Business Objects Reports Q2 2006 Results Total; Revenues Grew 12 Percent Year-over-Year; Americas Revenues Grew 36 Percent Year-over-Year.SAN JOSE San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Calif. & PARIS Paris, in Greek mythology Paris or Alexander, in Greek mythology, son of Priam and Hecuba and brother of Hector. Because it was prophesied that he would cause the destruction of Troy, Paris was abandoned on Mt. -- Business Objects (Nasdaq:BOBJ BOBJ Business Objects SA ) (Euronext Paris Euronext Paris is France's securities market, formerly known as the Paris Bourse, which merged with the Amsterdam and Brussels exchanges in September 2000 to form Euronext NV, which is the second largest exchange in Europe behind the London Stock Exchange. ISIN Isin (ĭs`ĭn), capital of an ancient Semitic kingdom of N Babylonia. The city became important after the third dynasty of Ur fell to the Elamites and the Amorites (c.2025 B.C.). The phase from c.2025–c.1763 B.C. code FR0004026250-BOB), the world's leading provider of business intelligence (BI) solutions, today announced results for the second quarter ended June June: see month. 30, 2006. Total revenues for the second quarter of 2006 were $294 million, up 12 percent year-over-year. License revenues for the second quarter of 2006 were $123 million, down 1 percent year-over-year. Services revenues for the second quarter of 2006 were $171 million, up 25 percent year-over-year. Currency exchange rates did not have a material impact on year-over-year comparative results. Income from operations on a US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis for the second quarter of 2006 was $13 million, or 5 percent of total revenues. Income from operations on a non-GAAP basis for the second quarter of 2006 was $39 million, or 13 percent of total revenues. US GAAP diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the second quarter of 2006 were $0.08 and non-GAAP diluted earnings per share were $0.31. All figures referred to herein are stated in US dollars unless otherwise indicated. Second quarter and six months 2006 non-GAAP results, as defined below in the section "Use of non-GAAP Financial Measures," differ from results measured under US GAAP as they exclude 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 stock-based compensation expense. It should be noted that 2005 US GAAP numbers do not include stock-based compensation expense under FAS 123R. A reconciliation of US GAAP to non-GAAP results is included at the end of this press release. All results reflect the acquisition of Firstlogic, Inc. as of April 1, 2006. "Our revenues grew 12 percent on the strength of the Americas' performance, newly acquired businesses and the adoption of the BusinessObjects A query, reporting and analysis suite of tools from Business Objects that runs under all versions of Windows and various Unix clients. It is the leading decision support tool in the business intelligence market, providing access to a wide variety of databases, including Oracle, INFORMIX XI platform," said John Schwarz —John F. Schwarz is the name of:
 r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and the Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). regions, as well as to focus on the more timely closure of large
transactions. To address these areas, we are hard at work implementing
key changes, including the creation of a global team to accelerate large
customer migrations to the BusinessObjects XI platform, and the
introduction of new programs to encourage mid-market customers to add
new users and features. We expect these actions to allow us to further
capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the growth opportunity presented by the BI market." "The level of our profits and the growth of our cash position in the face of reduced license revenues is a testament to the operational excellence programs we began adopting during 2005," said Jim Tolonen, chief financial officer of Business Objects. "We remain committed to our goal of improving operating profit margins Operating profit margin The ratio of operating profit to net sales. ." On July July: see month. 6, 2006, the company issued preliminary results for the second quarter of 2006. Total revenues were estimated at approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $287 million to $291 million, with license revenues of approximately $116 million to $118 million and services revenues of approximately $171 million to $173 million. The company further estimated US GAAP diluted earnings per share of approximately $0.05 to $0.08 and non-GAAP diluted earnings per share of approximately $0.25 to $0.28. The variances between the actual and the preliminary results are primarily due to conservative early estimates on license revenues and 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. . Second Quarter 2006 Business Highlights Total Revenues up 12 Percent Year-over-Year --License revenues for enterprise performance management (EPM EPM equine protozoal myeloencephalitis. ) solutions, including planning, budgeting, and dashboard (1) See Mac Dashboard. (2) A software-based control panel for one or more applications, network devices or industrial machines. Dashboards display simulated gauges and dials that look somewhat like an automobile dashboard. applications, were $15 million in the second quarter of 2006, up 69 percent year-over-year. --License revenues for enterprise information management (EIM EIM Enterprise Incentive Management EIM Enterprise Information Management EIM Enterprise Identity Mapping (IBM) EIM Enterprise Instant Messaging EIM Employee Internet Management EIM European Institute for the Media ) solutions, including