CUPERTINO, Calif., April 18 /PRNewswire-FirstCall/ --
Rational Software Corporation (Nasdaq: RATL) today announced results for the
fourth fiscal quarter and fiscal year ended March 31, 2002.
Revenue for the fourth quarter and fiscal year ended March 31, 2002 was
$180.1 million and $689.8 million, respectively, compared to $241.7 million
and $814.9 million, respectively, for the same periods last year. This
reflects a decrease in fourth quarter and fiscal year revenues of 25 percent
and 15 percent, respectively, compared to the same periods last year.
Rational reported pro forma net income and earnings per share on a diluted
basis for the fourth quarter of fiscal 2002 of $19.5 million and $0.10,
respectively, compared to pro forma net income and earnings per share of $45.9
million and $0.22, respectively, for the same period last year. This reflects
a decrease in fourth quarter pro forma net income of 58 percent compared to
the same period last year.
Rational reported pro forma net income and earnings per share on a diluted
basis for the year ended March 31, 2002 of $58.4 million and $0.29,
respectively, compared to pro forma net income and earnings per share of
$147.6 million and $0.72, respectively, for fiscal 2001. This reflects a
decrease in fiscal year pro forma net income of 60 percent compared to fiscal
2001.
"Despite the economic environment, Rational's business with enterprise
customers, as evidenced by a large number of $100,000-plus transactions, was
solid during the quarter. We see this as evidence that companies are focused
on working with a smaller number of highly credible partners," said Paul Levy,
chairman and co-fou nder of Rational Software. "We feel that we are entering
the new fiscal year as a partner that companies can depend on for the
infrastructure software they require in order to efficiently develop the
software applications that their products and businesses demand. We continue
to focus on managing our costs in this uncertain economic environment. As a
result, we were pleased to report that our pro forma earnings exceeded the
consensus estimate for the period."
Pro forma net income and earnings per share for the periods reported
exclude one-time charges for purchased in-process R&D, amortization of
goodwill and purchased intangibles, amortization of stock-based compensation
related to recent acquisitions, and restructuring charges, as well as the net
activity (operating expenses and interest income less portion allocated to
minority interest) incurred by Catapulse Inc. prior to the completion of the
Catapulse acquisition on February 5, 2001.
As reported net loss and loss per share on a diluted basis for the fourth
quarter ended March 31, 2002 was $11.7 million and $0.06, respectively,
compared to as reported net income and earnings per share of $6.6 million and
$0.03, respectively, for the same period last year.
As reported net loss and loss per share on a diluted basis for the year
ended March 31, 2002 was $75.9 million and $0.39, respectively, compared to as
reported net income and earnings per share of $72.1 million and $0.35,
respectively, for fiscal 2001.
(Photo: http://www.newscom.com/cgi-bin/prnh/20010417/RATLLOGO )
About Rational Software Corporation
Rational Software provides a software development platform that improves
the speed, quality, and predictability of software projects. This integrated,
full lifecycle solution combines software engineering best practices, market-
leading tools, and professional services. Ninety-six of the Fortune 100 rely
on Rational tools and services to build better software, faster. This open
platform is extended by partners who provide more than 500 complementary
products and services. Founded in 1981, Rational is one of the world's largest
software companies, with revenues of $689.8 million in its twelve months ended
March 31, 2002, and over 3,500 employees worldwide. Rational is a member of
the S&P 500 Index and a component of the Nasdaq-100 Index(R). Additional
information is available at http://www.rational.com and http://www.therationaledge.com, the
monthly e-zine for the Rational community.
This press release contains certain "forward-looking" statements within
the meaning of the Private Securities Litigation Reform Act of 1995. These
statements are based on management's current expectations and are subject to
uncertainty and changes in circumstances. Actual results may vary materially
from the expectations contained herein. The forward-looking statements
contained herein include statements relating to customers' selection of our
products, our expectations regarding the future operating and market
environment, our future financial and operating results, our competitive
position and our ability to manage expenses. Factors that could cause actual
results to differ materially from those described herein include, among other
factors, adverse changes in general economic conditions, increased
competition, and adverse changes in the market for sophisticated development
tools. More detailed information about these factors is set forth in the
reports filed by Rational Software with the Securities and Exchange
Commission. Rational Software 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.
