Business Objects Reports Third Quarter 2005 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 )(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): --Total Revenues Up 19 Percent Year over Year --Non-GAAP 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. up 62 Percent; US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Operating Income up 81 percent --Full Year Guidance Raised Business Objects (Nasdaq:BOBJ)(Euronext Paris ISIN code FR0004026250 - BOB), the world's leading provider of business intelligence (BI) solutions, today announced results for the third quarter ended September September: see month. 30, 2005. For the third quarter of 2005, the company reported total US GAAP revenues of $261.4 million, an increase of 19 percent year over year. 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 were $0.21 and non-GAAP diluted earnings per share were $0.30 in the third quarter of 2005. The US GAAP and non-GAAP diluted earnings per share were in line with or above the high end of the company's guidance range for the quarter. The company's guidance range was US GAAP $0.19 to $0.22 per share and non-GAAP $0.25 to $0.28 per share, respectively. Operating income improved significantly on both a US GAAP and non-GAAP basis during the third quarter of 2005. On a US GAAP basis, income from operations was $30.1 million or 12 percent of total revenues, up 81 percent year over year. On a non-GAAP basis, income from operations was $41.9 million or 16 percent of total revenues, up 62 percent from the third quarter of 2004. All figures referred to herein are stated in US dollars unless otherwise indicated. Third quarter of 2005 non-GAAP results as defined in the section "Use of Non-GAAP Financial Measures" below differ from results measured under US GAAP as they exclude $2.4 million of in-process research and development costs, $7.8 million of 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 $1.6 million of stock-based compensation expense. Reconciliations of US GAAP to non-GAAP results are included at the end of this press release. "Business Objects is now over $1 billion in trailing four quarter revenues, marking an important breakthrough in the history of the company and the Business Intelligence industry," 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 of the board. "I am really pleased to have John Schwarz —John F. Schwarz is the name of:
"In Q3 we continued to generate strong customer demand, execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution well in our sales channels, and improve our new product adoption as well as maintenance renewals, all of which contributed to significant market share gains and to our strengthening financial results," said John Schwarz, president and chief executive officer. "This is the third sequential One after the other in some consecutive order such as by name or number. quarter of accelerating license growth which reflects the rapid adoption of 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, the most advanced version of our flagship product A primary product of a company, which is typically why the company was founded and/or what made it well known. For example, MS-DOS, Windows and the Microsoft Office suite have been flagship products of Microsoft. CorelDRAW is a flagship product of Corel Corporation. , and the industry's leading Business Intelligence solution. In addition to license growth we had very strong growth in our services businesses as Business Objects continued to assume an increasing role as a strategic business intelligence solution provider." Business Objects Gained Momentum and Market Share in the Quarter --Since the launch of BusinessObjects XI in January January: see month. 2005, license growth accelerated to 14 percent year over year, increasing from 1 percent in the first quarter of 2005 and 7 percent in the second quarter of 2005. --This growth rate is more than double that of the second and third place BI providers in the most recent quarter. Broader Customer Adoption Reflected in the Increase in Large Deals and Customer Wins --There were 10 transactions over $1 million in license revenues in the third quarter of 2005, up from 4 transactions over $1 million in the third quarter of 2004. --Notable customer wins included Auchan Auchan SA is an international retail group and multinational corporation headquartered in Croix, France. It is one of the world's principal distribution groups . It is present in 12 countries and employs 175,000 employees. , Grupo Santander Grupo Santander (LSE: BNC, NYSE: STD, IBEX-35: SAN) is a banking group centered around Banco Santander, the largest bank in Spain. Together with its local subsidiaires it has large scale operations in Europe and Latin America. , Kohl's Kohl's Corporation (NYSE: KSS) is an American department store chain headquartered in Menomonee Falls, Wisconsin, a suburb of Milwaukee. The Company currently operates 834 stores in 46 states. Department Stores This is a list of department stores. In the case of department store groups the location of the flagship store is given. This list does not include large specialist stores, which sometimes resemble department stores. , and T-Mobile, many of which were driven by BusinessObjects XI. The Americas A·mer·i·cas , the See America. and 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. Reported Accelerating Growth --Revenues in the Americas reached $137.6 million in the third quarter of 2005, up 21 percent year over year, accelerating from 19 percent in the second quarter of 2005. The region closed 4 transactions over $1 million in license revenues. --Revenues in EMEA (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). , Middle East, and Africa) totaled $104.9
million, up 20 percent year over year (up 19 percent at 85.8 million in
euros), accelerating from 17 percent in the second quarter of 2005. EMEA
closed 6 transactions over $1 million in license revenues.