data quality and data integration, were $12 million in the second quarter of 2006, up 78 percent year-over-year. --License revenues for core business intelligence solutions were $96 million in the second quarter of 2006, down 12 percent year-over-year. --Maintenance revenues were $123 million in the second quarter of 2006, up 23 percent year-over-year. Maintenance renewals continue to demonstrate strong customer loyalty. --Global professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. revenues, including consulting and training, were $48 million in the second quarter of 2006, up 30 percent year-over-year. --There were 4 license transactions over $1 million, compared to 13 transactions in the previous year. --There were 113 license transactions between $200,000 and $1 million, up 18 percent year-over-year, and partially offsetting the decline in transactions greater than $1 million. Revenue Growth Led by the Americas A·mer·i·cas , the See America. Region; Offset by Europe and Asia-Pacific --Total revenues in the Americas for the second quarter of 2006 were $168 million, up 36 percent year-over-year. --Total revenues in 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. for the second quarter of 2006 were $107 million, down 8 percent year-over-year. --Total revenues in Asia-Pacific and Japan for the second quarter of 2006 were $20 million, down 10 percent year-over-year, but up 5 percent sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen from the first quarter, which we believe signals the start of our recovery in the region. BusinessObjects XI Continues to Gain Traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. --Customer acceptance of BusinessObjects XI continued to ramp with $82 million in license revenues in the quarter. --BusinessObjects XI license revenues were up 51 percent from the same quarter last year and BusinessObjects XI Release 2 now accounts for more than 70 percent of the BusinessObjects XI license revenues. Solid Balance Sheet --Total cash and investments (cash and 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) were $475 million at June 30, 2006; a $44 million net increase from the prior quarter end. --Days sales outstanding (DSO See CSO. ) were 73 days as of June 30, 2006, improved from 80 days in the previous quarter. --Deferred 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. deferred revenues totaled $274 million at June 30, 2006, up 32 percent year-over-year and 7 percent from March 31, 2006. Highlights from Second Quarter Customer Wins --Notable customer wins in the second quarter of 2006 included: Blue Care Network of Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). , Catholic Healthcare West Catholic Healthcare West (CHW) is a California not-for-profit public benefit corporation that operates hospitals in California, Arizona, and Nevada[1]. As such, it is exempt from federal and state income taxes. (CHW CHW Chicago White Sox CHW Catholic Healthcare West CHW Children's Hospital at Westmead (Australia) CHW Children's Hospital of Wisconsin CHW Community Health Worker CHW ChileHardware (Spanish website) ), Chick-fil-A Chick-fil-A (IPA pronunciation: /tʃɪkfɪ'leɪ/) is a chain headquartered in Atlanta, Georgia, that specializes in chicken entrees. It is the second-biggest chicken-based fast-food chain in the United States. , Inc., China Pacific Insurance Co., Datacard Group, Deli XL B.V., GroupM, Gruppo ITAS ITAS Improved Target Acquisition System (US Army) ITAS Indigenous Tutorial Assistance Scheme (Australia) ITAS Inside the Actor's Studio (TV program) Assicurazioni, Iron Mountain, Ministry of Education & Human Resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. Development (Korea Korea (kôrē`ə, kə–), Korean Hanguk or Choson, region and historic country (85,049 sq mi/220,277 sq km), E Asia. ), Mos Food Services food services Hospital services A 24/7 department in a hospital that provides for the nutritional needs of inpatients–eg, those needing special diets, preparing meals and transporting them to the floor and, through the cafeteria, the hospital staff and , Inc., Principal Financial Group, Sterling Savings Bank savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. , SEI, Smorgan Steel, State of Alaska Alaska (əlă`skə), largest in area of the United States but third smallest (exceeding only Vermont and Wyoming) in population, occupying the northwest extremity of the North American continent, separated from the coterminous United States Department of Administration, Sydney Water Sydney Water is a New South Wales government owned corporation that provides drinking water, wastewater and some stormwater services to Sydney, Illawarra and the Blue Mountains, in Australia. Corp, The United States Army United States Army Major branch of the U.S. military forces, charged with preserving peace and security and defending the nation. The first regular U.S. fighting force, the Continental Army, was organized by the Continental Congress on June 14, 1775, to supplement local , and United States Navy United States Navy Major branch of the U.S. military forces, charged with defending the nation at sea and maintaining security on the seas wherever U.S. interests extend. The Continental Navy was established by the Continental Congress in 1775. . --In a key win, Expedia, a leading provider of online travel, upgraded to BusinessObjects XI Release 2 and adopted our Enterprise Performance Management solutions, including Crystal Xcelsius as a visualization Using the computer to convert data into picture form. The most basic visualization is that of turning transaction data and summary information into charts and graphs. Visualization is used in computer-aided design (CAD) to render screen images into 3D models that can be viewed from all tool. --National Health Service Scotland Scotland, political division of Great Britain (1991 pop. 4,957,000), 30,414 sq mi (78,772 sq km), comprising the northern portion of the island of Great Britain and many surrounding islands. continues to expand its 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. of Business Objects and is standardizing on BusinessObjects XI Release 2. Other Highlights --The company completed its acquisition of privately-held Firstlogic, Inc., a global provider of enterprise data quality software and services. For the first time, Firstlogic, Inc.'s financials are included in the company's results. --In the quarter, the company introduced its EIM strategy and offering. With its EIM solutions, Business Objects provides a unique cross-platform (software, hardware) cross-platform - A term that describes a language, software application or hardware device that works on more than one system platform (e.g. Unix, Microsoft Windows, Macintosh). E.g. Netscape Navigator, Java. information integration and data quality framework that ensures customers can trust their information to make critical decisions. --The 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 business grew 7 percent year-over-year in the second quarter of 2006, with 15 new OEM partners added this quarter. --Continuing the expansion of the company's partner program, 88 new value added resellers See VAR. (company) value added reseller - (VAR, or "value added retailer") A company which sells something (e.g. computers) made by another company (an OEM) with extra components added (e.g. specialist software). worldwide signed up to Business Objects' partner network. --At the Business Objects European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. Insight user conference, the company introduced two new mid-market products: Crystal Vision, designed for individual users, and Crystal Vision Server, designed for managed environments. --During the quarter, the Company received widespread praise and won several awards, including "Best in Show" for crystalreports.com at the Gartner (Gartner, Inc., Stamford, CT, www.gartner.com) The largest information technology consulting firm that specializes in research and analysis. Founded in 1979 by Gideon Gartner, it has grown through acquisitions, including Dataquest in 1995 and Techrepublic in 2000. Midsize Enterprise Summit and several reader's choice awards for Crystal Reports XI from asp.netPRO magazine, JavaPro magazine, and Visual Studio magazine. Business Outlook Business Objects offers the following guidance for the quarter ending September September: see month. 30, 2006: Total revenues for the third quarter are expected to be flat to slightly up on a sequential One after the other in some consecutive order such as by name or number. basis, as seasonal declines in license revenues are offset by continued strength in the services business, higher maintenance revenues from the Firstlogic, Inc. acquisition. --Total revenues are expected to range from $293 million to $298 million. --US GAAP diluted earnings per share are expected to range from $0.15 to $0.18. --Non-GAAP diluted earnings per share are expected to range from $0.32 to $0.35. Non-GAAP diluted earnings per share for the quarter ending September 30, 2006, are expected to add back approximately $11 million of amortization of intangible assets, and approximately $11 million of stock based compensation expense, which would be an increase of approximately $0.17 per share, after tax effect. Business Objects updates the following updated guidance for the year ending December December: see month. 31, 2006: For the full year, the company has revised our revenue guidance downward from the previous guidance in light of the license revenue results from the first half of the year, and in particular during the second quarter of 2006. --Total revenues are expected to range from $1.2 billion to $1.215 billion. --US GAAP diluted earnings per share are expected to range from $0.72 to $0.80. --Non-GAAP diluted earnings per share are expected to range from $1.47 to $1.55. Non-GAAP diluted earnings per share for the year ending December 31, 2006, are expected to add back approximately $44 million of amortization and the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of intangible assets, and $47 million of stock based compensation expense, which would be an increase of approximately $0.75 per share, after tax effect. The US GAAP guidance includes stock based compensation expense from the application of FAS 123R. This stock based compensation expense of approximately $11 million in the quarter ended September 30, 2006, and $47 million for the full year 2006, includes the impact of options assumed in prior acquisitions, as well as prior employee grants, and estimated employee grants for the current year. These expenses are based on estimates, including future stock price, employee turnover, growth in new employees, grants to current and new employees, stock volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the , and future interest rates. The outlook for the quarter ending September 30, 2006 and full year 2006 assumes a US dollar to euro exchange rate of $1.26 per EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 1.00, a US dollar to Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents exchange rate of $0.88 per CDN (Content Delivery Network) A system of distributed content on a large intranet or the public Internet in which copies of content are replicated and cached throughout the network. $1.00 and an effective US GAAP tax rate of 41 percent, and a non-GAAP tax