CUPERTINO, Calif., July 10 /PRNewswire/ -- Rational Software Corporation
(Nasdaq: RATL), the e-development company(TM), today announced results for the
first fiscal quarter ended June 30, 2001.
Revenue for the first quarter of fiscal 2002 increased to $175.8 million
from $170.3 million for the same quarter last year or an increase of 3%.
The company reported pro forma net income and earnings per share on a
diluted basis for the first quarter of fiscal 2002 of $16.2 million and $0.08,
respectively, compared to pro forma net income and earnings per share of $26.9
million and $0.13, respectively, for the same period last year. This reflects
a decrease in first quarter pro forma net income of 40% compared to the same
period last year.
"As we stated last week, Rational was negatively impacted by weakness in
our international business -- particularly right at the end of the quarter,"
said Paul Levy, chairman and co-founder of Rational Software. "Highlights of
the first quarter include the new products shipped in the latest release of
our flagship Rational Suite product line, the broadening of our customer base,
and the number of large deals we closed -- demonstrating the attractiveness of
Rational's value proposition to our customers. We believe Rational is in a
strong position to accelerate our growth once the global economic environment
improves."
Pro forma 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 first
quarter ended June 30, 2001 was $24.8 million and $0.13, respectively,
compared to as reported net income and earnings per share of $19.4 million and
$0.10, respectively, for the same period last year.
Management will host a conference call to review today's announcement
beginning at 2:00 p.m. Pacific Daylight Time today, 5:00 p.m. Eastern Daylight
Time. Domestic parties may access the call by dialing 1.888.769.8713.
International parties may access the call by dialing 312.470.7405. The pass
code for both dial-in numbers is RATIONAL. Interested parties may also listen
to the conference call via live broadcast over the Internet at
http://www.rational.com/corpinfo/investor/index.jsp.
For those unable to participate in the live call, a replay will be
available approximately two hours after the earnings call ends. The replay
numbers are 1.800.810.4033 for domestic callers and 402.280.1620 for
international callers. No password is required for the replay.
( Photo: http://www.newscom.com/cgi-bin/prnh/20010417/RATLLOGO )
About Rational Software Corporation
Rational Software provides a platform for software development that speeds
time-to-market while improving software quality. This integrated, full life-
cycle solution combines software engineering best practices, market-leading
tools, and professional services. Ninety of the Fortune 100 and 49 of the
Fortune e-50 build software with the Rational solution. This open platform is
extended by hundreds of partners providing more than 500 complementary
products and services. IDC has recognized Rational as the revenue leader in
multiple application development and deployment markets for four years in a
row. Founded in 1981, Rational, one of the world's largest software companies,
had revenues of $820.4 million in its twelve months ended June, 2001 and
employs more than 3,800 people around the world.
Rational is a component of the Nasdaq-100 Index(R). Additional information
is available on the Internet at http://www.rational.com/
Rational Software Corporation
Pro Forma Statements of Operations
(in thousands, except percentage figures and per share data)
Three months ended June 30
(unaudited)
2001 % 2000 %
Net product revenue $83,314 47 $99,300 58
Consulting and
support revenue 92,479 53 70,997 42
Total revenue 175,793 100 170,297 100
Cost of product revenue 4,498 3 5,820 3
Cost of consulting
and support revenue 20,400 11 18,176 11
Total cost
of revenue 24,898 14 23,996 14
Gross margin 150,895 86 146,301 86
Operating expenses:
Product research and
development expenses 47,661 27 31,900 19
Sales and
marketing expenses 73,564 42 70,950 41
General and
administrative
expenses 12,964 7 10,025 6
Total
operating
expenses 134,189 76 112,875 66
Operating income 16,706 10 33,426 20
Other income, net 6,393 3 4,982 3
Income before
income taxes 23,099 13 38,408 23
Provision for
income taxes 6,930 4 11,517 7
Net income $16,169 9 $26,891 16
NOTE: PRO FORMA ONLY
Net income per common share:
Basic $0.08 $0.15
Diluted $0.08 $0.13
Shares used in computing per share amounts:
Basic 196,872 182,968
Diluted 211,369 201,330
