Business Editors/High-Tech Writers
SCOTTS VALLEY, Calif.--(BUSINESS WIRE)--Oct. 25, 2001
Borland Software Corporation (Nasdaq NM:BORL) today announced its financial results for the third quarter and nine-month period ended September 30, 2001.
For the third quarter, revenues increased 16% to $55.0 million from $47.6 million for the same quarter a year ago. Gross margins were 84% for both the third quarter of 2001 and 2000. Net income for the quarter was $4.7 million, or $0.06 per diluted share on 75.1 million weighted average shares outstanding. This compares with net income of $8.5 million, or $0.12 per diluted share, for the third quarter of 2000, excluding non-recurring items, on 69.0 million weighted shares outstanding. Including non-recurring items, the company reported net income of $11.4 million, or $0.17 per diluted share, for the third quarter of 2000. The increase in diluted shares outstanding reflects the increase in the number of dilutive ("in the money") options and the exercise of warrants and options.
For the first nine months of 2001, revenues increased 16% to $162.7 million from $140.8 million for the first nine months of 2000. Gross margins for the 2001 period were 84% versus 83% in the first nine months of 2000. Net income for the first nine months of 2001 increased 38% to $16.9 million, or $0.23 per diluted share, compared with net income of $12.3 million, or $0.18 per diluted share, for the same nine-month period last year.
"We are pleased to report that -- once again -- we delivered a solid performance in a challenging economic environment," stated Dale L. Fuller, Borland's president and chief executive officer. "Like most software vendors, we experienced a marked decline in the pace of our U.S. business after the September 11 terrorist attacks, which disrupted our ability to close business in the last critical weeks of the quarter. Nevertheless, Borland managed to achieve its sixth consecutive quarter of profitability, its seventh consecutive quarter of positive cashflow from operations, and continued improvement in its balance sheet.
"Our revenue growth was driven in part by our continued leadership in the Java(TM) development market, as our award-winning JBuilder(TM) products continue to gain acceptance and increase market penetration," added Mr. Fuller. "The global acceptance of Borland's products was demonstrated by the strength of our international sales, which helped offset the decline in domestic business that occurred after September 11. Borland continues to benefit from a diversified revenue stream generated from various geographies."
During the quarter, Borland increased its investment in building its direct sales organization and in new product development, which resulted in higher operating expenses. These investments are fueling strong initiatives in the wireless and Web services market, as well as supporting the company's continued growth in the Java development market.
Frederick A. Ball, Borland's executive vice president and chief financial officer, stated, "Borland's financial position continues to strengthen with cash, cash equivalents, and short-term investments exceeding $280 million at September 30, 2001. We were also able to generate $15.7 million in cashflow from operations during the quarter, enabling us to use approximately $9.0 million to eliminate our long-term, fixed-rate debt. Additionally, we used approximately $3.0 million in cash to repurchase more than 360,000 shares of Borland common stock through quarter-end."
During the quarter, days sales outstanding declined 15 days to 55. Deferred revenue for the quarter was $20.4 million, a 15-percent increase over the year-ago quarter.
"The strength of our balance sheet demonstrates management's ability to steward corporate assets," added Mr. Ball. "We continue to exercise ongoing fiscal discipline and execute on our plan. Borland's strong financial position should enable us to weather the economic downturn, continue to contest enterprise-level business, and pursue our growth strategy."
Concluded Mr. Fuller, "Borland is a leading provider of best-in-class, cross-platform software technology solutions used to build, deploy, and integrate applications across the enterprise, including the Internet. These solutions accelerate time to market and deliver high productivity and performance while lowering total cost of ownership. We are confident that our value proposition will continue to be compelling in both difficult and prosperous economic times."
Fourth Quarter 2001 and Full Year 2002 Outlook
Borland expects to deliver a 13%-17% increase in revenues for the fourth quarter of 2001 when compared with the fourth quarter of 2000. Gross margins for the fourth quarter are expected to remain in the 83%-85% range, and operating margins are expected to remain in the 7%-9% range. Non-operating income is expected to continue to decline, reflecting the ongoing impact of the reduction in the Federal Funds rate. Earnings per diluted share are expected to range from $0.06 to $0.08 for the fourth quarter. Depending on Borland's stock price performance, weighted average shares outstanding could range from 74 million to 76 million diluted shares as determined by the Treasury method.
Looking forward, Borland anticipates 2002 revenues to increase 12%-15% over 2001 revenues.
Conference Call Information
The Borland Software Corporation third quarter teleconference call and simultaneous Webcast is scheduled to begin at 2:00 p.m. Pacific Daylight Time, on Thursday, October 25, 2001. To access the live Webcast, please visit Borland's Website at www.borland.com/about/investor at least 30 minutes prior to the call to download any necessary audio or plug-in software.
Borland Software Corporation
Borland is a leading provider of best-in-breed, cross-platform software technology solutions used to build, deploy, and manage applications across the enterprise, including the Internet. Borland's solutions are designed to increase developer productivity, accelerate time to market, and reduce total cost of ownership. Founded in 1983, Borland is headquartered in Scotts Valley, California, with operations worldwide. To learn more, visit Borland at http://www.borland.com, the community site at http://community.borland.com, or call Borland at 800/632-2864.