rate of 31 percent. The non-GAAP tax rate differs from the US GAAP tax rate due to the elimination of the tax rate effect of the US GAAP expenses that are being eliminated to arrive at the non-GAAP expenses. The above information concerning our forecast for the third quarter and full year 2006 represents our outlook only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" , and we undertake no obligation to update or revise any financial forecast or other forward looking statements, as a result of new developments or otherwise. Conference Call Business Objects will hold a conference call to discuss its financial results for the second quarter of 2006 on July 26, 2006. The call will begin at 2:00 p.m. PT (5:00 p.m. New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , 11:00 p.m. Paris, 10:00 p.m. London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. ). The call-in call-in adj. Being in a format such that listeners or viewers are invited to have their telephone conversations with the host or guests on a show broadcast to other listeners: a call-in radio show. n. numbers are (800) 399-7988 for North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and (706) 634-5428 for Europe and Asia with ID # 2166964. The conference call also will be webcast live, and can be accessed on the company's IR website at www.businessobjects.com. A replay of the webcast will be available on the site approximately two hours after the end of the live call. Accounting Principles Business Objects prepares its financial statements 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 US GAAP. Because the company is listed on both the Eurolist by Euronext  Euronext N.V. is a pan-European stock exchange based in Paris[1] (TM) in France and the Nasdaq National Market 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. , it is required to separately report consolidated financial
statements Consolidated Financial StatementsThe combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge prepared in accordance with both US GAAP and International Financial Reporting Standards International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). ("IFRS IFRS International Financial Reporting Standard(s) IFRS Inter Frame Relay Service IFRS Indiana Facilities Registry System "). The most significant identified differences between the two reporting standards for Business Objects relate to the treatment of stock-based compensation expense, the accounting for deferred tax assets on certain intercompany transactions Intercompany transaction Transaction carried out between two units of the same corporation. and the accounting for business combinations. In accordance with French regulations and IFRS, Business Objects filed with the Autorite des Marches Financiers in France its Document de Reference 2005 on April 24, 2006 under the registration number R.06-038, which included its consolidated financial statements for the year ended on December 31, 2005. The Document de Reference 2005 includes the 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: information that Business Objects published on April 26, 2006 to the Bulletin des Annonces Legales Obligatoires ("BALO BALO Bulletin des Annonces Légales et Obligatoires (French) BALO Bdellovibrio and Like Organisms BALO Brigade Air Liaison Officer ") in France. In addition, the Company expects to publish the revenues for its first half of 2006 in accordance with IFRS in the BALO in France in August 2006. Use of Non-GAAP Financial Measures The non-GAAP financial measures such as 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. , net income, and earnings per share information for the second quarter and full year included in this press release are different from those otherwise presented under US GAAP as these non-GAAP measures exclude certain charges. These charges include a write-off of in-process research and development, amortization of intangible assets, stock-based compensation expense, 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. . The non-GAAP tax rate differs from the US GAAP tax rate due to the elimination of the tax rate effect of the US GAAP expenses that are being eliminated to arrive at the non-GAAP expenses. Business Objects has provided these measures in addition to US GAAP financial results because management believes these non-GAAP measures provide a consistent basis for comparison between quarters and of 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. year-over-year that are not influenced by certain non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. or impacts of prior period acquisitions, and therefore are helpful in understanding Business Objects' underlying operating results. In addition, this press release also includes non-GAAP measures that use a constant currency to separate the impact of conversion from other foreign currencies to US dollars from other changes in our business. These non-GAAP measures are some of the primary measures Business Objects' management uses for planning and forecasting. These measures are not in accordance with, or an alternative to US GAAP and these non-GAAP measures may not be comparable to information provided by other companies. Reconciliations of US GAAP to non-GAAP results are presented at the end of this press release. About Business Objects Business Objects is the world's leading business intelligence (BI) software company, with more than 39,000 customers worldwide, including over 80 percent of the Fortune 500. Business Objects helps organizations of all sizes create a trusted foundation for decision making, gain better insight into their business, and optimize optimize - optimisation performance. The company's innovative