Business Objects Reports Second Quarter 2004 Results.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 ) --Operating margins improve significantly from first quarter --Business Objects 6.5 extends product leadership --Expanded relationships with PeopleSoft (PeopleSoft, Inc., Pleasanton, CA, www.peoplesoft.com) A software company that specialized in enterprise-wide applications for client/server environments. Initially specializing in human resources, its package offerings covered the gamut including financial, distribution, manufacturing and IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) highlight partner momentum Business Objects (Nasdaq:BOBJ)(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, 2004. Second quarter revenues were $222.2 million, within the company's previous guidance range. Second quarter license revenues were $117.2 million. Earnings per ordinary and American depositary share American Depositary Share (ADS) Foreign stock issued in the US and registered in the ADR system. ("earnings per share" or "EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ") were $0.13. 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 share were $0.20. Both US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and 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 EPS are above the company's previous guidance. Pro forma results differ from US GAAP as they exclude certain purchase accounting adjustments and other costs associated with the acquisition of Crystal Decisions. A reconciliation of US GAAP to pro forma results is included at the end of this release. "During the second quarter, Business Objects continued to build upon its leadership position in business intelligence," said Bernard Liautaud Bernard Liautaud is chairman and chief strategy officer of Business Objects. Liautaud cofounded Business Objects in 1990 and was chief executive officer until September 2005. , chairman and chief executive officer. "I believe that the major risks associated with the integration of Crystal Decisions are behind us, and that we are beginning to see the benefits of the acquisition. Our operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: improved significantly, a sign that we are achieving operational synergies. Furthermore, the release of Business Objects 6.5 now gives us the strongest and most complete product line in the industry. And our new partnership agreements with IBM and PeopleSoft create significant opportunities for Business Objects in the business intelligence marketplace." Second Quarter Financial Highlights Revenue In the second quarter of 2004, Business Objects performance was driven by large transactions globally and strength in Europe Europe (y  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). specifically. During the quarter, there were 8 transactions over $1
million in license revenue, with the average size of those transactions
over $2 million. In addition, there were 91 transactions between
$200,000 and $1 million.
On a normalized basis: --Revenue in Europe reached $100.9 million, up 28 percent (up 20 percent in euro) over the same period in 2003. --Revenue in the Americas A·mer·i·cas , the See America. was $111.2 million, down 2 percent compared with the same period in 2003. The performance in the Americas was affected by a weak IT spending environment, particularly at the end of the quarter. --Revenue in Asia Pacific, including Japan, was $18.9 million, up 32 percent over the same period in 2003. --License revenue from 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 , analysis and reporting products was $107.2 million, up 2 percent year over year. --License revenue from performance management and analytic an·a·lyt·ic or an·a·lyt·i·cal adj. 1. Of or relating to analysis or analytics. 2. Expert in or using analysis, especially one who thinks in a logical manner. 3. Psychoanalytic. application products was $6.6 million, up 20 percent year over year. --License revenue from data integration products was $3.4 million, up 10 percent year over year. ("Normalized revenue" is defined in the section "Use of Non-GAAP Financial Measures" below) Earnings US GAAP operating margin reached 8 percent, compared to 4 percent in the first quarter of 2004. Pro forma operating margin improved to 13 percent, compared with 9 percent in the first quarter of 2004. Net income also improved sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen , with US GAAP earnings per share of $0.13, up from $0.04 in the first quarter, and pro forma earnings per share reaching $0.20, up from $0.10 in the first quarter. Synergies created by the integration of Crystal Decisions were a key contributor to the improved profitability in the second quarter. Balance Sheet As of June 30, 2004, the company had $203 million in cash and cash equivalents, compared with $246 million at the close of the first quarter. Cash generated from operations in the quarter was $15 million. The company used approximately $21 million to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. approximately 1 million shares in open market transactions. Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. Results Revenues for the six months ended June 30, 2004 were $439.5 million. 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 were $0.16 on a US GAAP basis, and $0.30 on a pro forma basis. Second Quarter Business Highlights 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 6.5 Extends Product Superiority During the quarter, the company released BusinessObjects 6.5. This important release introduces superior levels of end-user (job) end-user - The person who uses a computer application, as opposed to those who developed or support it. The end-user may or may not know anything about computers, how they work, or what to do if something goes wrong. integration across all Business Objects and Crystal products, allowing customers to seamlessly deploy the complete product line. BusinessObjects 6.5 delivers important performance improvements over the previous release and extends leadership in web-based query and analysis. Business Objects 6.5 is a key milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. in the company's product integration roadmap A roadmap may refer to:
"BusinessObjects 6.5 is a significant step forward in our competitive position. We are once again proving that we are at the leading edge of business intelligence solutions. We believe our current product offering is now the strongest and most complete -- from data integration, ad hoc query A non-standard inquiry. An ad hoc query is created to obtain information as the need arises. Contrast with a query that is predefined and routinely performed. See query and ad hoc. and analysis, enterprise reporting With the dramatic expansion of information technology, and the desire for increased competitiveness in corporations, there has been an increase in the use of computing power to produce unified reports which join different views of the enterprise in one place. , to performance management. It offers the broadest set of capabilities, it is highly scalable, and provides today integration across the whole suite of products," said Liautaud. Expansion of Alliances with PeopleSoft and IBM During the quarter, Business Objects signed a reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. agreement with IBM Global Services IBM Global Services is the world's largest business and technology services provider. It is the fastest growing part of IBM, with over 190,000 professionals serving customers in more than 160 countries. , the world's largest IT services and consulting provider. Following the close of the quarter, Business Objects expanded its 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 relationships with PeopleSoft and IBM. PeopleSoft has selected Crystal Reports and Crystal Enterprise as the integrated enterprise reporting solution for all their product lines and product families. In addition, Business Objects has announced a worldwide OEM agreement in which Crystal Version 10 will provide integrated reporting for future releases of IBM's WebSphere A family of Java development and Web application server products from IBM that run in an open, Eclipse-technology based environment on OS/390, OS/400, NT/2000, Linux and various Unix platforms. Studio and IBM Rational Software. Business Objects channel partners contributed 45 percent of the license revenue in the second quarter. Management believes the combination of Business Objects and Crystal Decisions creates new opportunities for successful partnerships with leaders in the software industry. Management Changes The company announced two management changes. First, the company has promoted Greg GREG Great Egg Harbor National Scenic and Recreational River (US National Park Service) Wolfe to general manager and senior vice president of the Americas. Wolfe was formerly head of sales for Business Objects Americas and a long-time sales executive at Crystal Decisions. Second, John Olsen For the Australian artist John Olsen, see John Olsen (artist). John Wayne Olsen, AO was Premier of South Australia between November 28, 1996 and October 22, 2001. John Olsen was a member of the Liberal Party and Member of Parliament for more than 20 years. , president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , will be leaving Business Objects at the end of the third quarter to pursue other interests. Olsen Olsen may refer to:
