Borland announces second quarter 2003 financial results

Borland Software Corporation today announced financial results for its second quarter ended 30 June 2003.

Revenues for the second quarter were $76.3 million, an increase of 28% over $59.7 million reported in the second quarter of 2002, and 3% over $74.4 million reported in the first quarter of 2003.

Including costs associated with the recent acquisitions, GAAP net loss for the second quarter was $5 million, or $(0.06) per diluted share, which compares to GAAP net income of $4.7 million, or $0.06 per diluted share, reported in the second quarter of 2002 and a GAAP net loss of $17.7 million, or $(0.22) per diluted share, reported in the first quarter of 2003.

Non-GAAP net income was $3.5 million, or $0.04 per diluted share, which compares to non-GAAP net income of $6.2 million, or $0.08 per diluted share reported in the second quarter of 2002 and $180 000 or $0.00 per diluted share, reported in the first quarter of 2003. Non-GAAP net income excludes, as applicable, restructuring, amortisation of intangible assets, acquisition-related expenses, in-process research and development, and other charges of $8.5 million in the second quarter of 2003, $1.6 million in the second quarter of 2002, and $17.9 million in the first quarter of 2003.

"We are pleased with our solid financial performance in the second quarter, which represented our 13th consecutive quarter of profitability on a non-GAAP basis, and offers a solid foundation for further achievement," said Borland`s president and chief executive officer, Dale L Fuller. "Our application lifecycle management platform gained traction, and we experienced an increase in the number of multi-product deals. Our customers in the quarter included Lockheed Martin, Lucent, Cingular Wireless, Telcordia, McKesson and eBay. In tough economic climates, customers, more than ever, seek maximum return on investment. Borland`s application lifecycle management platform increases productivity, and delivers better quality applications to market faster."

"Borland reported a strong cash position and resumed solid growth in operating margins, with the acquisitions behind us," stated Kenneth R Hahn, Borland`s senior vice-president and chief financial officer. "While customers remain cautious about committing to larger deals, we have continued to focus on improving our business model, increasing profitability, and aligning with the overall economy so that we are well-positioned for growth once the economy improves."

Management provided the following financial guidance which reflects typical seasonality and assumes no changes to the economy:

For the quarter ending 30 September 2003, on a GAAP basis:

* The company expects that revenues will be flat to slightly down from the second quarter of 2003.

* Forecast net loss per share should be in the range of $(0.07) to $(0.05).

For the quarter ending 30 September 2003, on a non-GAAP basis:

* Forecast earnings per share should be in the range of $0.03 to $0.05.

The following table shows our non-GAAP anticipated results for the quarter ending 30 September 2003 reconciled to the GAAP anticipated results for the quarter ending 30 September 2003. Our non-GAAP anticipated results exclude, as applicable, restructuring, amortisation of intangible assets, acquisition-related expenses, in-process research and development, and other charges.

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The Borland Software Corporation second quarter teleconference and simultaneous Webcast is scheduled to begin at 2.30pm, Pacific Time, on Thursday, 24 July 2003. To access the live Webcast, please visit: www.corporate-ir.net/ireye/ir_site.zhtml?ticker=BORL&script=2100 at least 30 minutes prior to the call to download any necessary audio or plug-in software. Any financial or statistical information posted on the Web site in connection with the teleconference can be found at: www.corporate-ir.net/ireye/ir_site.zhtml?ticker=BORL&script=2100. A replay of the Webcast will be available approximately two hours after the conference call ends. The replay number for those who prefer to dial-in to the call is (888) 286-8010 or (617) 801-6888, passcode 18865820.

Borland believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, Borland reports non-GAAP financial measures of its performance to provide investors with an alternative method for assessing its operating results in a manner that is focused on what it believes to be its core business operations. These measures are not in accordance with, or an alternative for, generally accepted accounting principals (GAAP), and may be materially different from non-GAAP financial measures used by other companies.

Borland`s management reviews these non-GAAP measures when assessing the performance of its ongoing operations and making determinations as to resource allocation within the organisation. In addition, since we have historically reported non-GAAP results to the investment community, we believe the inclusion of comparative numbers provides consistency in our financial reporting.

Borland computes its non-GAAP financial measure of net income by adjusting GAAP net income to exclude, as applicable, the impact of restructuring, amortisation of intangible assets, acquisition-related expenses, in-process research and development, and other charges. Many of these items are recurring from period to period. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as provided below.