--Revenues in Asia Pacific, including Japan, totaled $18.9 million, up 4 percent year over year. Strong Demand Across Software and Services Due to New Products --Software license revenues totaled $120.3 million in the third quarter of 2005, with growth in each major product area. --Sales of core business intelligence products including 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 , reporting and analysis resulted in $104.9 million in license revenues, up 9 percent year over year. --Enterprise performance management applications led license growth, reaching $7.9 million in license revenues, up 110 percent year over year. --Data integration products reached $7.6 million in license revenues, up 35 percent year over year. --Services revenues totaled $141.1 million in the third quarter, up 24 percent year over year with strong growth in both consulting and maintenance. Profits Continued to Grow; Earnings per Share Up Year over Year --On a US GAAP basis, operating income was $30.1 million in the third quarter of 2005, up 81 percent year over year, representing a US GAAP operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 12 percent. In the third quarter of 2005, US GAAP net income was $19.6 million and US GAAP diluted earnings per share were $0.21 per share. --On a non-GAAP basis, operating income was $41.9 million in the third quarter of 2005, up 62 percent year over year, representing a non-GAAP operating margin of 16 percent. In the third quarter of 2005, non-GAAP net income was $27.8 million and non-GAAP diluted earnings per share were $0.30 per share. Balance Sheet Remains Strong --Total cash and investments (cash, cash equivalents, restricted cash 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 $369 million at September 30, 2005, up 19 percent year to date. This $58 million year to date net increase in cash reflects approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $178 million of cash inflows, less acquisitions and other capital investment outflows of approximately $120 million. --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 $196.1 million at September 30, 2005, up 16 percent year over year. --Days sales outstanding (DSOs) were 69 days as of September 30, 2005, within the company's target range of 60 to 75 days. BusinessObjects XI Momentum Remains Strong --BusinessObjects XI license revenues totaled more than $65 million in the third quarter of 2005, up 21 percent versus the previous quarter. --Customer acceptance of BusinessObjects XI continued to ramp with over $136 million in license revenues in its first three quarters since availability. Business Outlook Business Objects has raised guidance for the fourth quarter and fiscal year 2005 to reflect the performance in Q3, the benefit from the strategic acquisitions made this year, and overall strength in the underlying business. Business Objects offers the following guidance for the quarter ending December December: see month. 31, 2005: --Total revenues are expected to range from $287 million to $292 million. --US GAAP diluted earnings per share are expected to range from $0.30 to $0.33. --Non-GAAP diluted earnings per share are expected to range from $0.37 to $0.40. --This guidance does not include the impact of the proposed Infommersion, Inc. acquisition which is expected to close in the fourth quarter of 2005. The non-GAAP diluted earnings per share guidance for the quarter ending December 31, 2005 excludes amortization of intangible assets and stock-based compensation expense of approximately $10.7 million, which accounts for the difference of approximately $0.07 per share. Assumptions for the fourth quarter guidance assume a US GAAP and non-GAAP tax rate of 38 percent and a US dollar to euro exchange rate of $1.22 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. Business Objects offers the following updated guidance for the year ending December 31, 2005: --Total revenues are expected to range from $1.060 billion to $1.065 billion. --US GAAP diluted earnings per share are expected to range from $0.93 to $0.97. --Non-GAAP diluted earnings per share are expected to range from $1.24 to $1.27. This guidance does not include the impact of the proposed Infommersion, Inc. acquisition which is expected to close in the fourth quarter of 2005. The non-GAAP diluted earnings per share guidance for the year ending December 31, 2005 excludes a write off of in-process research and development (IPR&D) of $2.4 million, and amortization of intangible assets and stock-based compensation expense of approximately $39.0 million, which represents an impact of approximately $0.30 per share. The outlook for the full year 2005 assumes a US dollar to euro exchange rate of $1.22 per EUR 1.00 and an effective US GAAP tax rate of 40 percent, and a non-GAAP tax rate of 38 percent for the full year 2005. The above information concerning our forecast for the fourth quarter and full year 2005 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 third quarter of 2005 on October October: see month. 27, 2005. 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 #1158554. 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. 