Novell today announced financial results for its third fiscal quarter ended July 31, 2004.
For the quarter, Novell reported revenues of $305 million, compared to revenues of $283 million for the third fiscal quarter 2003. Net income available to common stockholders in the third fiscal quarter 2004 was $23 million, or $0.06 per diluted common share. This compared to a net loss available to common stockholders of $12 million, or $0.03 loss per common share, for the third fiscal quarter 2003.
Included in Novell’s financial results for the third fiscal quarter 2004 is revenue of $14 million and interest income of $5 million from The Canopy Group, Inc., as a result of a previously announced legal judgment in favor of Novell.
On a non-GAAP basis, adjusted net income available to common stockholders for the third fiscal quarter 2004 was $14 million, or $0.04 per diluted common share, which excludes the effect of the payment from Canopy of $19 million, restructuring charges of $9 million and investment impairments of $1 million. This compares to non-GAAP adjusted net income available to common stockholders for the third fiscal quarter 2003 of $7 million, or $0.02 per diluted common share. Full details on Novell’s reported results, including a reconciliation of the non-GAAP adjusted results, are included in the financial schedules that are a part of this release.
In the third fiscal quarter 2004, foreign currency exchange rates favorably impacted total revenue by approximately $5 million year-over-year. There was no material foreign currency impact to net income.
Also in the third fiscal quarter 2004, Novell recognized revenue of $12 million associated with its SUSE(R) LINUX business. Sales of subscriptions to SUSE LINUX Enterprise Server reached 19,000 units in the quarter, with 12,000 of the units sold to one customer.
For the first nine months of fiscal 2004, Novell reported revenue of $865 million and net income of $44 million. The net income available to common stockholders in this period was $18 million, or $0.05 per diluted common share, after consideration of a $26 million deemed dividend related to the beneficial conversion feature of preferred stock and related preferred stock cash dividends. For the first nine months of fiscal 2003, the company reported revenue of $819 million and a net loss available to common stockholders of $53 million, or $0.14 loss per common share.
“While revenue was not as strong as we would have liked, Novell improved earnings performance for the quarter and nine months period versus the same periods last year,” said Jack Messman, chairman and CEO of Novell. “Novell’s transition to growth company status is well underway as we strengthen our products and services in both the Linux and identity management categories. Our SUSE LINUX business performed well in this quarter and is proving instrumental in positioning Novell as a strategic vendor to large enterprises. Our identity management products and services are creating the first line of defense for corporations seeking to improve the security and effectiveness of their information systems.”
Messman added, “We are witnessing the early impact of Linux, a disruptive technology, as it gives enterprises incomparable choices and flexibility in lowering their costs and reducing their vulnerability to security breaches. The collective innovation of the open source community that supports Linux will significantly disrupt the historical order in the information technology market to the benefit of corporations and consumers.”
On the balance sheet, cash and short-term investments were $1.1 billion at July 31, 2004, compared with $636 million at April 30, 2004. This increase in cash and short-term investments is primarily attributable to the issuance of $600 million of convertible senior debentures during the quarter and positive cash flow from operations of $65 million, offset by the repurchase of $125 million of common stock. Days sales outstanding (DSO) in accounts receivable increased to 77 days at the end of the third fiscal quarter 2004, up from 67 days in the prior quarter. Deferred revenues were $337 million at the end of the third fiscal quarter 2004, up $42 million or 14% year over year. Stockholders’ equity at July 31, 2004 declined $72 million from April 30, 2004 as a result of the repurchase of $125 million of common stock, offset by $23 million in net income available to common stockholders and $25 million from conversion of preferred stock into common stock. Cash flow from operations, including the payment from Canopy, was $65 million for the third fiscal quarter 2004, up $60 million from a year ago.
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