Novell Reports Financial Results for Fourth Fiscal Quarter and Full Fiscal Year 2010

Dec 02, 2010, 16:19 ET from Novell, Inc.

WALTHAM, Mass., Dec. 2, 2010 /PRNewswire-FirstCall/ -- Novell, Inc. (Nasdaq: NOVL) today announced financial results for its fourth fiscal quarter and full fiscal year ended October 31, 2010. For the quarter, Novell reported net revenue of $207 million. This compares to net revenue of $216 million for the fourth fiscal quarter of 2009. GAAP income from operations for the fourth fiscal quarter of 2010 was $22 million. This compares to GAAP loss from operations of $259 million for the fourth fiscal quarter of 2009, which included a $279 million non-cash impairment charge to goodwill and intangible assets. GAAP net income in the fourth fiscal quarter of 2010 was $322 million, or $0.91 per share, which included $308 million in non-cash tax provision benefits, principally to release a valuation allowance for certain net deferred tax assets. This compares to a GAAP net loss of $256 million, or a $0.74 loss per share, for the fourth fiscal quarter of 2009. Foreign currency exchange rates favorably impacted net revenue by $1 million, operating expenses by $1 million and income from operations by $2 million compared to the same period last year.

On a non-GAAP basis, income from operations for the fourth fiscal quarter of 2010 was $38 million. This compares to non-GAAP income from operations of $37 million in the same period last year. Non-GAAP net income for the fourth fiscal quarter of 2010 was $25 million, or $0.07 per share. This compares to non-GAAP net income of $38 million, or $0.11 per share, for the fourth fiscal quarter of 2009. A reconciliation of GAAP to non-GAAP results is provided in the financial schedules as part of this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

For the full fiscal year 2010, Novell reported net revenue of $812 million and GAAP income from operations of $84 million. Comparatively, net revenue for the full fiscal year 2009 was $862 million and GAAP loss from operations was $206 million, which included a $279 million non-cash impairment charge to goodwill and intangible assets. GAAP net income for the full fiscal year 2010 was $378 million or $1.07 per share, which included $308 million in non-cash tax provision benefits, principally to release a valuation allowance for certain net deferred tax assets. This compares to a net loss of $213 million, or a $0.62 loss per share, for the full fiscal year 2009. Foreign currency exchange rates favorably impacted net revenue by $4 million and unfavorably impacted operating expenses by $10 million and income from operations by $6 million compared to the prior fiscal year.

On a non-GAAP basis, income from operations for the full fiscal year 2010 was $131 million. This compares to non-GAAP income from operations of $139 million in the prior year. Non-GAAP net income for the full fiscal year 2010 was $97 million, or $0.27 per share. This compares to non-GAAP net income of $117 million, or $0.34 per share, for the full fiscal year 2009.

"I am pleased with our fourth quarter performance," said Ron Hovsepian, President and CEO of Novell. "We continue to see strong performance from our Linux business with invoicing for Linux, excluding Microsoft certificates, up over 40% from the year-ago period and the prior fiscal year. We also saw some stabilization in the Collaboration Solutions business with invoicing decreasing 3% over the year-ago period. In addition, we continue to invest in the business while improving our GAAP and non-GAAP operating margins, which were 11% and 19%, respectively, for the quarter. Finally, we were profitable on a GAAP net income basis for the quarter and for the full year, even excluding discrete tax items."

Cash, cash equivalents and short-term investments were $1.1 billion at October 31, 2010, up from $1.0 billion last quarter. Days sales outstanding in accounts receivable was 76 days at the end of the fourth fiscal quarter of 2010, up from 75 days at the end of the year-ago quarter. Total deferred revenue was $651 million at the end of the fourth fiscal quarter of 2010, down from $689 million at the end of the year-ago quarter. For the fourth fiscal quarter of 2010, cash flow from operations was $52 million. This compares to cash flow from operations of $51 million for the fourth fiscal quarter of 2009. For the full fiscal year 2010, cash flow from operations was $76 million. This compares to cash flow from operations of $69 million for the full fiscal year 2009.

Further details on Novell's reported results are included in the financial schedules that are a part of this release.