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 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 and the accounting for treasury shares related to a prior acquisition. In accordance with French regulations and IFRS, Business Objects will report its consolidated financial statements for the first half of 2005 on October 28, 2005. In addition, Business Objects expects to report its consolidated financial statements for the full year 2005 in April 2006. Business Objects filed with the Autorite des Marches Financiers in France its 2004 Document de Reference which included the opening balance sheet of the Company as of January 1, 2004 prepared in accordance with IFRS. In addition, the Company has published net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for its second quarter in accordance with IFRS in the Bulletin des Annonces Legales Obligatoires in France on August 12, 2005. Use of Non-GAAP Financial Measures The non-GAAP financial measures such as operating income, net income and earnings per share information for the third quarters of 2005 and 2004 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 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 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. . 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 30,000 customers worldwide, including over 80 percent of the Fortune 500, Business Objects helps organizations gain better insight into their business, improve decision making, and optimize optimize - optimisation enterprise performance. The company's business intelligence platform, BusinessObjects(TM) XI, offers the BI industry's most advanced and complete platform for performance management, planning, reporting, query and analysis, and data integration. BusinessObjects XI includes Crystal Reports(R), the industry standard for 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. . Business Objects has built the industry's strongest and most diverse partner community, and also offers consulting and education services to help customers effectively deploy their business intelligence projects. Business Objects has headquarters in both 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, including the company's expected financial performance for the fourth quarter and full year 2005, the company's core strategy and the company's expectations regarding its planned acquisition of Infommersion, Inc. 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 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 company's ability to issue new releases of BusinessObjects XI on other platforms; changes to current accounting policies which may have a significant, adverse impact upon the company's financial results; risks related to the company's purchase and integration of SRC (SouRCe) Contrast with DST, which is an abbreviation of "destination." Software, Inc. and Infommersion, Inc. ; 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, 2004 and Business Objects' Form 10-Q Form 10-Q See 10-Q. for the quarter ended June June: see month. 30, 2005, 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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per ordinary share and ADS data)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
--------- --------- --------- ---------
Revenues: (unaudited) (unaudited)
Net license fees $120,308 $105,705 $360,317 $337,380
Services 141,073 113,765 412,248 321,563
--------- --------- --------- ---------
Total revenues 261,381 219,470 772,565 658,943
Cost of revenues:
Net license fees 7,169 7,117 21,586 20,770
Services 54,854 42,470 159,016 125,544
--------- --------- --------- ---------
Total cost of revenues 62,023 49,587 180,602 146,314
--------- --------- --------- ---------
Gross margin 199,358 169,883 591,963 512,629
Operating expenses:
Sales and marketing 103,622 96,543 312,131 292,995
Research and development 42,849 35,339 123,550 111,583
General and administrative 22,799 21,366 69,830 62,312
Restructuring costs - - - 1,492
--------- --------- --------- ---------
Total operating expenses 169,270 153,248 505,511 468,382
--------- --------- --------- ---------
Income from operations 30,088 16,635 86,452 44,247
Interest and other income
(expense), net 2,895 1,137 10,473 (2,670)
--------- --------- --------- ---------
Income before provision for
income taxes 32,983 17,772 96,925 41,577
Provision for income taxes (13,416) (6,743) (39,213) (15,800)
--------- --------- --------- ---------
Net income $19,567 $11,029 $57,712 $25,777
========= ========= ========= =========
Basic net income per ordinary
share and ADS $0.22 $0.12 $0.64 $0.29
========= ========= ========= =========
Diluted net income per
ordinary share and ADS $0.21 $0.12 $0.63 $0.28
========= ========= ========= =========
Ordinary shares and ADSs used
in computing basic net income
per ordinary share and ADS 90,552 88,495 90,005 88,745
========= ========= ========= =========
Ordinary shares and ADSs and
equivalents used in computing
diluted net income per
ordinary share and ADS 93,455 89,792 92,286 91,210
========= ========= ========= =========
BUSINESS OBJECTS S.A.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except nominal value per ordinary share)