"I would like to thank John Olsen for his contributions to Business Objects in the past three years, and am pleased that he will remain on our board," said Liautaud. "And I am very enthusiastic about Greg Wolfe's promotion to run the Americas. He has a great track record and I look forward to working closely with him." Additional Second Quarter Highlights and Metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. --Launch of Crystal Enterprise Live Office, a unique solution allowing embedding 1. (mathematics) embedding - One instance of some mathematical object contained with in another instance, e.g. a group which is a subgroup. 2. (theory) embedding - (domain theory) A complete partial order F in [X -> Y] is an embedding if live data from Crystal Reports into Microsoft Office Microsoft's primary desktop applications for Windows and Mac. Depending on the package, it includes some combination of Word, Excel, PowerPoint, Access and Outlook along with various Internet and other utilities. documents. --Release of BusinessObjects Finance Intelligence, an analytic application that allows companies to gain critical insight into financial operations. --Availability of Crystal Enterprise 10 on the Red Hat Enterprise Linux Red Hat Enterprise Linux (often abbreviated to RHEL) is a Linux distribution produced by Red Hat and targeted toward the commercial market, including mainframes. Red Hat commits to supporting each version of RHEL for 7 years after its release. platform, demonstrating Business Objects commitment to the Linux Linux Nonproprietary operating system (OS) for digital computers. In 1991 Linus Torvalds of Finland began asking for volunteer programmers over the Internet to collaborate on the development of a UNIX-like OS for personal computers; the “1. community. --Major customer transactions with Defense Logistics Agency Noun 1. Defense Logistics Agency - a logistics combat support agency in the Department of Defense; provides worldwide support for military missions Defense Department, Department of Defense, DoD, United States Department of Defense, Defense - the federal department , ENI Group, Fairfax County Public Schools The Fairfax County Public Schools system (abbreviated FCPS) is a branch of the Fairfax County government which administers public schools in Fairfax County and the City of Fairfax. , Fedex European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. Services, General Electric, Huawei Huawei Technologies Co. Ltd. (Chinese: 华为技术有限公司; Pinyin: Huáwei Jíshu Yǒuxiàn Gōngsī , Ingram Micro Ingram Micro, Inc. NYSE: IM a Fortune 100 company founded in 1979 and based in Santa Ana, California. It is the world’s largest technology distributor and a leading technology sales, marketing and logistics company. , Kodak (company) Kodak - The photographic company responsible for Photo CD. http://kodak.com/. , Nomura Nomura (野村 or 乃村 or 埜村) is a Japanese surname. It can refer to: People
Business Outlook Business Objects offers the following guidance for the quarter ending September September: see month. 30, 2004: Revenue is expected to be in the range of $215 million to $220 million. US GAAP diluted earnings per share are expected to be in the range of $0.07 to $0.11. Pro forma diluted earnings per share are expected to be in the range of $0.14 to $0.18. Both the US GAAP and pro forma guidance for the quarter ending September 30, 2004 exclude eliminated deferred maintenance revenue of approximately $5.1 million, which is approximately a $0.03 per share reduction reflected in both estimates. The pro forma earnings per share for the quarter ending September 30, 2004 also excludes 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 of approximately $9.1 million, which is an increase of approximately $0.06 per share, and planned 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. of $1.5 million, which is an increase of approximately $0.01 per share. Business Objects offers the following guidance for the year ending December December: see month. 31, 2004: Revenue is expected to be in the range of $905 to $915 million on a US GAAP basis. US GAAP diluted earnings per share are expected to be in the range of $0.52 to $0.57. Pro forma diluted earnings per share are expected to be in the range of $0.80 to $0.85. Both the US GAAP and pro forma guidance for the full year exclude eliminated deferred maintenance revenue of approximately $28 million, which is approximately a $0.19 per share reduction reflected in both estimates. The pro forma earnings per share for the year ending December 31, 2004 also excludes amortization of intangible assets and stock-based compensation of approximately $36.4 million, which is an increase of approximately $0.25 per share, and planned restructuring charges of $5 million, which is an increase of approximately $0.03 per share. The revised revenue guidance for 2004 reflects the strengthening of the dollar compared to previous guidance provided on April 29, 2004. The impact of this factor is a reduction of approximately $16 million in revenue. The remainder of the reduction is due to caution in light of the tighter IT spending environment experienced throughout the software industry. The above information concerning our forecast for the third quarter and full year 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. 