business intelligence suite, BusinessObjects(TM) XI, offers the BI industry's most advanced and complete solution for performance management, planning, reporting, query To interrogate a collection of data such as records in a database. The term may also be used to search a single file or collection of files such as HTML files on the Web. However, in addition to obtaining lists of records that match the search criteria, queries to a database allow for and analysis, and enterprise information management. BusinessObjects XI includes the award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" Crystal line of reporting and data visualization See information visualization. software. Business Objects has also built the industry's strongest and most diverse partner community, and offers consulting and education services to help customers effectively deploy their business intelligence projects. Business Objects has dual headquarters in San Jose, Calif., and Paris, France. The company's stock is traded on both the Nasdaq (BOBJ) and Euronext Paris (ISIN: FR0004026250 - BOB) stock exchanges. More information about Business Objects can be found at www.businessobjects.com. 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. This document contains forward-looking statements that involve risks and uncertainties concerning the company's expected growth and profitability, the company's licensing and adoption of its BusinessObjects XI products, the integration of recent acquisitions, the market adoption of Crystal Vision products, the company's expected financial performance for the third quarter and full year 2006 and the company's product and business strategies. Actual events or results may differ materially from those described in this document due to a number of risks and uncertainties. These potential risks and uncertainties include, among others, fluctuations in the company's quarterly and yearly operating results; the company's ability to sustain or increase its profitability; the company's ability to attract and retain customers for BusinessObjects XI; the enterprise performance management products and CrystalReports.com; the company's ability to issue new releases of its products, including those acquired from Firstlogic, Inc.; the company's ability to successfully integrate Firstlogic, Inc. and its other recent acquisitions; changes to current accounting policies which may have a significant, adverse impact upon the company's financial results; risks related to the company's integration of past and future acquisitions; the introduction of new products by 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. or the entry of new competitors into the markets for Business Objects' products; the impact of the pricing of competing technologies; the company's ability to preserve its key strategic relationships; the company's reliance upon selling products only in the Business Intelligence software market; and economic and political conditions in the US and abroad. More information about potential factors that could affect Business Objects' business and financial results is included in Business Objects' 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. for the year ended December 31, 2005 and Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2006, each of which are on file with the SEC and available at the SEC's website at www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . Business Objects is not obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to undertake any obligation to update these forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of this document. Business Objects and the Business Objects logo, BusinessObjects, WebIntelligence, Crystal Reports, Intelligent Question, and Desktop Intelligence are trademarks or registered trademarks of Business Objects S.A. or its affiliated companies Affiliated Companies A situation that occurs when one company owns a minority interest (less than 50%) in another company. Also refers to companies that are related to each other in some way. Notes: An affiliated company is sometimes referred to as a subsidiary. in the United States and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. other countries. All other names mentioned herein may be trademarks of their respective owners. BUSINESS OBJECTS S.A.
BUSINESS OBJECTS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per ordinary share and ADS data)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
------ ------ ------ ------
Revenues: (unaudited) (unaudited)
Net license fees $123,110 $124,858 $249,004 $240,009
Services 171,374 137,551 323,751 271,175
-------- -------- -------- --------
Total revenues 294,484 262,409 572,755 511,184
Cost of revenues:
Net license fees 10,276 7,249 18,252 14,417
Services 66,023 52,781 126,790 104,162
-------- -------- -------- --------
Total cost of
revenues 76,299 60,030 145,042 118,579
-------- -------- -------- --------
Gross profit 218,185 202,379 427,713 392,605
Operating expenses:
Sales and marketing 123,123 104,787 240,623 208,509
Research and development 52,644 40,427 96,381 80,701
General and
administrative 28,965 22,218 59,328 47,031
-------- -------- -------- --------
Total operating
expenses 204,732 167,432 396,332 336,241
-------- -------- -------- --------
Income from operations 13,453 34,947 31,381 56,364
Interest and other income, net 3,008 3,178 5,863 7,578
-------- -------- -------- --------
Income before provision for
income taxes 16,461 38,125 37,244 63,942
Provision for income taxes (8,512) (14,986) (16,958) (25,797)
-------- -------- -------- --------
Net income $ 7,949 $ 23,139 $ 20,286 $ 38,145
======== ======== ======== ========
Basic net income per ordinary