September December
30, 2005 31, 2004
----------- -----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $332,464 $293,485
Restricted cash 32,044 14,043
Short-term investments 4,801 3,831
Accounts receivable, net 200,929 248,957
Deferred tax assets 3,840 8,328
Prepaid and other current assets 58,935 46,575
----------- -----------
Total current assets 633,013 615,219
Goodwill 1,139,014 1,067,694
Other intangible assets, net 114,566 124,599
Property and equipment, net 63,144 64,053
Deposits and other assets 37,782 49,296
Long-term deferred tax assets 2,067 2,067
----------- -----------
Total assets $1,989,586 $1,922,928
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $40,709 $40,939
Accrued payroll and related expenses 68,215 84,918
Income taxes payable 77,823 85,000
Deferred revenues 190,707 194,366
Other current liabilities 71,461 83,544
Escrows payable 24,657 6,654
----------- -----------
Total current liabilities 473,572 495,421
Other long-term liabilities 7,157 6,448
Long-term deferred revenues 5,401 6,316
Long-term deferred tax liabilities 5,881 7,599
----------- -----------
Total liabilities 492,011 515,784
Shareholders' equity
Ordinary shares, Euro 0.10 nominal value 10,535 10,312
Additional paid-in capital 1,200,662 1,167,336
Treasury and Business Objects Option LLC
shares (53,335) (53,335)
Retained earnings 307,432 249,720
Unearned compensation (4,720) (8,079)
Accumulated other comprehensive income 37,001 41,190
----------- -----------
Total shareholders' equity 1,497,575 1,407,144
----------- -----------
Total liabilities and shareholders' equity $1,989,586 $1,922,928
=========== ===========
BUSINESS OBJECTS S.A.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended
September 30,
-------------------
2005 2004
--------- ---------
(unaudited)
Operating activities:
Net income $57,712 $25,777
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of property and
equipment 24,016 25,224
Amortization of other intangible assets 23,865 23,085
Stock-based compensation expense 3,922 5,309
Acquired in-process research and development 2,384 -
Deferred income taxes 4,030 (17,456)
Tax benefit from employee stock plans - 2,517
Changes in operating assets and liabilities:
Accounts receivable, net 40,331 3,549
Prepaid and other current assets (12,935) (6,755)
Deposits and other assets 11,379 (16,873)
Accounts payable 1,616 (11,411)
Accrued payroll and related expenses (15,645) (21,444)
Income taxes payable (1,270) 3,925
Deferred revenues 3,237 32,671
Other liabilities (13,111) (7,672)
Short-term investments classified as trading (970) (290)
--------- ---------
Net cash provided by operating activities 128,561 40,156
--------- ---------
Investing activities:
Purchases of property and equipment (20,692) (24,161)
Business acquisitions, net of acquired cash (95,858) -
--------- ---------
Net cash used in investing activities (116,550) (24,161)
--------- ---------
Financing activities:
Issuance of shares 30,095 28,191
Purchase of treasury shares - (40,231)
Transfer of cash (to) from restricted cash
accounts 2 (17,861)
Payments on escrows payable - (3,083)
--------- ---------
Net cash provided by (used in) financing
activities 30,097 (32,984)
--------- ---------
Effect of foreign exchange rate changes on cash
and cash equivalents (3,129) 4,225
--------- ---------
Net increase (decrease) in cash and cash
equivalents 38,979 (12,764)
Cash and cash equivalents, beginning of the period 293,485 235,380
--------- ---------
Cash and cash equivalents, end of the period $332,464 $222,616
========= =========
BUSINESS OBJECTS S.A.
STATEMENT OF INCOME -- Reconciliation of US GAAP to Non-GAAP Results
Three Months Ended September 30, 2005
(in millions, except per ordinary share and ADS data)
(Unaudited)
Add back:
Amortization Add back:
of intangible Stock-based Non-GAAP
US GAAP assets compensation Results
------- ------------- ------------ --------
Revenues:
Net license fees $120.3 $120.3
Services 141.1 141.1
------- ------------- ------------ --------
Total revenues 261.4 - - 261.4
Cost of revenues:
Net license fees 7.2 (5.2) 2.0
Services 54.8 (2.3) (0.2) 52.3
------- ------------- ------------ --------
Total cost of revenues 62.0 (7.5) (0.2) 54.3
------- ------------- ------------ --------
Gross margin 199.4 7.5 0.2 207.1
Gross margin % 76% 79%
Operating expenses:
Sales and marketing 103.6 (0.3) (0.5) 102.8
Research and
development (1) 42.9 (2.4) (0.3) 40.2
General and
administrative 22.8 (0.6) 22.2
------- ------------- ------------ --------
Total operating
expenses 169.3 (2.7) (1.4) 165.2
------- ------------- ------------ --------
Income from operations 30.1 10.2 1.6 41.9
Interest and other income
(expense), net 2.9 2.9
------- ------------- ------------ --------
Income before provision
for income taxes 33.0 10.2 1.6 44.8
Provision for income taxes (13.4) (17.0)
------- --------
Net income $19.6 $27.8
======= ========
Basic net income per
ordinary share and ADS $0.22 $0.31
======= ========
Diluted net income per
ordinary share and ADS $0.21 $0.30
======= ========
(1) includes acquired in-process research and development for SRC and
Medience
BUSINESS OBJECTS S.A.