In addition, as previously publicly disclosed, Novell entered into an Agreement and Plan of Merger, dated as of November 21, 2010, with Attachmate Corporation, a Washington corporation, and Longview Software Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Attachmate, upon the terms and subject to the conditions of which, Longview will be merged with and into Novell, with Novell continuing as the surviving corporation and a wholly-owned subsidiary of Attachmate.

Non-GAAP Financial Measures

We supplement our consolidated unaudited condensed financial statements presented in accordance with GAAP with certain non-GAAP financial measures. These non-GAAP measures include adjusted income from operations, adjusted operating margin, adjusted income from continuing operations, adjusted net income, adjusted income per share from continuing operations and adjusted net income per share. We provide non-GAAP financial measures to enhance an overall understanding of our current financial performance and prospects for the future and to enable investors to evaluate our performance in the same way that management does. Management uses these same non-GAAP financial measures to evaluate performance, allocate resources, and determine compensation. The non-GAAP financial measures do not replace the presentation of our GAAP financial results, but they eliminate expenses and gains that are excluded from most analysts' consensus estimates, that are unusual, and/or that arise outside of the ordinary course of business, such as, but not limited to, those related to stock-based compensation, acquisition-related intangible asset amortization, restructuring, asset impairments, litigation judgments and settlements, strategic alternatives review, the sale of business operations, long-term investments, property, plant and equipment, and unusual and discrete income tax effects.

Legal Notice Regarding Forward-Looking Statements

This press release may include statements that are not historical in nature and that may be characterized as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including those related to future financial and operating results, targets, and prospects; future opportunities; market leadership and positioning; short-term and long-term trends; the macroeconomic environment; customer priorities; timing of realization of projections; functionality, characteristics, quality and performance capabilities of Novell's products and technology; and results achievable and benefits attainable through deployment of Novell's products and provision of services. Forward-looking statements forecasting growth in financial metrics are predicated on assumptions regarding improvements in the overall economy and the markets served by the Company and in which the Company operates, the timing of which are impossible to accurately predict. Actual results may differ materially from the results discussed in or implied by such forward-looking statements, which are based upon information that is currently available to us and/or management's current expectations and speak only as of the date hereof. We are subject to a number of risks, including, among others, the risk that the merger may be delayed or may not be consummated, the risk that the definitive merger agreement may be terminated in circumstances that require Novell to pay Attachmate a termination fee of $60 million; risks related to the diversion of management's attention from Novell's ongoing business operations; risks regarding the failure of Attachmate to obtain the necessary financing to complete the merger; the effect of the announcement of the merger on Novell's business relationships (including, without limitation, partners and customers), operating results and business generally; and risks related to obtaining the requisite consents to the merger, including, without limitation, the timing (including possible delays) and receipt of regulatory approvals from various governmental entities (including any conditions, limitations or restrictions placed on these approvals) and the risk that one or more governmental entities may deny approval, as well as risks related to indirect sales, growth rates of our business units, renewal of SUSE® Linux Enterprise Server subscriptions with customers who have received certificates from Microsoft, decline rates of Open Enterprise Server and NetWare® revenue, development of products and services, the intelligent workload management market, software vulnerabilities, delays in product releases, reliance on open source software, adequacy of renewal rates, uncertain economic conditions, competition, rapid technological changes, failure to expand brand awareness, adequacy of technical support, pricing pressures, system failures, integration of acquisitions, industry consolidation, challenges resulting from a global business, foreign research and development operations, loss of key employees, intellectual property infringement, litigation matters, unpredictable financial results, impairments, the timing of revenue recognition, our investments and effective use of our cash.

A detailed discussion of these and other factors that could affect our results is included in our SEC filings, including, but not limited to, our Quarterly Report on Form 10-Q for the period ended April 30, 2010 filed with the SEC on June 8, 2010 and our Current Report on Form 8-K filed with the SEC on November 22, 2010 (as amended), which may be obtained by calling (800) 317- 3195, or at our Investor Relations web page at: www.novell.com/company/ir.