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. As the Company is listed on both the Premier Marche Marche, region, Italy Marche (mär`kā) or the Marches, region (1991 pop. 1,429,205), 3,742 sq mi (9,692 sq km), E central Italy, extending from the eastern slopes of the Apennines to the Adriatic Sea. Euronext  Euronext N.V. is a pan-European stock exchange based in Paris[1] 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 accounting principles generally accepted in France ("French GAAP") and in accordance with US GAAP. There are significant differences in results of operations and financial position between the two reporting standards. These differences are primarily related to the amortization of goodwill, stock-based compensation, financial instrument derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. , the accounting for treasury shares related to the acquisition of Crystal Decisions and their presentation in the balance sheet. The reconciliation of 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: net income for 2003 and of the consolidated shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. as of December 31, 2003 in accordance with French GAAP and with US GAAP is available in the Company's annual report filed as a "Document de Reference" under reference R. 04-066 with the French Securities Exchange Commission ("Autorite des Marches Financiers"). Use of Non-GAAP Financial Measures This press release includes financial measures for net income and earnings per share that exclude 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. and that have not been calculated in accordance with US GAAP. These measures differ from US GAAP in that they exclude the amortization of intangible assets and of deferred stock-based compensation associated with the Crystal Decisions acquisition, and the elimination of maintenance revenue due to the impact of purchase accounting entries on deferred revenue. Business Objects has provided these measurements in addition to US GAAP financial results because it believes they provide a consistent basis for comparison between quarters that is not influenced by certain non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) related to the acquisition of Crystal Decisions and therefore is helpful to understanding Business Objects' underlying operational results. Further, 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. A reconciliation of US GAAP to pro forma results is presented at the end of this press release. The "normalized revenue" referred to above includes approximately $8.7 million of deferred maintenance revenue that is eliminated under purchase accounting rules. The growth rate in normalized revenue is derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. by comparing 2004 normalized revenue to the combined Business Objects and Crystal Decisions revenue in the similar time period in 2003. Conference Call Business Objects will hold a conference call today to discuss its financial results for the second quarter of 2004. The call will begin at 1:30 p.m. PT (4:30 p.m. ET). 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. access numbers are 800.399.7988 for the U.S. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of ; and 706.634.5428 (Europe and Asia). The conference call also will be webcast live, and can be accessed on the company's website - www.businessobjects.com. A replay of the webcast will be available on the site approximately two hours after the end of the live call. About Business Objects Business Objects is the world's leading business intelligence (BI) software company. Business Objects enables organizations to track, understand, and manage enterprise performance. The company's solutions leverage the information that is stored in an array of corporate databases, enterprise resource planning See ERP. (application, business) Enterprise Resource Planning - (ERP) Any software system designed to support and automate the business processes of medium and large businesses. (ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. ), and customer relationship management (CRM (Customer Relationship Management) An integrated information system that is used to plan, schedule and control the presales and postsales activities in an organization. ) systems. Popular uses of BI include enterprise reporting, management dashboards and scorecards, customer intelligence applications, financial reporting, and both customer and partner extranets. These solutions enable companies to gain visibility into their business, acquire and retain profitable customers, reduce costs, optimize optimize - optimisation the supply chain, increase productivity, and improve financial performance. In December 2003, Business Objects completed the acquisition of Crystal Decisions, the leader in enterprise reporting. The combined product line includes software for reporting, query and analysis, performance management, analytic applications Analytic Applications are a type of business application software, used to measure and improve the performance of business operations. More specifically, Analytic Applications are a type of Business Intelligence solution. , and data integration. In addition, Business Objects offers consulting and education services to help customers effectively deploy their business intelligence projects. Business Objects has more than 24,000 customers in over 80 countries. The company's stock is traded under the ticker symbols Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors NASDAQ: BOBJ and Euronext Paris (ISIN: FR0004026250 - BOB). It is included in the SBF SBF Studium Biblicum Franciscanum (Franciscan School of Biblical Investigations; Jerusalem, Israel) SBF Small Block Ford (automotive engine) SBF Single Black Female SBF Société des Bourses Francaises 120 and IT CAC See Consumer Advisory Council. 