STATEMENT OF INCOME -- Reconciliation of US GAAP to Non-GAAP Results
Nine Months Ended September 30, 2005
(in millions, except per ordinary share and ADS data)
(Unaudited)
Add back:
Amortization
of intangible
assets and Add back:
restructuring Stock-based Non-GAAP
US GAAP costs compensation Results
------- ------------- ------------ --------
Revenues:
Net license fees $360.3 $360.3
Services 412.3 412.3
------- ------------- ------------ --------
Total revenues 772.6 - - 772.6
Cost of revenues:
Net license fees 21.6 (15.9) - 5.7
Services 159.0 (7.0) (0.6) 151.4
------- ------------- ------------ --------
Total cost of revenues 180.6 (22.9) (0.6) 157.1
------- ------------- ------------ --------
Gross margin 592.0 22.9 0.6 615.5
Gross margin % 77% 80%
Operating expenses:
Sales and marketing 312.1 (0.3) (1.4) 310.4
Research and
development (1) 123.6 (2.4) (1.0) 120.2
General and
administrative 69.9 (0.7) (0.9) 68.3
Restructuring costs (0.1) 0.1 - -
------- ------------- ------------ --------
Total operating
expenses 505.5 (3.3) (3.3) 498.9
------- ------------- ------------ --------
Income from operations 86.5 26.2 3.9 116.6
Interest and other income
(expense), net 10.4 10.4
------- ------------- ------------ --------
Income before provision
for income taxes 96.9 26.2 3.9 127.0
Provision for income taxes (39.2) (47.3)
------- --------
Net income $57.7 $79.7
======= ========
Basic net income per
ordinary share and ADS $0.64 $0.89
======= ========
Diluted net income per
ordinary share and ADS $0.63 $0.86
======= ========
(1) includes acquired in-process research and development for SRC and
Medience
BUSINESS OBJECTS S.A.
Q3 FISCAL 2005 SUPPLEMENTAL INFORMATION
(in millions, except per ordinary share and ADS data)
(Unaudited)
Fiscal 2004
---------------------------------------
Q1 Q2 Q3 Q4 Total
------- ------- ------- ------- -------
SUPPLEMENTAL INCOME STATEMENT
INFORMATION
Revenues
Net license fees $114.5 $117.2 $105.7 $136.0 $473.4
Maintenance 73.8 75.6 84.4 97.0 330.8
Consulting and training 28.9 29.4 29.4 33.7 121.4
------- ------- ------- ------- -------
Total revenues 217.2 222.2 219.5 266.7 925.6
------- ------- ------- ------- -------
Total expenses
Cost of net license fees 2.5 1.0 2.1 2.4 8.0
Cost of services revenues 39.0 38.8 39.9 44.1 161.8
Sales and marketing 96.5 98.6 95.9 113.2 404.2
Research and development 39.1 36.1 34.9 38.7 148.8
General and administrative 20.9 18.6 20.9 21.1 81.5
Amortization of intangible
assets 7.8 7.6 7.6 7.7 30.7
Stock-based compensation (1) 2.1 1.7 1.5 1.4 6.7
Restructuring costs - 1.5 - 0.7 2.2
------- ------- ------- ------- -------
Total expenses 207.9 203.9 202.8 229.3 843.9
------- ------- ------- ------- -------
Income from operations 9.3 18.3 16.7 37.4 81.7
------- ------- ------- ------- -------
Interest and other income
(expense), net (4.0) 0.3 1.1 (1.6) (4.2)
Income before provision for
income taxes 5.3 18.6 17.8 35.8 77.5
Provision for income taxes (2.0) (7.1) (6.8) (14.5) (30.4)
Effective tax rate 38% 38% 38% 41% 39%
------- ------- ------- ------- -------
Net income 3.3 11.5 11.0 21.3 47.1
======= ======= ======= ======= =======
Net income per ordinary share
and ADS
Basic 0.04 0.13 0.12 0.24 0.53
Diluted 0.04 0.13 0.12 0.24 0.52
Ordinary shares and ADSs used
in computing net income
per share (000's)
Basic 88,632 89,095 88,495 88,769 88,748
Diluted 92,305 91,061 89,792 90,390 91,077
Amortization of intangible
assets
Cost of net license fees 5.2 5.0 5.0 5.1 20.3
Cost of services revenues 2.3 2.3 2.3 2.3 9.2
Sales and marketing - - - - -
Research and development - - - - -
General and administrative 0.3 0.3 0.3 0.3 1.2