Note to Editors: All Borland brand and product names are trademarks or registered trademarks of Borland Software Corporation, in the United States and other countries. Other names mentioned herein may be trademarks of the party using such names.
Forward-Looking Statement
This release contains "forward-looking statements" as defined under the Federal Securities Laws, including the Private Securities Litigation Reform Act of 1995. All statements that are not historical are forward-looking. Forward-looking statements may relate to, but are not limited to, Borland's future financial performance, capital expenditures, revenues, gross margins, operating margins, days sales outstanding, acquisitions, earnings, earnings per share, weighted average shares outstanding, costs, product development plans, global expansion plans, estimated size of potential customer markets, demand for Borland's products, the projected acceptance by existing or potential customers of new technologies and the potential features of, or benefits to be derived from, the products developed, marketed or sold by Borland, market and technological trends in the software industry and various economic and business trends. Such forward-looking statements are based on current expectations that involve a number of uncertainties and risks that may cause actual events or results to differ materially. Factors that could cause actual events or results to differ materially include, among others, the following: general economic factors and capital market conditions, general industry trends, the potential effects on Borland of competition in computer software product and services markets, growth rates in the software and professional services markets that Borland participates in, rapid technological change that can adversely affect the demand for Borland's products, shifts in customer demand, market acceptance of new or enhanced products or services developed, marketed or sold by Borland, delays in scheduled product availability dates, actions or announcements by competitors, software errors, reduction in sales to or loss of any significant customers, the ability to successfully integrate acquisitions, Borland's ability to protect its intellectual property rights, the dependence of certain of Borland's business units on licenses from third parties, Borland's ability to attract and retain qualified personnel, Borland's failure to reduce costs and unanticipated further deterioration of economic and financial conditions in the United States and around the world resulting from the terrorist attacks on September 11, 2001. These and other risks may be detailed from time to time in Borland's periodic reports filed with the Securities and Exchange Commission, including, but not limited to, its latest Annual Report on Form 10-K and its latest Quarterly Report on Form 10-Q, copies of which may be obtained from www.sec.gov. Borland is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
BORLAND SOFTWARE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data, unaudited) Three Months Ended Nine Months Ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2001 2000 2001 2000 Revenues Licenses and other $ 46,985 $ 40,926 $ 136,931 $ 120,700 Services 8,048 6,631 25,810 20,073 ---------- ---------- ---------- ---------- Total revenues 55,033 47,557 162,741 140,773 Cost of revenues Licenses and other 3,434 2,501 9,874 9,431 Services 5,576 4,944 16,627 14,760 ---------- ---------- ---------- ---------- Cost of revenues 9,010 7,445 26,501 24,191 Gross profit 46,023 40,112 136,240 116,582 Operating expenses Research and development 12,311 10,515 34,987 32,077 Selling, general and administrative 30,617 24,176 89,401 76,844 Restructuring and merger-related expenses -- -- -- 3,556 ---------- ---------- ---------- ---------- Total operating expenses 42,928 34,691 124,388 112,477 Operating income 3,095 5,421 11,852 4,105 Interest income, net and other 2,782 4,511 9,389 9,118 Non-recurring benefit -- 2,967 -- 2,967 ---------- ---------- ---------- ---------- Income before taxes 5,877 12,899 21,241 16,190 Provision for income taxes 1,204 1,455 4,302 3,890 ---------- ---------- ---------- ---------- Net income $ 4,673 $ 11,444 $ 16,939 $ 12,300 ========== ========== ========== ========== Income per share - Basic(1) $ 0.07 $ 0.18 $ 0.26 $ 0.19 Income per share - Diluted $ 0.06 $ 0.17 $ 0.23 $ 0.18 Shares used in the calculation of basic income per share 65,233 61,506 64,563 61,308 Shares used in the calculation of diluted income per share 75,092 68,983 73,715 70,087 (1) The calculation of net income per share for the three and nine months ended September 30, 2001 includes an accretion to the Preferred Stock Series C of approximately $0 and $397,000, respectively. The calculation of net income per share for the three and nine months ended September 30, 2000 includes an accretion to the Preferred Stock Series C of approximately $219,000 and $656,000, respectively. BORLAND SOFTWARE CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (in thousands) September 30, 2001 December 31, 2000 (Unaudited) (Audited) ASSETS Cash, cash equivalents and short-term investments $ 280,610 $ 262,559 Accounts receivables, net 33,083 33,495 Property and equipment, net 20,060 20,438 Other assets 22,464 24,411 ----------- ----------- Total assets $ 356,217 $ 340,903 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Deferred revenue $ 20,358 $ 18,765 Other current liabilities 60,264 60,143 ----------- ----------- Total current liabilities 80,622 78,908 Long-term debt -- 8,764 Other long-term liabilities 10,458 10,551 Stockholders' equity 265,137 242,680 ----------- ----------- Total liabilities and stockholders' equity $ 356,217 $ 340,903 =========== ===========
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