Rational Software Corporation
Pro Forma Statements of Operations
(in thousands, except percentage figures and per share
data)
Three months ended
March 31
(unaudited) Year ended March 31
2002 % 2001 % 2002 % 2001 %
Net product
revenue $86,222 48 $141,565 59 $318,711 46 477,726 59
Consulting and
support revenue 93,897 52 100,115 41 371,086 54 337,209 41
Total revenue 180,119 100 241,680 100 689,797 100 814,935 100
Cost of product
revenue 8,494 5 7,531 3 27,235 4 28,514 3
Cost of
consulting and
support revenue 18,374 10 25,907 11 77,065 11 89,227 11
Total cost
of revenue 26,868 15 33,438 14 104,300 15 117,741 14
Gross margin 153,251 85 208,242 86 585,497 85 697,194 86
Operating
expenses:
Product
research and
development
expenses 43,330 24 47,741 20 176,817 26 151,655 19
Sales and
marketing
expenses 71,493 39 92,623 38 288,837 41 321,311 39
General and
administrative
expenses 14,000 8 11,914 5 54,059 8 45,171 6
Total
operating
expenses 128,823 71 152,278 63 519,713 75 518,137 64
Operating
income 24,428 14 55,964 23 65,784 10 179,057 22
Other income,
net 3,382 2 9,606 4 17,666 2 31,827 4
Income before
income taxes 27,810 16 65,570 27 83,450 12 210,884 26
Provision for
income taxes 8,343 5 19,671 8 25,011 4 63,251 8
Net income $19,467 11 $45,899 19 $58,439 8 $147,633 18
NOTE: PRO
FORMA ONLY
Net income per
common share:
Basic $0.10 $0.23 $0.30 $0.78
Diluted $0.10 $0.22 $0.29 $0.72
Shares used in
computing per
share amounts:
Basic 190,252 195,336 193,054 188,566
Diluted 201,695 211,923 204,179 206,211
The above pro forma statements of operations have been adjusted to present
Rational's operating results excluding one-time charges for purchased in-
process R&D, amortization of goodwill and purchased intangibles, amortization
of stock-based compensation related to recent acquisitions, and restructuring
charges, as well as the net activity (operating expenses and interest income
less portion allocated to minority interest) incurred by Catapulse Inc. prior
to the completion of the Catapulse acquisition on February 5, 2001.
The following table reflects the differences between pro forma and as-
reported net income (loss) (in thousands):
Three months ended Year ended
March 31 March 31
(unaudited)
2002 2001 2002 2001
As reported net
income (loss) $(11,652) $6,561 $(75,948) $72,144
Activity relating
to Catapulse:
Deferred compensation - 389 - 1,989
Research and
development expenses - 4,281 - 31,853
Sales and marketing
expenses - 794 - 8,817
General and
administrative
expenses - 436 - 3,396
Interest earned on
cash and cash
equivalents - (151) - (2,882)
Minority interest - (1,888) - (15,323)
Total Catapulse
activity, net of
minority interest - 3,861 - 27,850
Amortization of
goodwill and
purchased
intangibles, net of
tax, relating to
recent acquisitions 20,276 12,436 80,581 24,598
Amortization of
stock based
compensation, net
of tax 10,843 7,219 43,407 7,219
Purchased in-process
R&D relating to
recent acquisitions - 15,822 - 15,822
Restructuring costs,
net of tax - - 10,399 -
Pro forma net income $19,467 $45,899 $58,439 $147,633
Rational Software Corporation
Condensed Consolidated Statements of Operations
(in thousands, except percentage figures and per share data)
Three months ended March 31 Year ended March 31
(unaudited)
2002 % 2001 % 2002 % 2001 %
Net product
revenue $86,222 48 $141,565 59 $318,711 46 $477,726 59
Consulting and
support revenue 93,897 52 100,115 41 371,086 54 337,209 41
Total revenue 180,119 100 241,680 100 689,797 100 814,935 100
Cost of product
revenue 13,291 8 9,838 4 45,228 7 32,817 4
Cost of
consulting and
