losses, as well as the tax effect of these charges. 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. " as defined under the Federal Securities Laws, including the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. All statements that are not historical are forward-looking. Forward-looking statements contained in this release may relate to, but are not limited to, Borland's results for the third quarter and nine-month period ended September 30, 2002, and Borland's near-term and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. outlook. Such forward-looking statements are based on current expectations that involve a number of uncertainties and risks that may cause actual events or results to differ materially. Factors that could cause actual events or results to differ materially include, among others, the following: general economic factors and capital market conditions, general industry trends, the ability to successfully integrate acquisitions, costs associated with acquisitions, diversion A turning aside or altering of the natural course or route of a thing. The term is chiefly applied to the unauthorized change or alteration of a water course to the prejudice of a lower riparian, or to the unauthorized use of funds. of management attention from other business concerns due to acquisitions, undisclosed or unanticipated liabilities and risks resulting from acquired companies, the potential effects on Borland of competition in computer software product and services markets, growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. in the software and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. markets that Borland participates in, rapid technological change that can adversely affect the demand for Borland's products, shifts in customer demand, geographic concentration of revenues, market acceptance of new or enhanced products or services developed, marketed or sold by Borland, delays in scheduled product availability dates The date after notification of mobilization by which forces will be marshalled at their home station or mobilization station and available for deployment. See also home station; mobilization; mobilization station. , open source technologies that compete with Borland's products, actions or announcements by competitors, software errors, reduction in sales to or loss of any significant customers, the size and timing of execution of enterprise-level licenses, Borland's ability to protect its intellectual property rights, dependence on technologies licensed from third parties, Borland's ability to attract and retain qualified personnel, Borland's ability to contain costs and the unanticipated impact on economic and financial conditions in the United States and around the world resulting from geopolitical ge·o·pol·i·tics n. (used with a sing. verb) 1. The study of the relationship among politics and geography, demography, and economics, especially with respect to the foreign policy of a nation. 2. a. conflicts and other consequences of the United States' war against terrorism. 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 www.sec.gov. 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.
BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
Three Months Ended Nine Months Ended
------------------- -------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2002 2001 2002 2001
-------- -------- -------- --------
Revenues
Licenses and other $ 50,295 $ 46,985 $148,058 $136,931
Services 10,425 8,048 29,461 25,810
-------- -------- -------- --------
Total revenues 60,720 55,033 177,519 162,741
Cost of revenues
Licenses and other 4,241 3,434 11,318 9,874
Services 5,173 5,576 15,563 16,627
-------- -------- -------- --------
Cost of revenues 9,414 9,010 26,881 26,501
Gross profit 51,306 46,023 150,638 136,240
Operating expenses
Research and
development(1) 12,732 12,091 37,392 34,327
Selling, general &
administrative(2) 32,713 30,617 95,848 89,078
Restructuring,
amortization of
intangibles and
acquisition-
related expenses 1,386 220 4,472 983
-------- -------- -------- --------
Total operating
expenses 46,831 42,928 137,712 124,388
Operating income 4,475 3,095 12,926 11,852
Interest income, net
and other 1,884 2,782 5,314 9,389
-------- -------- -------- --------
Income before taxes 6,359 5,877 18,240 21,241
Provision for income
taxes 1,400 1,204 4,015 4,302
-------- -------- -------- --------
Net income $ 4,959 $ 4,673 $ 14,225 $ 16,939
======== ======== ======== ========
Income per share
-- Basic(3) $ 0.07 $ 0.07 $ 0.20 $ 0.26
Income per share
-- Diluted $ 0.07 $ 0.06 $ 0.19 $ 0.23
Shares used in the
calculation of basic
income per share 71,180 65,233 71,295 64,563
Shares used in the
calculation of
diluted income per
share 73,462 75,093 74,646 73,715
-------- -------- -------- --------
(1) Research and development expenses for the quarter and nine months
ended September 30, 2001 exclude approximately $220 and $660,
respectively, in acquisition-related expenses associated with the
acquisition of Bedouin Software Inc. These expenses have been
included in restructuring, amortization of intangibles, and
acquisition-related expenses.
(2) Selling, general and administrative expenses for the quarter and
nine months ended September 30, 2001 exclude approximately $0 and
$323, respectively, in acquisition-related expenses associated
with the acquisition of Engine Informatica LTD. These expenses
have been included in restructuring, amortization of intangibles,
and acquisition-related expenses.
(3) The calculation of net income per share for the quarter and nine
months ended September 30, 2001 includes an accretion to the
Series C Preferred Stock of approximately $0 and $397,
respectively.