------- ------- ------- ------- -------
Total 7.8 7.6 7.6 7.7 30.7
======= ======= ======= ======= =======
Stock-based compensation (1)
Cost of services revenues 0.3 0.3 0.3 0.2 1.1
Sales and marketing 0.7 0.7 0.6 0.6 2.6
Research and development 0.6 0.4 0.4 0.4 1.8
General and administrative 0.5 0.3 0.2 0.2 1.2
------- ------- ------- ------- -------
Total 2.1 1.7 1.5 1.4 6.7
======= ======= ======= ======= =======
Non-GAAP income from
operations (2) 19.2 29.1 25.8 47.2 121.3
------- ------- ------- ------- -------
% of total revenues 9% 13% 12% 18% 13%
Interest and other income
(expense), net (4.0) 0.3 1.1 (1.6) (4.2)
Income before provision for
income taxes 15.2 29.4 26.9 45.6 117.1
Provision for income taxes (5.8) (11.2) (10.2) (18.3) (45.5)
Effective tax rate 38% 38% 38% 40% 39%
------- ------- ------- ------- -------
Non-GAAP net income 9.4 18.2 16.7 27.3 71.6
======= ======= ======= ======= =======
% of total revenues 4% 8% 8% 10% 8%
Non-GAAP net income per
ordinary share and ADS
Basic 0.11 0.20 0.19 0.31 0.81
Diluted 0.10 0.20 0.19 0.30 0.79
Fiscal 2005
--------------------------------
Q1 Q2 Q3
---------- ---------- ----------
SUPPLEMENTAL INCOME STATEMENT
INFORMATION
Revenues
Net license fees $115.2 $124.9 $120.3
Maintenance 100.1 100.7 103.5
Consulting and training 33.5 36.8 37.6
---------- ---------- ----------
Total revenues 248.8 262.4 261.4
---------- ---------- ----------
Total expenses
Cost of net license fees 1.7 1.9 2.0
Cost of services revenues 48.9 50.3 52.3
Sales and marketing 103.2 104.3 102.8
Research and development 40.0 40.1 40.2
General and administrative 24.4 21.9 22.2
Amortization of intangible
assets 8.1 7.9 10.2
Stock-based compensation (1) 1.2 1.1 1.6
Restructuring costs (0.1) - -
---------- ---------- ----------
Total expenses 227.4 227.5 231.3
---------- ---------- ----------
Income from operations 21.4 34.9 30.1
---------- ---------- ----------
Interest and other income
(expense), net 4.4 3.2 2.9
Income before provision for
income taxes 25.8 38.1 33.0
Provision for income taxes (10.8) (15.0) (13.4)
Effective tax rate 42% 39% 41%
---------- ---------- ----------
Net income 15.0 23.1 19.6
========== ========== ==========
Net income per ordinary share
and ADS
Basic 0.17 0.26 0.22
Diluted 0.16 0.25 0.21
Ordinary shares and ADSs used
in computing net income
per share (000's)
Basic 89,424 90,030 90,552
Diluted 91,184 92,089 93,455
---------- ---------- ----------
Amortization of intangible
assets
Cost of net license fees 5.5 5.3 5.2
Cost of services revenues 2.3 2.3 2.3
Sales and marketing - - 0.3
Research and development - - 2.4
General and administrative 0.3 0.3 -
---------- ---------- ----------
Total 8.1 7.9 10.2
========== ========== ==========
Stock-based compensation (1)
Cost of services revenues 0.2 0.2 0.2
Sales and marketing 0.5 0.5 0.5
Research and development 0.3 0.3 0.3
General and administrative 0.2 0.1 0.6
---------- ---------- ----------
Total 1.2 1.1 1.6
========== ========== ==========
Non-GAAP income from
operations (2) 30.6 43.9 41.9
---------- ---------- ----------
% of total revenues 12% 17% 16%
Interest and other income
(expense), net 4.4 3.2 2.9
Income before provision for
income taxes 35.0 47.1 44.8
Provision for income taxes (12.9) (17.4) (17.0)
Effective tax rate 37% 37% 38%
---------- ---------- ----------
Non-GAAP net income 22.1 29.7 27.8
========== ========== ==========
% of total revenues 9% 11% 11%
Non-GAAP net income per
ordinary share and ADS
Basic 0.25 0.33 0.31
Diluted 0.24 0.32 0.30
(1) Represents stock-based compensation expense primarily relating to
the assumption of unvested options in Crystal Decisions
acquisition.