50 French stock market indexes. Business Objects can be reached at 408-953-6000 and 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 Business Objects, including the company's expected financial performance, the breadth and acceptance of the company's new version 6.5 product offering and the Crystal version 10 offering, the continued success of integration and realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. of synergies from the Crystal Decisions acquisition, and the benefits of new OEM and reseller agreements. Actual events or results may differ materially from those described in this document due to a number of risks and uncertainties. The potential risks and uncertainties include, among others, Business Objects' ability to successfully integrate Crystal Decisions' operations, employees, and products; Business Objects' ability to transition Crystal Decisions' customers to the combined company's products; the realization of revenue from new OEM and reseller agreements; the introduction of new products by competitors or the entry of new competitors into the markets for Business Objects' products; and economic and political conditions in the U.S. and abroad. More information about potential factors that could affect Business Objects' business and financial results is included in Business Objects' 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. for the fiscal year ended December 31, 2003, Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarterly period ended March 31, 2004, which are on file with the Securities and Exchange Commission (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. BUSINESSOBJECTS is a trademark of Business Objects S.A. Other company and product names may be trademarks of the respective companies with which they are associated
BUSINESS OBJECTS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands of US dollars, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
-------- -------- -------- --------
Revenues: (unaudited) (unaudited)
Net license fees $117,182 $ 62,695 $231,675 $118,938
Services 105,056 66,292 207,798 128,573
-------- -------- -------- --------
Total revenues 222,238 128,987 439,473 247,511
Cost of revenues:
Net license fees 5,971 863 13,653 1,757
Services 41,444 20,701 83,074 40,695
-------- -------- -------- --------
Total cost of
revenues 47,415 21,564 96,727 42,452
-------- -------- -------- --------
Gross profit 174,823 107,423 342,746 205,059
Operating expenses:
Sales and marketing 99,271 58,297 196,452 114,730
Research and development 36,541 23,540 76,244 46,119
General and administrative 19,234 10,602 40,946 18,760
Restructuring costs 1,492 - 1,492 -
-------- -------- -------- --------
Total operating
expenses 156,538 92,439 315,134 179,609
-------- -------- -------- --------
Income from operations 18,285 14,984 27,612 25,450
Interest and other income
(expense), net 261 3,608 (3,807) 7,356
-------- -------- -------- --------
Income before provision for
income taxes 18,546 18,592 23,805 32,806
Provision for income taxes (7,058) (7,065) (9,057) (12,466)
-------- -------- -------- --------
Net income $ 11,488 $ 11,527 $ 14,748 $ 20,340
======== ======== ======== ========
Basic net income per ordinary
share and ADS $ 0.13 $ 0.18 $ 0.17 $ 0.32
======== ======== ======== ========
Diluted net income per
ordinary share and ADS $ 0.13 $ 0.18 $ 0.16 $ 0.32
======== ======== ======== ========
Ordinary shares and ADSs used
in computing basic
net income per share 89,095 63,052 88,864 62,765
======== ======== ======== ========
Ordinary shares and ADSs and
equivalents used in
computing diluted net income
per share 91,061 64,458 91,730 64,075
======== ======== ======== ========
BUSINESS OBJECTS S.A.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of US dollars)
June 30, December 31,
2004 2003
----------- -----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 202,617 $ 235,380
Restricted cash 49,280 19,243
Accounts receivable, net 200,155 187,885
Deferred tax assets 5,351 261
Prepaid and other current assets 42,697 33,797
---------- ----------
Total current assets 500,100 476,566
Goodwill 1,061,201 1,051,111
Other intangible assets, net 131,193 149,143
Property and equipment, net 61,105 61,187
Deposits and other assets 32,853 19,092
Long-term deferred tax assets 26,830 17,963
---------- ----------
Total assets $1,813,282 $1,775,062
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 38,181 $ 47,790
Accrued payroll and related expenses 64,643 84,686
Income taxes payable 90,554 75,727
Deferred revenues 176,221 135,977
Restructuring liability 8,958 21,331