The above pro forma statements of operations for the quarter ended June
30, 2001 have been adjusted to present the Company'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
June 30
(unaudited)
2001 2000
As reported net income (loss) $(24,808) $19,361
Activity relating to Catapulse:
Deferred compensation - 190
Research and development expenses - 6,393
Interest earned on cash and cash equivalents - (1,053)
Minority interest - (1,989)
Total Catapulse activity, net of minority interest - 3,541
Amortization of goodwill and purchased intangibles,
net of tax, relating to
recent acquisitions 19,637 3,989
Amortization of stock based compensation,
net of tax 10,941 -
Restructuring costs, net of tax 10,399 -
Pro forma net income $16,169 $26,891
Rational Software Corporation
Condensed Consolidated Statements of Operations
(in thousands, except percentage figures and per share data)
Three months ended June 30
(unaudited)
2001 % 2000 %
Net product revenue $83,314 47 $99,300 58
Consulting and
support revenue 92,479 53 70,997 42
Total revenue 175,793 100 170,297 100
Cost of product revenue 8,184 5 6,488 4
Cost of consulting and
support revenue 20,400 11 18,176 11
Total cost
of revenue 28,584 16 24,664 15
Gross margin 147,209 84 145,633 85
Operating expenses:
Product research and
development expenses 47,661 27 38,293 23
Sales and marketing
expenses 73,564 42 70,950 41
General and
administrative
expenses 12,964 7 10,025 6
Amortization of goodwill
and purchased
intangibles 17,987 10 3,321 2
Amortization of stock
based compensation 18,236 11 190 -
Restructuring costs 17,331 10 - -
Total operating
expenses 187,743 107 122,779 72
Operating income
(loss) (40,534) (23) 22,854 13
Other income, net 6,393 3 6,035 4
Income (loss)
before income taxes (34,141) (20) 28,889 17
Provision for
income taxes (9,333) (6) 11,517 7
Minority interest - - (1,989) (1)
Net income (loss) $(24,808) (14) $19,361 11
Net income (loss) per common share:
Basic $(0.13) $0.11
Diluted $(0.13) $0.10
Shares used in computing per share amounts:
Basic 196,872 182,968
Diluted 196,872 201,330
Rational Software Corporation
Condensed Consolidated Balance Sheets
(in thousands)
June 30, March 31
2001 2001
(unaudited)
Assets
Current assets:
Cash and cash equivalents
and short-term investments $984,332 $1,040,821
Accounts receivable, net 162,088 206,099
Prepaid expenses and other assets 31,798 21,902
Deferred tax asset 16,727 16,727
Total current assets 1,194,945 1,285,549
Property and equipment, net 100,641 103,239
Goodwill and purchased intangibles, net 291,938 294,824
Other assets, net 26,331 25,711
Total assets $1,613,855 $1,709,323
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $11,308 $23,909
Accrued employee benefits 38,364 68,624
Income taxes payable 25,608 30,788
Other accrued expenses 51,562 49,753
Accrued merger and restructuring expenses 17,528 19,970
Deferred revenue 170,446 166,531
Total current liabilities 314,816 359,575
Convertible subordinated notes 500,000 500,000
Long term deferred tax liabilities 43,906 57,900
Other noncurrent liabilities 24,574 25,594
Total liabilities 883,296 943,069
Stockholders' equity:
Common stock 743,922 754,809
Retained earnings/(Accumulated deficit) (13,363) 11,445
Total stockholders' equity 730,559 766,254
Total liabilities and
stockholders' equity $1,613,855 $1,709,323
The word "Rational" and Rational's products are trademarks of Rational
Software Corporation. References to other companies and their products use
trademarks owned by the respective companies and are for reference purposes
only.
For more information contact:
Rational Software Corporation
18880 Homestead Road
Cupertino, CA 95014
Tel. (408) 863-9900 or (800) 728-1212
Fax (408) 863-4133
Fax-on-demand: 1-800-758-5804 Pin: 113375
E-mail: info@rational.com; Web: http://www.rational.com
Contacts:
Press:
Bill Durling, Director of Corporate Communications
(781) 372-5886
bdurling@rational.com
Financial:
Timothy A. Brennan, Chief Financial Officer
(408) 863-4500
David Henshall, Treasurer
(408) 863-4500
ir@rational.com
SOURCE Rational Software Corporation
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Related links:
http://www.rational.com
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CONTACT:
Bill Durling, Director of Corporate
Communications, 781-372-5886, bdurling@rational.com, or Timothy
A. Brennan, Chief Financial Officer, 408-863-4500, or David
Henshall, Treasurer, 408-863-4500, ir@rational.com, all of
Rational Software Corporation
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