(2) Non-GAAP measures are reconciled from US GAAP figures. Non-GAAP
measures exclude in-process research and development, amortization
of intangible assets, non-cash stock-based compensation expense,
and restructuring costs.
BUSINESS OBJECTS S.A.
Q3 FISCAL 2005 SUPPLEMENTAL INFORMATION
(in millions, except for number of transactions,
DSO and headcount information)
(Unaudited)
Fiscal 2004
-----------------------------------
Q1 Q2 Q3 Q4 Total
-----------------------------------
REVENUE ANALYSIS
Total revenues by geography
Americas $104.1 $104.3 $113.8 $131.0 $453.3
EMEA 96.4 99.6 87.6 114.2 397.7
Asia Pacific, including Japan 16.7 18.3 18.1 21.5 74.6
-----------------------------------
Total $217.2 $222.2 $219.5 $266.7 $925.6
Analysis of currency impact (year-
over-year) (3)
Reported revenue growth rate 13% 7% 4% 13% 9%
Constant currency growth rate 5% 3% -1% 7% 4%
-----------------------------------
Impact of foreign currency on
growth rate 9% 4% 4% 6% 6%
Fiscal 2004
-----------------------------------
Q1 Q2 Q3 Q4 Total
-----------------------------------
LICENSE REVENUE ANALYSIS
License revenues by channel
Direct 53% 55% 49% 50% 52%
Indirect 47% 45% 51% 50% 48%
-----------------------------------
Total 100% 100% 100% 100% 100%
Number of transactions by size
Over $1 million 7 8 4 14 33
Over $200 thousand 104 91 78 103 376
Fiscal 2004
----------------------------
Q1 Q2 Q3 Q4
----------------------------
SELECTED BALANCE SHEET ITEMS
Cash and cash equivalents,
restricted cash, and short-term
investments
$269 $256 $263 $311
DSO (Days sales outstanding) 75 81 75 84
HEADCOUNT
Total headcount 3,756 3,707 3,815 3,834
Fiscal 2005
------------------------------
Q1 Q2 Q3
------------------------------
REVENUE ANALYSIS
Total revenues by geography
Americas $118.1 $123.6 $137.6
EMEA 111.2 116.5 104.9
Asia Pacific, including Japan 19.5 22.3 18.9
------------------------------
Total $248.8 $262.4 $261.4
Analysis of currency impact (year-
over-year) (3)
Reported revenue growth rate 15% 18% 19%
Constant currency growth rate 11% 15% 18%
------------------------------
Impact of foreign currency on
growth rate 3% 3% 1%
Fiscal 2005
------------------------------
Q1 Q2 Q3
------------------------------
LICENSE REVENUE ANALYSIS
License revenues by channel
Direct 47% 49% 48%
Indirect 53% 51% 52%
------------------------------
Total 100% 100% 100%
Number of transactions by size
Over $1 million 9 13 10
Over $200 thousand 101 96 121
Fiscal 2005
------------------------------
Q1 Q2 Q3
------------------------------
SELECTED BALANCE SHEET ITEMS
Cash and cash equivalents,
restricted cash, and short-term
investments
$392 $384 $369
DSO (Days sales outstanding) 66 72 69
HEADCOUNT
Total headcount 3,944 4,039 4,320
(3) For 2004, reported revenue growth rates are calculated on a Non-
GAAP basis including the impact of inclusion of Crystal Decisions'
operations for fiscal 2003. Certain information on constant
currency to separate out the impact of conversion from other
foreign currencies to US dollars from other changes in our
business is also presented. The impact of foreign currency on
growth rate is calculated from absolute amounts and thus this
presentation in full percentages does not always add.
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