We expressly disclaim any obligation, except as required by law, or undertaking to update or revise any forward-looking statements contained in this press release to reflect any change of expectations with regard thereto or to reflect any change in events, conditions, or circumstances on which any such forward-looking statement is based, in whole or in part.

Additional Information About the Merger and Where to Find It

In connection with the merger, Novell intends to file relevant materials with the SEC, including a proxy statement. Investors and security holders of Novell are urged to read these documents (if and when they become available) and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information about Novell, the merger and the other parties to the merger. Investors and security holders may obtain these documents (and any other documents filed by Novell and Attachmate with the SEC) free of charge at the SEC's website at http://www.sec.gov. In addition, the documents filed with the SEC by Novell may be obtained free of charge by directing such request to: Novell Investor Relations at 1-800-317-3195 or from the investor relations portion of Novell's website at http://www.novell.com/company/ir/. Investors and security holders are urged to read the definitive proxy statement and the other relevant materials when they become available before making any voting or investment decision with respect to the merger.

Novell and its directors and executive officers may be deemed to be participants in the solicitation of proxies from Novell's stockholders in respect of the merger. Information regarding Novell's directors and executive officers is contained in Novell's Annual Report on Form 10-K for the fiscal year ended October 31, 2009, its proxy statement for its 2010 Annual Meeting of Stockholders, dated February 26, 2010, and subsequent filings which Novell has made with the SEC. Stockholders may obtain additional information about the directors and executive officers of Novell and their respective interests with respect to the merger by security holdings or otherwise, which may be different than those of Novell's stockholders generally, by reading the definitive proxy statement and other relevant documents regarding the merger, when filed with the SEC. Each of these documents is, or will be, available as described above.

About Novell

Novell, Inc. (NASDAQ: NOVL), a leader in intelligent workload management, through WorkloadIQ™, helps organizations securely deliver and manage computing services across physical, virtual and cloud computing environments. We help customers reduce the cost, complexity, and risk associated with their IT systems through our solutions for identity and security, systems management, collaboration and Linux-based operating platforms. With our infrastructure software and ecosystem of partnerships, Novell integrates mixed IT environments, allowing people and technology to work as one. For more information, visit www.novell.com.

NetWare, Novell, the Novell logo, the N Logo, and SUSE are registered trademarks and WorkloadIQ is a trademark of Novell, Inc. in the United States and other countries. All third party trademarks are the property of their respective owners.

Novell, Inc.

Consolidated Unaudited Condensed Statements of Operations

(In thousands, except per share data)

Fiscal Quarter Ended

Fiscal Year Ended

Oct 31, 2010

Oct 31, 2009

Oct 31, 2010

Oct 31, 2009

Net revenue:

Software licenses

$                      31,256

$                      31,382

$                    105,108

$                    116,919

Maintenance and subscriptions

153,277

159,902

618,542

640,745

Services (1)

21,978

24,351

88,221

104,521

Total net revenue

206,511

215,635

811,871

862,185

Cost of revenue:

Software licenses

2,538

2,967

8,506

9,174

Maintenance and subscriptions

22,517

24,276

88,447

92,613

Services

20,013

20,426

76,652

85,044

Total cost of revenue

45,068

47,669

173,605

186,831

Gross profit

161,443

167,966

638,266

675,354

Operating expenses:

Sales and marketing

67,841

68,760

282,402

295,998

Product development

41,718

45,756

160,188

181,383

General and administrative

23,652

26,948

101,118

102,172

Other operating expenses (2)

6,225

285,636

10,121

302,293

Total operating expenses

139,436

427,100

553,829

881,846

Income (loss) from operations

22,007

(259,134)

84,437

(206,492)

Operating margin %

10.7%

-120.2%

10.4%

-23.9%

Other income, net:

Interest income, net

2,588

3,208

10,790

15,275

Other income (expense)

353

(2,392)

6,860

(12,757)

Total other income, net

2,941

816

17,650

2,518

Income (loss) from continuing operations before taxes

24,948

(258,318)

102,087

(203,974)

Income tax (benefit) expense

(296,640)

(2,629)

(275,279)

10,666

Income (loss) from continuing operations

321,588

(255,689)

377,366

(214,640)

Income from discontinued operations

610

-

610

1,904

Net income (loss)

$                    322,198

$                   (255,689)

$                    377,976

$                  (212,736)

Diluted earnings (loss) per share:

Continuing operations

$                          0.90

$                         (0.74)

$                          1.07

$                        (0.62)

Net income (loss)

$                          0.91

$                         (0.74)

$                          1.07

$                        (0.62)

Weighted average shares

356,010

347,043

353,447

345,493

(1) Services includes professional services, technical support and training services.