share and ADS $ 0.09 $ 0.26 $ 0.22 $ 0.43
======== ======== ======== ========
Diluted net income per
ordinary share and ADS $ 0.08 $ 0.25 $ 0.21 $ 0.42
======== ======== ======== ========
Ordinary shares and ADSs used
in computing
basic net income per
ordinary share and ADS 93,310 90,030 92,946 89,727
======== ======== ======== ========
Ordinary shares and ADSs and
equivalents
used in computing diluted
net income per ordinary
share and ADS 95,083 92,089 95,162 91,650
======== ======== ======== ========
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except nominal value per ordinary share)
June 30, December 31,
2006 2005
----------- -----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 469,490 $ 332,777
Restricted cash 30,545 22,157
Short-term investments 5,041 4,651
Accounts receivable, net 239,401 265,672
Deferred tax assets 13,106 13,605
Prepaid and other current assets 60,919 60,880
---------- ----------
Total current assets 818,502 699,742
Goodwill 1,210,775 1,166,043
Other intangible assets, net 122,607 110,512
Property and equipment, net 85,888 74,116
Deposits and other assets 28,766 34,945
Long-term restricted cash 26,428 20,858
Long-term deferred tax assets 15,230 17,142
---------- ----------
Total assets $2,308,196 $2,123,358
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 52,118 $ 45,777
Accrued payroll and related expenses 73,940 83,332
Income taxes payable 95,034 79,820
Deferred revenues 265,920 201,788
Other current liabilities 78,799 72,098
Escrows payable 24,970 21,728
---------- ----------
Total current liabilities 590,781 504,543
Long-term escrows payable 19,951 10,902
Other long-term liabilities 8,487 8,871
Long-term deferred tax liabilities 2,290 2,853
Long-term deferred revenues 8,480 6,734
---------- ----------
Total liabilities 629,989 533,903
Shareholders' equity
Ordinary shares, Euro 0.10 nominal value 10,524 10,359
Additional paid-in capital 1,257,437 1,217,473
Treasury, Business Objects Option LLC, and
Employee Benefit Sub-Plan Trust shares (4,214) (3,223)
Retained earnings 362,631 342,345
Unearned compensation - (12,243)
Accumulated other comprehensive income 51,829 34,744
---------- ----------
Total shareholders' equity 1,678,207 1,589,455
---------- ----------
Total liabilities and
shareholders' equity $2,308,196 $2,123,358
========== ==========
BUSINESS OBJECTS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended
June 30,
--------------------
2006 2005
-------- --------
(unaudited)
Operating activities:
Net income $ 20,286 $ 38,145
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property
and equipment 15,770 16,516
Amortization of other intangible assets 19,146 16,040
Stock-based compensation expense 24,917 2,360
Excess tax benefits from stock-based
compensation (2,422) -
Acquired in-process research and development 3,300 -
Deferred income taxes (5,789) 3,850
Changes in operating assets and liabilities:
Accounts receivable, net 45,546 29,019
Prepaid and other current assets 6,654 (8,865)
Deposits and other assets 6,282 7,563
Accounts payable 2,499 4,523
Accrued payroll and related expenses (21,645) (14,389)
Income taxes payable 16,937 (14,067)
Deferred revenues 45,860 15,517
Other liabilities (1,953) (24,943)
Short-term investments classified as
trading (390) (15)
-------- --------
Net cash provided by operating
activities 174,998 71,254
-------- --------
Investing activities:
Purchases of property and equipment (22,807) (13,891)
Business acquisitions, net of acquired
cash (55,482) -
Increase in escrows payable 12,099 -
Transfer of cash to restricted cash
accounts (13,766) -
-------- --------
Net cash used in investing activities (79,956) (13,891)
-------- --------
Financing activities:
Issuance of shares 25,361 16,057
Excess tax benefits from stock-based
compensation 2,422 -
-------- --------
Net cash provided by financing
activities 27,783 16,057
-------- --------
Effect of foreign exchange rate changes on cash
and cash equivalents 13,888 (911)
-------- --------
Net increase in cash and cash
equivalents 136,713 72,509
Cash and cash equivalents, beginning of the
period 332,777 293,485
-------- --------
Cash and cash equivalents, end of the period $469,490 $365,994
======== ========
BUSINESS OBJECTS S.A.
STATEMENT OF INCOME -- Reconciliation of US GAAP to Non-GAAP Results
Three Months Ended June 30, 2006
(in millions, except per ordinary share and ADS data)
(Unaudited)
Add back:
Amortization
of
intangible
assets and
in-process Add back:
research and Stock-based Non-GAAP
US GAAP development compensation Results
------- ------------- ------------- --------
Revenues:
Net license fees $123.1 $123.1
Services 171.4 171.4
------ ------------ ------------ ------
Total revenues 294.5 - - 294.5
Cost of revenues:
Net license fees 10.3 (7.4) 2.9
Services 66.0 (2.9) (1.5) 61.6
------ ------------ ------------ ------
Total cost of
revenues 76.3 (10.3) (1.5) 64.5
------ ------------ ------------ ------
Gross profit 218.2 10.3 1.5 230.0
Gross margin % 74% 78%
Operating expenses:
Sales and marketing 123.1 (0.4) (3.7) 119.0
Research and
development 52.6 (3.3) (1.8) 47.5
General and
administrative 29.0 (4.5) 24.5
------ ------------ ------------ ------
Total operating
expenses 204.7 (3.7) (10.0) 191.0
------ ------------ ------------ ------
Income from operations 13.5 14.0 11.5 39.0
Interest and other
income, net 3.0 3.0
------ ------------ ------------ ------
Income before provision
for income taxes 16.5 14.0 11.5 42.0
Provision for income
taxes (8.6) (12.9)
------ ------
Net income $ 7.9 $ 29.1
====== ======
Basic net income per
ordinary share and ADS $ 0.09 $ 0.31
====== ======
Diluted net income per
ordinary share and ADS $ 0.08 $ 0.31
====== ======
BUSINESS OBJECTS S.A.
