Business Objects reports first quarter 2005 results

Business Objects, the world`s leading provider of business intelligence (BI) solutions, today announced results for the first quarter ended 31 March 2005.

For the first quarter of 2005, the company reported total revenues of $248.8 million, an increase of 15% year-over-year. US GAAP diluted earnings per share were $0.16 and pro forma diluted earnings per share were $0.24 in the first quarter of 2005. The US GAAP and pro forma diluted earnings per share came in at or above the high end of the company`s guidance for the quarter of US GAAP $0.13 to $0.16 per share and pro forma $0.19 to $0.22 per share.

Pro forma or 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 amortisation of intangible assets, deferred stock-based compensation expense and restructuring charges, all primarily associated with the acquisition of Crystal Decisions. Reconciliations of US GAAP to pro forma results are included at the end of this press release.

"First quarter results mark an excellent start to the year with solid top-line growth and strength in every major geography," said Bernard Liautaud, chairman and chief executive officer. "Our customer wins underscore the competitive strength of our offering and our ability to execute. In particular, BusinessObjects XI exceeded our expectations in its first full quarter on the market, contributing more than $15 million in licence revenues."

* There were nine transactions over $1 million in licence revenues in the first quarter, up from seven transactions over $1 million in the year ago quarter.

* Notable customer wins include Banner Health, British Nuclear Fuels plc, CNA Insurance, National Health Service and US Foodservice, among many others.

* Revenues in the Americas reached $118.1 million, up 13% year-over-year with three transactions over $1 million in licence revenue.

* Revenues in EMEA (Europe, Middle East, and Africa) totalled $111.2 million, up 15% year-over-year (up 9% at 83.6 million in Euros), with six transactions over $1 million in licence revenues.

* Revenues in Asia Pacific, including Japan, rose to $19.5 million, up 17% year-over-year.

* Software licence revenues totalled $115.2 million in the first quarter, up 1% year-over-year.

* Core business intelligence products: query, reporting and analysis reached $101 million in licence revenues, representing 88% of total licence revenues.

* Enterprise Performance Management Applications reached $8.2 million in licence revenues, representing 7% of total licence revenues.

* Data Integration products reached $6 million in licence revenues, representing 5% of total licence revenues.

* Services revenues totalled $133.6 million in the first quarter, up 30% year-over-year, primarily on the strength of maintenance revenues.

* On a US GAAP basis, operating income was $21.4 million in the first quarter, up 130% year-over-year, representing a US GAAP operating margin of 9%. In the first quarter, US GAAP net income was $15 million and US GAAP diluted earnings per share were $0.16 per share.

* On a pro forma basis, operating income was $30.6 million, up 60% year-over-year, in the first quarter, representing a pro forma operating margin of 12%. In the first quarter, pro forma net income was $22.1 million and pro forma diluted earnings per share were $0.24 per share.

* Total cash and investments (cash, cash equivalents, restricted cash and short-term investments) grew by $81 million, or 26%, from $311.4 million at 31 December 2004 to $392.3 million at 31 March 2005.

* Deferred revenues grew to $210.1 million, the highest level in the company`s history.

* DSOs improved to 66 days as of 31 March 2005, down from 84 days as of 31 December 2004.

* Customer response to BusinessObjects XI has been unprecedented.

* Attendance at worldwide product launches has been high around the globe, with over 9 000 customers, prospects and partners in attendance.

* Many partners are accelerating plans to support XI within their offerings.

* BusinessObjects XI licence revenue totalled more than $15 million in its first quarter of general availability.

Business Objects offers the following guidance for the quarter ending 30 June 2005:

* Total revenues are expected to range from $250 million to $255 million.

* US GAAP diluted earnings per share are expected to range from $0.20 to $0.22.

* Pro forma diluted earnings per share are expected to range from $0.26 to $0.28.

The pro forma diluted earnings per share guidance for the quarter ending 30 June 2005 excludes amortisation of intangible assets and deferred stock-based compensation expense of approximately $9 million, which is an increase of approximately $0.06 per share.

Business Objects offers the following updated guidance for the year ending 31 December 2005:

* Total revenues are expected to range from $1.010 billion to $1.035 billion.

* US GAAP diluted earnings per share are expected to range from $0.82 to $0.92.

* Pro forma diluted earnings per share are expected to range from $1.07 to $1.17.

The pro forma diluted earnings per share guidance for the year ending 31 December 2005 excludes amortisation of intangible assets and deferred stock-based compensation expense of approximately $37 million, which is an increase of approximately $0.25 per share.

The outlook for both the second quarter and full year 2005 assumes a US dollar to euro exchange rate of $1.30 per EUR1 and an effective GAAP tax rate of 36% for the second quarter and 38% for the full year 2005.

The above information concerning our forecast for the second quarter and full year 2005 represents our outlook only as of the date hereof, 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.

Business Objects prepares its financial statements in accordance with US GAAP. Because the company is listed on both the Eurolist by Euronext in France and the Nasdaq National Market in the US, it is required to separately report consolidated financial statements prepared in accordance with US GAAP and International Financial Reporting Standards (IFRS). The most significant differences between the two reporting standards 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, Business Objects will report its consolidated financial statements for the first half and full year 2005 in accordance with IFRS with comparative 2004 figures. Business Objects recently filed with the Autorit'e des Marches Financiers in France its 2004 Document de Reference which included the opening balance sheet of the company as of 1 January 2004 prepared in accordance with IFRS. In addition, the company will publish net sales for its first quarter in accordance with IFRS in the Bulletin des Annouces Legales Obligatoires in France by 15 May 2005.

The pro forma financial measures such as revenues, operating income, net income and earnings per share information included in this press release are different from those otherwise presented under US GAAP as these pro forma measures excluded certain charges. These charges represent amortisation of intangible assets, deferred stock-based compensation expense and restructuring charges, all primarily associated with the acquisition of Crystal Decisions. Business Objects has provided these measures in addition to US GAAP financial results because management believes these pro forma measures provide a consistent basis for comparison between quarters and of growth rates year-over-year that are not influenced by certain non-cash charges or impacts of prior period acquisitions, and therefore is 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 pro forma results are presented at the end of this press release.

Business Objects will hold a conference call to discuss its financial results for the first quarter of 2005. The call will begin at 5am PT (8am ET, 2pm Paris, 1pm London). The call-in access numbers are 800.399.7988 for the US and Canada; and 706.634.5428 for Europe and Asia with ID # 5328116. The conference call will also be Webcast live, and can be accessed on the company`s Web site at www.businessobjects.com. A replay of the Webcast will be available on the site approximately two hours after the end of the live call.