(2) See Page 9 of 12 for a detail of other operating expenses.

Revisions were made to prior period amounts in order to conform to the current period's presentation.

Novell, Inc.

Consolidated Unaudited Condensed Balance Sheets

(In thousands)

Oct 31, 2010

Oct 31, 2009

Assets

Current assets:

   Cash and cash equivalents

$                  685,594

$                  591,656

   Short-term investments

441,096

391,809

   Restricted cash

-

53,033

   Receivables, net

171,607

177,898

   Prepaid expenses

16,233

17,708

   Current deferred income taxes

49,169

5,521

   Other current assets

33,725

26,747

Total current assets

1,397,424

1,264,372

Property, plant and equipment, net

156,033

170,459

Long-term investments

-

10,303

Goodwill

353,415

356,033

Intangible assets, net

28,746

36,621

Deferred income taxes

243,583

26,717

Other assets

46,797

38,403

Total assets

$               2,225,998

$               1,902,908

Liabilities and Stockholders' Equity

Current liabilities:

   Accounts payable

$                    26,785

$                    37,628

   Accrued compensation

83,181

87,928

   Other accrued liabilities

86,223

97,154

   Deferred revenue

487,590

495,245

Total current liabilities

683,779

717,955

Deferred income taxes

7,622

8,403

Other long-term liabilities

35,655

48,502

Long-term deferred revenue

163,394

193,526

Total liabilities

890,450

968,386

Stockholders' equity

1,335,548

934,522

Total liabilities and stockholders' equity

$               2,225,998

$               1,902,908

Revisions were made to prior period amounts in order to conform to the current period's presentation.

Novell, Inc.

Consolidated Unaudited Condensed Statements of Cash Flows

(In thousands)

Fiscal Quarter Ended

Fiscal Year Ended

Oct 31, 2010

Oct 31, 2009

Oct 31, 2010

Oct 31, 2009

Cash flows from operating activities

Net income (loss)

$                  322,198

$                (255,689)

$                  377,976

$                (212,736)

Adjustments to reconcile net income (loss) to net cash provided

 by operating activities:

Stock-based compensation expense

8,232

5,683

29,057

25,881

Depreciation and amortization

7,896

9,657

30,298

40,675

Change in accounts receivable allowances

(1,166)

827

(1,833)

444

Utilization of previously reserved acquired net operating losses

-

2,125

-

2,580

Net gain on sale of property, plant and equipment

-

(2,199)

-

(2,199)

Gain on debenture repurchases

-

-

-

(11)

Income from discontinued operations

(610)

-

(610)

(1,904)

Impairment of long-term investments

-

-

-

5,466

Net gain on sale of previously impaired investments

(218)

(300)

(7,413)

(300)

Impairment of goodwill and intangible assets

-

279,135

-

279,135

Gain on sale of subsidiaries

-

-

-

(16)

Deferred income taxes

(272,654)

(3,071)

(261,878)

8,610

Changes in assets and liabilities, excluding the

 effect of acquisitions and dispositions

(12,085)

15,250

(90,050)

(76,855)

Net cash provided by operating activities

51,593

51,418

75,547

68,770

Cash flows from investing activities

Purchases of property, plant and equipment

(2,410)

(7,324)

(17,648)

(22,087)

Net proceeds from the sale of property, plant and equipment

-

10,748

-

10,748

Short-term investment activity

(1,936)

(5,199)

(42,663)

5,100

Long-term investment activity

218

300

8,847

4,209

Change in restricted cash

17,723

(25)

53,033

(332)

Cash proceeds from sale of discontinued operations

233

-

938

1,036

Net cash paid for acquisitions

-

-

-

(48,472)