support revenue 18,374 10 25,907 11 77,065 11 89,227 11
Total cost of
revenue 31,665 18 35,745 15 122,293 18 122,044 15
Gross margin 148,454 82 205,935 85 567,504 82 692,891 85
Operating
expenses:
Product
research and
development
expenses 43,330 24 52,023 22 176,817 26 183,509 23
Sales and
marketing
expenses 71,493 39 93,417 39 288,837 41 330,128 41
General and
administrative
expenses 14,000 8 12,350 4 54,059 8 48,567 5
Amortization
of goodwill
and purchased
intangibles 17,995 10 12,204 5 72,108 10 22,370 3
Amortization
of stock-based
compensation 18,072 10 12,420 5 72,345 10 14,020 1
Purchased in-
process R&D - - 15,822 7 - - 15,822 2
Restructuring
costs - - - - 17,331 3 - -
Total
operating
expenses 164,890 91 198,236 82 681,497 98 614,416 75
Operating
income (loss) (16,436) (9) 7,699 3 (113,993) (16) 78,475 10
Other income,
net 3,382 2 9,757 4 17,666 2 34,709 4
Income (loss)
before income
taxes (13,054) (7) 17,456 7 (96,327) (14) 113,184 14
Provision for
(benefit from)
income taxes (1,402) (1) 12,783 5 (20,379) (3) 56,363 7
Minority
interest - - (1,888) (1) - - (15,323)(2)
Net income
(loss) $(11,652) (6) $6,561 3 $(75,948) (11) $72,144 9
Net income
(loss) per
common share:
Basic $(0.06) $0.03 $(0.39) $0.38
Diluted $(0.06) $0.03 $(0.39) $0.35
Shares used in
computing per
share amounts:
Basic 190,252 195,336 193,054 188,566
Diluted 190,252 211,923 193,054 206,211
Rational Software Corporation
Condensed Consolidated Balance Sheets
(in thousands)
March 31, March 31,
2002 2001
Assets
Current assets:
Cash and cash equivalents and
short-term investments $960,383 $1,040,821
Accounts receivable, net 149,896 206,099
Prepaid expenses and other assets 24,525 19,991
Deferred tax asset 19,714 16,727
Total current assets 1,154,518 1,283,638
Property and equipment, net 91,254 103,239
Goodwill and purchased intangibles, net 228,030 294,824
Other assets, net 29,417 27,622
Total assets $1,503,219 $1,709,323
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $11,575 $23,909
Accrued employee benefits 46,145 68,624
Income taxes payable 29,192 30,788
Other accrued expenses 42,445 49,753
Accrued merger and integration expenses 18,632 19,970
Deferred revenue 181,903 166,531
Total current liabilities 329,892 359,575
Convertible subordinated notes 500,000 500,000
Long term deferred tax liabilities 11,921 57,900
Other noncurrent liabilities 23,430 25,594
Total liabilities 865,243 943,069
Stockholders' equity:
Common stock 702,479 754,809
Retained earnings/(Accumulated deficit) (64,503) 11,445
Total stockholders' equity 637,976 766,254
Total liabilities and stockholders' equity $1,503,219 $1,709,323
Rational, the Rational logo, Rational Software Corporation, among others,
are trademarks or registered trademarks of Rational Software Corporation in
the United States and/or in other countries. All other names are used for
identification purposes only and are trademarks or registered trademarks of
their respective companies.
SOURCE Rational Software Corporation
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Related links:
http://www.rational.com
Photo Notes:Newscom:
http://www.newscom.com/cgi-bin/prnh/20010417/RATLLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, 888-776-6555 or 201-369-3467
CONTACT:
Bill Durling, Director of Corporate
Communications, +1-781-372-5886, bdurling@rational.com; or
Financial: Timothy A. Brennan, Chief Financial Officer,
+1-408-863-4500, ir@rational.com, or David Henshall, Treasurer,
+1-408-863-4500, ir@rational.com, all of Rational Software
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