STATEMENT OF INCOME -- Reconciliation of US GAAP to Non-GAAP Results
Six Months Ended June 30, 2006
(in millions, except per ordinary share and ADS data)
(Unaudited)
Add back:
Amortization
of
intangible
assets and
in-process Add back:
research and Stock-based Non-GAAP
US GAAP development compensation Results
------- ------------- ------------- --------
Revenues:
Net license fees $249.0 $249.0
Services 323.8 323.8
------ ------------ ------------ ------
Total revenues 572.8 - - 572.8
Cost of revenues:
Net license fees 18.3 (13.4) - 4.9
Services 126.8 (5.4) (2.8) 118.6
------ ------------ ------------ ------
Total cost of
revenues 145.1 (18.8) (2.8) 123.5
------ ------------ ------------ ------
Gross profit 427.7 18.8 2.8 449.3
Gross margin % 75% 78%
Operating expenses:
Sales and marketing 240.6 (0.7) (7.2) 232.7
Research and
development (1) 96.4 (3.3) (3.7) 89.4
General and
administrative 59.3 - (11.2) 48.1
------ ------------ ------------ ------
Total operating
expenses 396.3 (4.0) (22.1) 370.2
------ ------------ ------------ ------
Income from operations 31.4 22.8 24.9 79.1
Interest and other
income, net 5.8 5.8
------ ------------ ------------ ------
Income before provision
for income taxes 37.2 22.8 24.9 84.9
Provision for income
taxes (16.9) (24.9)
------ ------
Net income $ 20.3 $ 60.0
====== ======
Basic net income per
ordinary share and ADS $ 0.22 $ 0.65
====== ======
Diluted net income per
ordinary share and ADS $ 0.21 $ 0.63
====== ======
BUSINESS OBJECTS S.A.
Q2 FISCAL 2006 SUPPLEMENTAL INFORMATION
(in millions, except per ordinary share and ADS data)
(Unaudited)
Fiscal 2005 Fiscal 2006
-------------------------------- -------------
Q1 Q2 Q3 Q4 Total Q1 Q2
-------------------------------- -------------
SUPPLEMENTAL INCOME STATEMENT INFORMATION
Revenues
Net license fees $115.2 $124.9 $120.3 $155.3 $515.7 $125.9 $123.1
Maintenance 100.1 100.7 103.5 107.8 412.1 108.6 123.5
Consulting and
training 33.5 36.8 37.6 41.5 149.4 43.8 47.9
------------------------------------ --------------
Total revenues 248.8 262.4 261.4 304.6 1,077.2 278.3 294.5
------------------------------------ --------------
Total expenses
Cost of net
license fees 1.7 1.9 2.0 2.0 7.6 2.0 2.9
Cost of services
revenues 48.9 50.3 52.3 55.0 206.5 56.9 61.6
Sales and
marketing 103.2 104.3 102.8 121.6 431.9 113.6 119.0
Research and
development 40.0 40.1 40.2 41.1 161.4 41.9 47.5
General and
administrative 24.4 21.9 22.2 25.7 94.2 23.7 24.5
Amortization of
intangible
assets (1) 8.1 7.9 10.2 10.1 36.3 8.9 14.0
Stock-based
compensation (2) 1.2 1.1 1.6 3.1 7.0 13.4 11.5
Restructuring
costs (0.1) - - 0.3 0.2 - -
------------------------------------ --------------
Total expenses 227.4 227.5 231.3 258.9 945.1 260.4 281.0
------------------------------------ --------------
Income from
operations 21.4 34.9 30.1 45.7 132.1 17.9 13.5
------------------------------------ --------------
Interest and
other income,
net 4.4 3.2 2.9 3.9 14.4 2.9 3.0
Income before
provision for
income taxes 25.8 38.1 33.0 49.6 146.5 20.8 16.5
Provision for
income taxes (10.8) (15.0) (13.4) (14.7) (53.9) (8.5) (8.6)
Effective tax
rate 42% 39% 41% 30% 37% 41% 52%
------------------------------------ --------------
Net income 15.0 23.1 19.6 34.9 92.6 12.3 7.9
==================================== ==============
Net income per
ordinary share
and ADS
Basic 0.17 0.26 0.22 0.38 1.02 0.13 0.09
Diluted 0.16 0.25 0.21 0.37 1.00 0.13 0.08
Ordinary shares
and ADSs used in
computing net income
per share (000's)
Basic 89,424 90,030 90,552 91,588 90,405 92,552 93,310
Diluted 91,184 92,089 93,455 95,086 93,036 95,333 95,083
------------------ ---------------------------------------------------
Amortization of intangible assets
Cost of net
license fees 5.5 5.3 5.2 6.1 22.1 6.0 7.4
Cost of services
revenues 2.3 2.3 2.3 2.5 9.4 2.5 2.9
Sales and
marketing - - 0.3 0.3 0.6 0.4 0.4
Research and
development (1) - - 2.4 1.2 3.6 - 3.3
General and
administrative 0.3 0.3 - - 0.6 - -
------------------------------------ --------------
Total 8.1 7.9 10.2 10.1 36.3 8.9 14.0
==================================== ==============