Other

6,520

1,330

7,899

7,228

Net cash provided by (used in) investing activities

20,348

(170)

10,406

(42,570)

Cash flows from financing activities

Issuances of common stock

1,292

641

8,940

3,566

Excess tax effects from stock-based compensation

2,226

13

2,226

(2,775)

Debt repayment

-

(4,087)

-

(4,658)

Debenture repurchases

-

-

-

(125,537)

Net cash provided by (used in) financing activities

3,518

(3,433)

11,166

(129,404)

Effect of exchange rate changes on cash

5,085

6,977

(3,181)

14,826

Increase (decrease) in cash and cash equivalents

80,544

54,792

93,938

(88,378)

Cash and cash equivalents - beginning of period

605,050

536,864

591,656

680,034

Cash and cash equivalents - end of period

$                  685,594

$                  591,656

$                  685,594

$                  591,656

Novell, Inc.

Unaudited Non-GAAP Adjusted Income From Operations

(In thousands)

Fiscal Quarter Ended

Fiscal Year Ended

Oct 31, 2010

Oct 31, 2009

Oct 31, 2010

Oct 31, 2009

GAAP income (loss) from operations

$                 22,007

$              (259,134)

$                 84,437

$              (206,492)

Adjustments:

Stock-based compensation expense:

Cost of revenue

876

512

3,053

2,649

Sales and marketing

2,385

1,659

8,038

7,015

Product development

2,151

1,721

8,227

9,332

General and administrative

2,820

1,791

9,739

6,885

Sub-total

8,232

5,683

29,057

25,881

Acquisition-related intangible asset amortization:

Cost of revenue

1,129

2,098

4,895

9,984

Sales and marketing

630

2,706

2,980

7,296

Sub-total

1,759

4,804

7,875

17,280

Other operating expenses (income):

Restructuring expense

-

8,700

2,774

25,200

Strategic alternatives review expense

6,225

-

9,222

-

Litigation related activity

-

-

(1,875)

-

Gain on sale of subsidiaries

-

-

-

(16)

Net gain on sale of property, plant and equipment

-

(2,199)

-

(2,199)

IT outsourcing transition costs

-

-

-

173

Impairment of goodwill and intangible assets

-

279,135

-

279,135

Sub-total

6,225

285,636

10,121

302,293

Total operating adjustments

16,216

296,123

47,053

345,454

Non-GAAP income from operations

$                 38,223

$                 36,989

$               131,490

$               138,962

Non-GAAP operating margin %

18.5%

17.2%

16.2%

16.1%

Novell, Inc.

Unaudited Non-GAAP Adjusted Net Income

(In thousands, except per share data)

Fiscal Quarter Ended

Fiscal Year Ended

Oct 31, 2010

Oct 31, 2009

Oct 31, 2010

Oct 31, 2009

GAAP net income (loss)

$               322,198

$              (255,689)

$               377,976

$              (212,736)

Operating adjustments (detailed above)

16,216

296,123

47,053

345,454

Non-operating expenses (income) adjustments:

Net gain on sale of previously impaired investments

(218)

(300)

(7,413)

(300)

Gain on debenture repurchases

-

-

-

(11)

Impairment of long-term investments

-

-

-

5,466

Sub-total

(218)

(300)

(7,413)

5,155

Total pre-tax adjustments

15,998

295,823

39,640

350,609

Income tax adjustments

(312,118)

(2,130)

(320,153)

(19,219)

Income from discontinued operations

(610)

-

(610)

(1,904)

Total net adjustments

(296,730)

293,693

(281,123)

329,486

Non-GAAP net income and non-GAAP income

from continuing operations

$                 25,468

$                 38,004

$                 96,853

$               116,750

GAAP net income (loss) per share

$                     0.91

$                    (0.74)

$                     1.07

$                    (0.62)

Total adjustments detailed above

(0.84)

0.85

(0.80)

0.96

Non-GAAP net income per share and non-GAAP

income from continuing operations per share

$                     0.07

$                     0.11

$                     0.27

$                     0.34

GAAP weighted average shares

356,010

347,043

353,447

345,493

Change from basic to diluted weighted average shares

-

1,707

-

2,328

Non-GAAP weighted average shares

356,010

348,750

353,447

347,821

Novell, Inc.