Other current liabilities 57,084 51,814
Notes payable 6,636 9,728
---------- ----------
Total current liabilities 442,277 427,053
Long-term accrued rent 5,298 4,950
Shareholders' equity
Ordinary shares, Euro 0.10 nominal value 10,136 9,927
Additional paid-in capital 1,142,620 1,121,910
Treasury and Business Objects Option
LLC shares (34,065) (13,104)
Retained earnings 217,345 202,597
Unearned compensation (12,222) (18,353)
Accumulated other comprehensive income 41,893 40,082
---------- ----------
Total shareholders' equity 1,365,707 1,343,059
---------- ----------
Total liabilities and
shareholders' equity $1,813,282 $1,775,062
========== ==========
BUSINESS OBJECTS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US dollars)
Six Months Ended
June 30,
---------------------
2004 2003
-------- --------
(unaudited)
Operating activities:
Net income $ 14,748 $ 20,340
Adjustment to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization of
property and equipment 16,113 8,048
Amortization of other intangible assets 15,435 1,405
Stock-based compensation expense 3,787 -
Deferred income taxes (14,795) 1,223
Tax benefit from employee stock plans 2,517 -
Changes in operating assets and liabilities:
Accounts receivable, net (14,849) 21,651
Prepaid and other current assets (9,516) (3,321)
Deposits and other assets (13,717) -
Accounts payable (8,808) (2,874)
Accrued payroll and related expenses (21,503) (4,472)
Income taxes payable 6,501 (2,454)
Deferred revenues 41,576 23,279
Restructuring liability and other current
liabilities (4,991) (6,193)
-------- --------
Net cash provided by operating
activities 12,498 56,632
-------- --------
Investing activities:
Purchases of property and equipment, net (16,272) (4,673)
Purchase of short-term investments, net - (25,321)
-------- --------
Net cash used in investing
activities (16,272) (29,994)
-------- --------
Financing activities:
Issuance of shares 20,746 6,299
Purchase of treasury shares (20,961) -
Transfer of cash to restricted cash accounts (33,300) -
Transfer of cash from restricted cash
accounts 3,263 793
Payments on notes and escrow payable (3,092) (793)
-------- --------
Net cash provided by (used in)
financing activities (33,344) 6,299
-------- --------
Effect of foreign exchange rate changes on cash
and cash equivalents 4,355 19,976
Net increase (decrease) in cash and cash
equivalents (32,763) 52,913
Cash and cash equivalents, beginning of period 235,380 233,941
-------- --------
Cash and cash equivalents, end of period $202,617 $286,854
Short-term investments, end of period - 76,129
-------- --------
Cash and cash equivalents and short-term
investments, end of period $202,617 $362,983
======== ========
Business Objects S.A.
Statement of Income - Reconciliation of US GAAP
to Pro forma Information
For the Three Months Ended June 30, 2004
(In millions of US dollars, except for EPS data)
(Unaudited)
Add back:
Amortization Add back:
of Intangible Amortization
Assets and of
Restructuring Stock-based
US GAAP Costs Compensation
-------------------------------------
Net license fees $117.2 $ - $ -
Services revenues 105.0 - -
------ ----- -----
Total revenues 222.2 - -
Total cost of revenues 47.4 (7.3) (0.3)
------ ----- -----
Gross profit 174.8 7.3 0.3
------ ----- -----
Gross profit % 79%
Sales and marketing 99.3 - (0.7)
Research and development 36.5 - (0.4)
General and administrative 19.2 (0.3) (0.3)
Restructuring costs 1.5 (1.5) -
------ ----- -----
Total operating expenses 156.5 (1.8) (1.4)
Income from operations 18.3 9.1 1.7
Operating profit % 8%
Interest and other income, net 0.3 - -
----------------------------------
Income before provision for taxes 18.6 9.1 1.7
------ ----- -----
Provision for income taxes (7.1) (3.5) (0.6)
----------------------------------
Net income $ 11.5 $ 5.6 $ 1.1
====== ===== =====
EPS - Basic $ 0.13
EPS - Diluted $ 0.13
Business Objects S.A.
Statement of Income - Reconciliation of US GAAP
to Pro forma Information
For the Three Months Ended June 30, 2004
(In millions of US dollars, except for EPS data)
(Unaudited)
Pro Add back: Normalized
forma Lost (including
Results Deferred add back of
Maintenance lost
Revenue deferred
maintenance
revenue)
--------------------------------
Net license fees $117.2 $ - $117.2
Services revenues 105.0 8.7 113.7
------ ----- ------
Total revenues 222.2 8.7 230.9
Total cost of revenues 39.8 - 39.8
------ ----- ------
Gross profit 182.4 8.7 191.1
------ ----- ------
Gross profit % 82% 83%
Sales and marketing 98.6 - 98.6
Research and development 36.1 - 36.1
General and administrative 18.6 - 18.6
Restructuring costs - - -
------ ----- ------
Total operating expenses 153.3 - 153.3
Income from operations 29.1 8.7 37.8
Operating profit % 13% 16%
Interest and other income, net 0.3 - 0.3
-----------------------------
Income before provision for taxes 29.4 8.7 38.1
------ ----- ------
Provision for income taxes (11.2) (3.3) (14.5)
-----------------------------
Net income $ 18.2 $ 5.4 $ 23.6
====== ===== ======
EPS - Basic $ 0.20 $ 0.26
EPS - Diluted $ 0.20 $ 0.26
Business Objects S.A.
