CUPERTINO, Calif., July 18 /PRNewswire-FirstCall/ --
Rational Software Corporation (Nasdaq: RATL) today announced results for the
fiscal quarter ended June 30, 2002.
(Photo: http://www.newscom.com/cgi-bin/prnh/20010417/RATLLOGO )
Revenue for the first quarter of fiscal 2003 decreased to $152.5 million
from $175.8 million for the same quarter last year or a decrease of 13
percent.
Rational reported pro forma net income and earnings per share on a diluted
basis for the first quarter of fiscal 2003 of $7.3 million and $0.04,
respectively, compared to pro forma net income and earnings per share of $16.2
million and $0.08, respectively, for the same period last year. This reflects
a decrease in pro forma net income of 55 percent compared to the same period
last year.
Pro forma net income and earnings per share for the periods reported
exclude amortization of goodwill and purchased intangibles, amortization of
stock-based compensation related to recent acquisitions, and restructuring
charges.
As reported net loss and loss per share on a diluted basis for the first
quarter ended June 30, 2002 was $6.5 million and $0.03, respectively, compared
to as reported net loss and loss per share on a diluted basis of $24.8 million
and $0.13, respectively, for the same period last year. As a consequence of
adopting the Statement of Financial Accounting Standards 142 as of April 1,
2002, the non-cash charges related to amortization of goodwill and
intangibles, net of tax, dropped from $19.6 million in the quarter ended June
30, 2001 to $2.9 million in the quarter ended June 30, 2002.
Business Outlook
For the quarter ending September 30, 2002, management currently expects
revenue to be in the range of between $145 and $155 million, and pro forma
earnings per share on a diluted basis to be in the range of $0.03 to $0.04.
For the full fiscal year ending March 31, 2003, management currently
expects revenue to be in the range of between $625 million and $660 million,
and pro forma earnings per share on a diluted basis to be in the range of
$0.20 to $0.25.
In addition, management currently expects the company to record a
restructuring charge in the range of $5 million to $15 million in the quarter
ending September 30, 2002, as a result of the cessation of selected
development activities associated with the company's hosted development
service. The effect of this anticipated charge is not reflected in the
expected pro forma results for the quarter ending September 30, 2002 or the
year ending March 31, 2003, provided above. Expected pro forma earnings per
share for the future periods discussed excludes amortization of goodwill and
purchased intangibles, amortization of stock-based compensation related to
recent acquisitions, and restructuring charges.
Management will host the quarterly conference call today to discuss the
results beginning at 2:00 p.m. Pacific Time, 5:00 p.m. Eastern Time.
Interested parties may listen to the conference call via live broadcast on
Rational's Investor Relations Web site (http://investor.rational.com).
Domestic callers can dial in to the conference call at 1-888-276-0010 and
international callers can listen at 1-612-332-0226 or 1-612-288-0337. The
password is Rational.
For those unable to participate in the live call, replays will be
available approximately two hours after the earnings call ends. The replay
numbers are 1-800-475-6701 for domestic callers and 1-320-365-3844 for
international callers. The access code for the replay is 644557, and it will
be available to callers until approximately 11:00 p.m. Pacific Time on
Thursday, July 25, 2002. The conference call will also be archived on
Rational's Investor Relations Web site.
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-eight 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 $666.4 million in its twelve
months ended June 30, 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 future revenue and pro forma
earnings per share on a diluted basis, future restructuring charges and
discontinued development activities associated with the company's hosted
development service. 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, adverse changes
in the market for sophisticated development tools and the company's ability to
manage expenses associated with the cessation of its development activities
associated with the company's hosted development service. 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 June 30
(unaudited)
2002 % 2001 %
Net product revenue $59,479 39 $83,314 47
Consulting and support
revenue 92,985 61 92,479 53
Total revenue 152,464 100 175,793 100
Cost of product revenue 5,357 3 4,498 3
Cost of consulting
and support revenue 17,583 12 20,400 11
Total cost of
revenue 22,940 15 24,898 14
Gross margin 129,524 85 150,895 86
Operating expenses:
Product research and
development expenses 41,910 28 47,661 27
Sales and marketing
expenses 68,924 45 73,564 42
General and
administrative
expenses 11,247 7 12,964 7
Total operating
expenses 122,081 80 134,189 76
Operating income 7,443 5 16,706 10
Other income, net 2,690 2 6,393 3
Income before
income taxes 10,133 7 23,099 13
Provision for
income taxes 2,837 2 6,930 4
Net income $7,296 5 $16,169 9
NOTE: PRO FORMA ONLY
Net income per common share:
Basic $0.04 $0.08
Diluted $0.04 $0.08
Shares used in computing per share amounts:
Basic 190,057 196,872
Diluted 197,061 211,369
The above pro forma statements of operations have been adjusted to present
Rational's operating results excluding amortization of goodwill and purchased
intangibles, amortization of stock-based compensation related to recent
acquisitions, and restructuring charges.