Consolidated Unaudited Condensed Segment Results

(in thousands)

Fiscal Quarter Ended October 31, 2010

Security,

Management and

Collaboration

Common

Operating Platforms

%

Solutions

%

Unallocated

Total

%

Net revenue:

Software licenses

$                18,915

14.7

$          12,341

15.8

$                    -

$          31,256

15.1

Maintenance and subscriptions

93,360

72.8

59,917

76.6

-

153,277

74.2

Services

16,044

12.5

5,934

7.6

-

21,978

10.6

Total net revenue

128,319

100.0

78,192

100.0

-

206,511

100.0

Cost of revenue:

Software licenses

1,938

1.5

408

0.5

192

2,538

1.2

Maintenance and subscriptions

14,546

11.3

6,822

8.7

1,149

22,517

10.9

Services

14,627

11.4

4,722

6.0

664

20,013

9.7

Total cost of revenue

31,111

24.2

11,952

15.3

2,005

45,068

21.8

Gross profit

97,208

75.8

66,240

84.7

(2,005)

161,443

78.2

Operating expenses:

Sales and marketing

52,139

40.6

12,687

16.2

3,015

67,841

32.9

Product development

31,239

24.3

8,328

10.7

2,151

41,718

20.2

General and administrative

13,419

10.5

7,413

9.5

2,820

23,652

11.5

Other operating expenses

-

-

-

-

6,225

6,225

3.0

Total operating expenses

96,797

75.4

28,428

36.4

14,211

139,436

67.5

Income (loss) from operations

$                     411

0.3

$          37,812

48.4

$         (16,216)

$          22,007

10.7

Fiscal Quarter Ended July 31, 2010

Security,

Management and

Collaboration

Common

Operating Platforms

%

Solutions

%

Unallocated

Total

%

Net revenue:

Software licenses

$                15,819

12.8

$            9,149

12.1

$                    -

$          24,968

12.5

Maintenance and subscriptions

92,333

74.8

60,126

79.7

-

152,459

76.6

Services

15,354

12.4

6,199

8.2

-

21,553

10.8

Total net revenue

123,506

100.0

75,474

100.0

-

198,980

100.0

Cost of revenue:

Software licenses

1,842

1.5

325

0.4

188

2,355

1.2

Maintenance and subscriptions

14,428

11.7

6,755

9.0

1,350

22,533

11.3

Services

13,165

10.7

4,834

6.4

620

18,619

9.4

Total cost of revenue

29,435

23.8

11,914

15.8

2,158

43,507

21.9

Gross profit

94,071

76.2

63,560

84.2

(2,158)

155,473

78.1

Operating expenses:

Sales and marketing

54,949

44.5

13,708

18.2

2,135

70,792

35.6

Product development

29,720

24.1

7,743

10.3

1,937

39,400

19.8

General and administrative

13,854

11.2

7,615

10.1

1,836

23,305

11.7

Other operating expenses

-

-

-

-

878

878

0.4

Total operating expenses

98,523

79.8

29,066

38.5

6,786

134,375

67.5

Income (loss) from operations

$                 (4,452)

(3.6)

$          34,494

45.7

$           (8,944)

$          21,098

10.6

Fiscal Quarter Ended October 31, 2009

Security,

Management and

Collaboration

Common

Operating Platforms

%

Solutions

%

Unallocated

Total

%

Net revenue:

Software licenses

$                19,430

14.8

$          11,952

14.2

$                    -

$          31,382

14.6

Maintenance and subscriptions

94,189

71.6

65,713

78.1

-

159,902

74.2

Services

17,859

13.6

6,492

7.7

-

24,351

11.3

Total net revenue

131,478

100.0

84,157

100.0

-

215,635

100.0

Cost of revenue:

Software licenses

2,247

1.7

384

0.5

336

2,967

1.4

Maintenance and subscriptions

14,816

11.3

7,603

9.0

1,857

24,276

11.3

Services

14,908

11.3

5,101

6.1

417

20,426

9.5

Total cost of revenue

31,971

24.3

13,088

15.6

2,610

47,669

22.1

Gross profit

99,507

75.7

71,069

84.4

(2,610)

167,966

77.9

Operating expenses:

Sales and marketing

51,305

39.0

13,090

15.6

4,365

68,760

31.9

Product development

35,077

26.7

8,958

10.6

1,721

45,756

21.2

General and administrative

16,294

12.4

8,863

10.5

1,791

26,948

12.5

Other operating expenses

-

-

-

-

285,636

285,636

132.5

Total operating expenses

102,676

78.1

30,911

36.7

293,513

427,100

198.1

Income (loss) from operations

$                 (3,169)

(2.4)

$          40,158

47.7

$       (296,123)

$       (259,134)

(120.2)

Revisions were made to prior period amounts in order to conform to the current period's presentation.

Novell, Inc.

Unaudited Trended Segment Revenue by Software Licenses and Maintenance and Services

(In thousands)

Fiscal Year

Fiscal Year

Change from

Q4 2009

%

2009

%

Q3 2010

%

Q4 2010

%

2010

%

Q4 2009 to Q4 2010

FY 2009 to FY 2010

Security, management and operating platforms

Open platform solutions

Linux platform products

Software licenses

$                -

-

$                      -

-

$                -

-

$                -

-

$                      -

-

$                       -

-

$                       -

-

Maintenance and subscriptions

39,011

18.1

149,162

17.3

35,506

17.8

36,256

17.6

144,411

17.8

(2,755)

(7.1)

(4,751)

(3.2)

39,011

18.1

149,162

17.3

35,506

17.8

36,256

17.6

144,411

17.8

(2,755)

(7.1)

(4,751)

(3.2)

Other open platform products

Software licenses

21

0.0

125

0.0

1

0.0

70

0.0

109

0.0

49

233.3

(16)

(12.8)

Maintenance and subscriptions

1,979

0.9

7,592

0.9

2,108

1.1

2,505

1.2

8,088

1.0

526

26.6

496

6.5

2,000

0.9

7,717

0.9

2,109

1.1

2,575

1.2

8,197

1.0

575

28.8

480

6.2

Total open platform solutions

41,011

19.0

156,879

18.2

37,615

18.9

38,831

18.8

152,608

18.8

(2,180)

(5.3)

(4,271)

(2.7)

Identity and security management

Identity, access and compliance management

Software licenses

10,360

4.8

31,908

3.7

7,991

4.0

10,912

5.3

34,508

4.3

552

5.3

2,600

8.1

Maintenance and subscriptions

19,606

9.1

80,340

9.3

22,502

11.3

21,856

10.6

88,637

10.9

2,250

11.5

8,297

10.3

29,966

13.9

112,248

13.0

30,493

15.3

32,768

15.9

123,145

15.2

2,802

9.4

10,897

9.7

Other identity and security management

Software licenses

426

0.2

1,965

0.2

260

0.1

393

0.2

1,416

0.2

(33)

(7.7)

(549)

(27.9)

Maintenance and subscriptions

1,781

0.8

6,837

0.8

1,303

0.7

1,072

0.5

4,926

0.6

(709)

(39.8)

(1,911)

(28.0)

2,207

1.0

8,802

1.0

1,563

0.8

1,465

0.7

6,342

0.8

(742)

(33.6)

(2,460)

(27.9)

Total identity and security management

32,173

14.9

121,050

14.0

32,056

16.1

34,233

16.6

129,487

15.9

2,060

6.4

8,437

7.0

Systems and resource management

Software licenses

8,623

4.0

33,806

3.9

7,567

3.8

7,540

3.7

29,549

3.6

(1,083)

(12.6)

(4,257)

(12.6)

Maintenance and subscriptions

31,812

14.8

126,963

14.7

30,914

15.5

31,671

15.3

126,502

15.6

(141)

(0.4)

(461)

(0.4)

Total systems and resource management

40,435

18.8

160,769

18.6

38,481

19.3

39,211

19.0

156,051

19.2

(1,224)