Supplemental Information
($ in millions of US dollars, except where indicated)
(Unaudited)
------- ------- ------- ------- -------
2003
------- ------- ------- ------- -------
US GAAP Basis Q1 Q2 Q3 Q4 Total
Revenues
Net license fees $56.2 $62.7 $58.0 $98.3 $275.2
Maintenance and Services
revenues
Maintenance revenues 46.0 48.4 53.1 63.2 210.7
Consulting and Training
revenues 16.3 17.9 18.0 22.7 74.9
------- ------- ------- ------- -------
Total Maintenance and Services
Revenues 62.3 66.3 71.1 85.9 285.6
------- ------- ------- ------- -------
Total revenues $118.5 $129.0 $129.1 $184.2 $560.8
======= ======= ======= ======= =======
Revenues By Geography
Americas $51.9 $56.6 $55.3 $78.1 $241.9
EMEA 57.8 63.0 63.3 89.6 273.7
Asia Pacific including Japan 8.8 9.4 10.5 16.5 45.2
------- ------- ------- ------- -------
Total revenues $118.5 $129.0 $129.1 $184.2 $560.8
======= ======= ======= ======= =======
License Revenues by Channel
Direct 59% 60% 57% 59% 59%
Indirect 41% 40% 43% 41% 41%
------- ------- ------- ------- -------
Total net license fees 100% 100% 100% 100% 100%
======= ======= ======= ======= =======
Selected P&L Metrics
Gross Profit % 82% 83% 82% 84% 83%
Operating Profit % 9% 12% 10% 0% 7%
Net Income % 7% 9% 8% N/A 4%
Diluted EPS $0.14 $0.18 $0.17 $(0.12) $0.34
License Deal Sizes
Number of software
transactions greater than
$1M 5 7 6 1
Number of software
transactions greater than
$200K 58 55 50 80
Selected Balance Sheet Measures
Cash, equivalents and
short-term investments $329 $363 $380 $235
Days Sales Outstanding 53 57 62 66
Headcount
Quota Carrying Sales
Representatives 292 294 293 563
Total Headcount 2,145 2,148 2,111 3,924
Supplemental Information and Non-GAAP
Measurements
Normalized Revenues by Geography
Americas
EMEA
Asia Pacific including Japan
Total normalized revenues
Less: deferred maintenance revenue write-down
Total revenues, US GAAP basis
Business Objects S.A.
Supplemental Information
($ in millions of US dollars, except where indicated)
(Unaudited)
Q2 2004
------ ------- --------
2004 % Change
------ ------- over Q2 03
US GAAP Basis Q1 Q2 ---------
Revenues
Net license fees $114.5 $117.2 87%
Maintenance and Services revenues
Maintenance revenues 73.8 75.6 56%
Consulting and Training revenues 28.9 29.4 64%
------ ------ --------
Total Maintenance and Services Revenues 102.7 105.0 58%
------ ------ --------
Total revenues $217.2 $222.2 72%
====== ====== ========
Revenues By Geography
Americas $104.1 $104.3 84%
EMEA 96.4 99.6 58%
Asia Pacific including Japan 16.7 18.3 95%
------ ------ --------
Total revenues $217.2 $222.2 72%
====== ====== ========
License Revenues by Channel
Direct 53% 55%
Indirect 47% 45%
------ ------
Total net license fees 100% 100%
====== ======
Selected P&L Metrics
Gross Profit % 77% 79%
Operating Profit % 4% 8%
Net Income % 2% 5%
Diluted EPS $ 0.04 $ 0.13
License Deal Sizes
Number of software transactions greater
than $1M 7 8
Number of software transactions greater
than $200K 104 91
Selected Balance Sheet Measures
Cash, equivalents and short-term
investments $ 246 $ 203
Days Sales Outstanding 75 81
Headcount
Quota Carrying Sales Representatives 554 575
Total Headcount 3,756 3,707 73%
Supplemental Information and Non-GAAP
Measurements
Normalized Revenues by Geography
Americas $114.2 $111.2 -2%
EMEA 98.4 100.9 28%
Asia Pacific including Japan 17.2 18.8 32%
------ ------ --------
Total normalized revenues $229.8 $230.9 11%
------ ------ --------
Less: deferred maintenance revenue
write-down (12.6) (8.7)
------ ------
Total revenues, US GAAP basis $217.2 $222.2
====== ======
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