The following table reflects the differences between pro forma and as-
reported net income (loss) (in thousands):
Three months ended
June 30
(unaudited)
2002 2001
As reported net loss $(6,484) $(24,808)
Amortization of goodwill and
purchased intangibles,
net of tax,
relating to recent acquisitions 2,938 19,637
Amortization of stock based
compensation, net of tax 10,842 10,941
Restructuring costs, net of tax - 10,399
Pro forma net income $7,296 $16,169
Rational Software Corporation
Condensed Consolidated Statements of Operations
(in thousands, except percentage figures and per share data)
Three months ended June 30
(unaudited)
2002 % 2001 %
Net product revenue $59,479 39 $83,314 47
Consulting and
support revenue 92,985 61 92,479 53
Total revenue 152,464 100 175,793 100
Cost of product revenue 9,946 6 8,184 5
Cost of consulting
and support revenue 17,583 12 20,400 11
Total cost of
revenue 27,529 18 28,584 16
Gross margin 124,935 82 147,209 84
Operating expenses:
Product research and
development expenses 41,910 28 47,661 27
Sales and marketing
expenses 68,924 45 73,564 42
General and
administrative
expenses 11,247 7 12,964 7
Amortization of goodwill
and purchased
intangibles 307 - 17,987 10
Amortization of stock
based compensation 18,071 12 18,236 11
Restructuring costs - - 17,331 10
Total operating
expenses 140,459 92 187,743 107
Operating loss (15,524) (10) (40,534) (23)
Other income, net 2,690 2 6,393 3
Loss before income
taxes (12,834) (8) (34,141) (20)
Benefit from income
taxes (6,350) (4) (9,333) (6)
Net loss $(6,484) (4) $(24,808) (14)
Net loss per common share:
Basic $(0.03) $(0.13)
Diluted $(0.03) $(0.13)
Shares used in computing per share amounts:
Basic 190,057 196,872
Diluted 190,057 196,872
Rational Software Corporation
Condensed Consolidated Balance Sheets
(in thousands)
June 30, March 31,
2002 2002
(unaudited)
Assets
Current assets:
Cash and cash equivalents and
short-term investments $1,014,326 $960,383
Accounts receivable, net 119,799 149,896
Prepaid expenses and other assets 24,085 24,525
Deferred tax asset 19,714 19,714
Total current assets 1,177,924 1,154,518
Property and equipment, net 90,537 91,254
Goodwill and purchased intangibles, net 223,112 228,030
Other assets, net 29,513 29,417
Total assets $1,521,086 $1,503,219
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $10,903 $11,575
Accrued employee benefits 36,562 46,145
Income taxes payable 29,156 29,192
Other accrued expenses 46,108 42,445
Accrued merger and integration expenses 12,019 11,511
Deferred revenue 182,283 181,903
Total current liabilities 317,031 322,771
Convertible subordinated notes 500,000 500,000
Long term deferred tax liabilities 9,751 11,921
Other noncurrent liabilities 28,366 30,551
Total liabilities 855,148 865,243
Stockholders' equity:
Common stock 736,925 702,479
Accumulated deficit (70,987) (64,503)
Total stockholders' equity 665,938 637,976
Total liabilities and stockholders'
equity $1,521,086 $1,503,219
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.
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
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 David
Henshall, Chief Financial Officer, +1- 408-863-4500,
ir@rational.com, both of Rational Software Corporation
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