(3.0)

(4,718)

(2.9)

Total security, management and operating platforms

113,619

52.7

438,698

50.9

108,152

54.4

112,275

54.4

438,146

54.0

(1,344)

(1.2)

(552)

(0.1)

Collaboration solutions

OES and NetWare-related

Software licenses

5,504

2.6

20,232

2.3

5,225

2.6

6,128

3.0

20,831

2.6

624

11.3

599

3.0

Maintenance and subscriptions

38,080

17.7

157,524

18.3

35,161

17.7

35,478

17.2

144,794

17.8

(2,602)

(6.8)

(12,730)

(8.1)

43,584

20.2

177,756

20.6

40,386

20.3

41,606

20.1

165,625

20.4

(1,978)

(4.5)

(12,131)

(6.8)

Collaboration

Software licenses

3,827

1.8

14,822

1.7

1,980

1.0

3,271

1.6

9,555

1.2

(556)

(14.5)

(5,267)

(35.5)

Maintenance and subscriptions

20,477

9.5

85,123

9.9

18,978

9.5

18,867

9.1

77,282

9.5

(1,610)

(7.9)

(7,841)

(9.2)

24,304

11.3

99,945

11.6

20,958

10.5

22,138

10.7

86,837

10.7

(2,166)

(8.9)

(13,108)

(13.1)

Other collaboration solutions

Software licenses

2,621

1.2

14,061

1.6

1,944

1.0

2,942

1.4

9,140

1.1

321

12.2

(4,921)

(35.0)

Maintenance and subscriptions

7,156

3.3

27,204

3.2

5,987

3.0

5,572

2.7

23,902

2.9

(1,584)

(22.1)

(3,302)

(12.1)

9,777

4.5

41,265

4.8

7,931

4.0

8,514

4.1

33,042

4.1

(1,263)

(12.9)

(8,223)

(19.9)

Total collaboration solutions

77,665

36.0

318,966

37.0

69,275

34.8

72,258

35.0

285,504

35.2

(5,407)

(7.0)

(33,462)

(10.5)

Total software licenses, maintenance

and subscriptions

Software licenses

31,382

14.6

116,919

13.6

24,968

12.5

31,256

15.1

105,108

12.9

(126)

(0.4)

(11,811)

(10.1)

Maintenance and subscriptions

159,902

74.2

640,745

74.3

152,459

76.6

153,277

74.2

618,542

76.2

(6,625)

(4.1)

(22,203)

(3.5)

Total product revenue

191,284

88.7

757,664

87.9

177,427

89.2

184,533

89.4

723,650

89.1

(6,751)

(3.5)

(34,014)

(4.5)

Services

24,351

11.3

104,521

12.1

21,553

10.8

21,978

10.6

88,221

10.9

(2,373)

(9.7)

(16,300)

(15.6)

Total net revenue

$    215,635

100.0

$          862,185

100.0

$    198,980

100.0

$    206,511

100.0

$          811,871

100.0

$              (9,124)

(4.2)

$            (50,314)

(5.8)

Novell, Inc.

Major IT Software and Solutions Included Within Reported Line Items

Security, Management and Operating Platforms

Open Platform Solutions

Linux Platform Products

> SUSE LINUX Enterprise Server

> SUSE LINUX Enterprise Desktop

Other Open Platform Products

> SUSE Engineering

Identity and Security Management

Identity, Access and Compliance Management

> Identity Manager

> SecureLogin

> Access Manager

> Sentinel

Other Identity and Security Management

> eDirectory

Systems and Resource Management

> ZENworks Suite

> ZENworks Patch Management

> ZENworks Asset Management

> ZENworks Linux Management

> ZENworks Configuration Management

> PlateSpin

> Business Service Management

Collaboration Solutions

Open Enterprise Server and NetWare-Related

> Open Enterprise Server (OES)

> NetWare

> Cluster Services

Collaboration

> GroupWise

> Teaming + Conferencing

Other Collaboration Solutions

> BorderManager

Services

> Professional Services

> Technical Support Services

> Training Services

SOURCE Novell, Inc.



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