Stock-based
compensation (2)
Cost of services
revenues 0.2 0.2 0.2 0.2 0.8 1.4 1.5
Sales and
marketing 0.5 0.5 0.5 0.4 1.9 3.5 3.7
Research and
development 0.3 0.3 0.3 0.3 1.2 1.8 1.8
General and
administrative 0.2 0.1 0.6 2.2 3.1 6.7 4.5
------------------------------------ --------------
Total 1.2 1.1 1.6 3.1 7.0 13.4 11.5
==================================== ==============
----------------------------------------------------------------------
Non-GAAP income
from operations
(3) 30.6 43.9 41.9 59.2 175.6 40.2 39.0
------------------------------------ --------------
% of total
revenues 12% 17% 16% 19% 16% 14% 13%
Interest and
other income,
net 4.4 3.2 2.9 3.9 14.4 2.9 3.0
Income before
provision for
income taxes 35.0 47.1 44.8 63.1 190.0 43.1 42.0
Provision for
income taxes (12.9) (17.4) (17.0) (22.7) (70.0) (12.0) (12.9)
Effective tax
rate 37% 37% 38% 36% 37% 28% 31%
------------------------------------ --------------
Non-GAAP net
income 22.1 29.7 27.8 40.4 120.0 31.1 29.1
==================================== ==============
% of total
revenues 9% 11% 11% 13% 11% 11% 10%
Non-GAAP net income
per ordinary share
and ADS
Basic 0.25 0.33 0.31 0.44 1.33 0.34 0.31
Diluted 0.24 0.32 0.30 0.42 1.29 0.33 0.31
----------------------------------------------------------------------
(1) Includes acquired in-process research and development related to
acquisitions
(2) In fiscal 2005, represents stock-based compensation expense
recorded in accordance with APB 25. In fiscal 2006, represents
stock-based compensation expense recorded in accordance with FAS 123R.
(3) Non-GAAP measures are reconciled from US GAAP figures. Non-GAAP
measures exclude in-process research and development, amortization of
intangible assets, stock-based compensation expense, and restructuring
costs.
BUSINESS OBJECTS S.A.
Q2 FISCAL 2006 SUPPLEMENTAL INFORMATION
(in millions, except for number of transactions, DSO and
headcount information)
(Unaudited)
----------------------------------------------------------------------
Fiscal 2005 Fiscal 2006
------------------------------- -------------
Q1 Q2 Q3 Q4 Total Q1 Q2
-------------------------------- -------------
REVENUE ANALYSIS
Total revenues
by geography
Americas $118.1 $123.6 $137.6 $166.7 $546.0 $147.2 $167.7
EMEA 111.2 116.5 104.9 117.7 450.3 $112.0 $106.8
Asia Pacific,
including
Japan 19.5 22.3 18.9 20.2 80.9 $19.1 $20.0
------------------------------------ --------------
Total $248.8 $262.4 $261.4 $304.6 $1,077.2 $278.3 $294.5
---------------------------------------------------------------------
Analysis of currency impact (year-over-year)
Reported revenue
growth rate 15% 18% 19% 14% 16% 12% 12%
Constant currency
growth rate 11% 15% 18% 19% 16% 17% 12%
------------------------------------ ------------
Impact of
foreign
currency on
growth rate 3% 3% 1% -5% 1% -5% 0%
---------------------------------------------------------------------
Fiscal 2005 Fiscal 2006
--------------------------------- ------------
Q1 Q2 Q3 Q4 Total Q1 Q2
--------------------------------- -----------
LICENSE REVENUE ANALYSIS
License revenues by
channel
Direct 47% 49% 48% 59% 51% 54% 48%
Indirect 53% 51% 52% 41% 49% 46% 52%
------ ------ ------ ------ ----- ------ ------
Total 100% 100% 100% 100% 100% 100% 100%
---------------------------------------------------------------------
Number of transactions
by size
Over $1 million 9 13 10 14 46 9 4
$200 thousand to
$999 thousand 101 96 121 147 465 104 113
---------------------------------------------------------------------
Fiscal 2005 Fiscal 2006
--------------------------- -------------
Q1 Q2 Q3 Q4 Q1 Q2
---------------------------- -----------
SELECTED BALANCE SHEET ITEMS
Cash and cash
equivalents,
restricted cash,
and short-term
investments $392 $384 $369 $380 $474 $532
DSO (Days sales
outstanding) 66 72 69 79 80 73
---------------------------------------------------------------------
HEADCOUNT
Total headcount 3,944 4,039 4,320 4,418 4,484 4,977
--------------------------------------------------------------------
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