BORLAND SOFTWARE CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
Three Months Ended Nine Months Ended
------------------- -------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2002 2001 2002 2001
-------- -------- -------- --------
Revenues
Licenses and other $ 50,295 $ 46,985 $148,058 $136,931
Services 10,425 8,048 29,461 25,810
-------- -------- -------- --------
Total revenues 60,720 55,033 177,519 162,741
Cost of revenues
Licenses and other 4,241 3,434 11,318 9,874
Services 5,173 5,576 15,563 16,627
-------- -------- -------- --------
Cost of revenues 9,414 9,010 26,881 26,501
Gross profit 51,306 46,023 150,638 136,240
Operating expenses
Research and
development 12,732 12,091 37,392 34,327
Selling, general
and administrative 32,713 30,617 95,848 89,078
Restructuring,
amortization of
intangibles and
acquisition-related
expenses(1) -- -- -- --
-------- -------- -------- --------
Total operating
expenses 45,445 42,708 133,240 123,405
Operating income 5,861 3,315 17,398 12,835
Interest income, net
and other 1,884 2,782 5,314 9,389
-------- -------- -------- --------
Income before taxes 7,745 6,097 22,712 22,224
Provision for income
taxes(2) 1,705 1,249 4,996 4,501
-------- -------- -------- --------
Net income $ 6,040 $ 4,848 $ 17,716 $ 17,723
======== ======== ======== ========
Income per share
-- Basic(3) $ 0.08 $ 0.07 $ 0.25 $ 0.27
Income per share
-- Diluted $ 0.08 $ 0.06 $ 0.24 $ 0.24
Shares used in the
calculation of basic
income per share 71,180 65,233 71,295 64,563
Shares used in the
calculation of
diluted income per
share 73,462 75,093 74,646 73,715
-------- -------- -------- --------
(1) Pro forma income for the quarter and nine months ended September
30, 2002 excludes approximately $1,386 and $4,472, respectively,
in acquisition-related expenses associated with the acquisitions
of Redline Software Inc. (VMGEAR) and Bedouin Software Inc. Pro
forma income for the quarter and nine months ended September 30,
2001 excludes approximately $220 and $983, respectively, in
acquisition-related expenses associated with the acquisition of
Bedouin Software Inc. and Engine Informatica LTD. For the quarter
and nine months ended September 30, 2002, the acquisition related
expenses included $1,028 and $3,068, respectively, in compensation
expenses that will be paid in the next three years depending on
future revenues derived from the sale of Redline products and the
retention of certain employees of Redline.
(2) Pro forma income for the quarter ended September 30, 2002 and 2001
is presented based upon our effective tax rate of 22% and 20.5%
for the quarters respectively. Accordingly, an adjustment to
increase the provision for income taxes was included in the pro
forma income statement in the amount of $305 and $45 for the
quarters ended September 30, 2002 and 2001, respectively. Pro
forma income for the nine months ended September 30, 2002 and 2001
is presented based upon our effective tax rate of 22% and 20.2%,
respectively. Accordingly, an adjustment to increase the
provisions for income tax was included in the pro forma income
statement in the amount of $981 and $199 for the nine months ended
September 30, 2002 and 2001, respectively.
(3) The calculation of net income per share for the quarter and nine
months ended September 30, 2001 includes an accretion to the
Series C Preferred Stock of approximately $0 and $397,
respectively.
The following table shows our pro forma results reconciled to the GAAP
Condensed Consolidated Statements of Income for the three and nine
months ended September 30, 2002 and 2001. Our pro forma results for
fiscal 2002 and fiscal 2001 exclude restructuring and other charges,
acquisition-related expenses, and amortization of goodwill and
purchased intangibles.
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2002 2001 2002 2001
-------- -------- -------- --------
(in thousands, except per share data, unaudited)
GAAP net income $ 4,959 $ 4,673 $ 14,225 $ 16,939
Restructuring,
amortization
of intangibles,
and acquisition-
related expenses 1,386 220 4,472 983
Adjustment to
provision for
income taxes (305) (45) (981) (199)
-------- -------- -------- --------
Pro forma net
income $ 6,040 $ 4,848 $ 17,716 $ 17,723
Basic pro forma
net income per
share $ 0.08 $ 0.07 $ 0.25 $ 0.27
Shares used in
computing basic
net income per
share 71,180 65,233 71,295 64,563
Diluted net
income per
share $ 0.08 $ 0.06 $ 0.24 $ 0.24
Shares used in
computing diluted
net income per
share 73,462 75,093 74,646 73,715
BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
Sept. 30, Dec. 31,
2002 2001
-------- --------
ASSETS
Cash, cash equivalents and short-term
investments $309,334 $294,370
Accounts receivable, net 37,295 38,405
Property and equipment, net 17,480 18,994
Other assets 26,325 24,054
-------- --------
Total assets $390,434 $375,823
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deferred revenue $ 25,782 $ 23,859
Other current liabilities 63,580 64,710
-------- --------
Total current liabilities 89,362 88,569
Other long-term liabilities 10,361 10,469
Stockholders' equity 290,711 276,785
-------- --------
Total liabilities and stockholders' equity $390,434 $375,823
======== ========
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