Borland reports strong financial results for second quarter 2004

This compares to revenues of 72.9 million USD and GAAP  net income of 713,000 USD, or 0.01 USD per diluted share, reported in the prior quarter and revenues of 76.3  million USD and a GAAP net loss of 5.0 million USD, or (0.06) USD per diluted share, reported in the second quarter of 2003. Non-GAAP net income for the second quarter of 2004 was 6.5 million USD, or 0.08 USD per diluted share, which compares to Non-GAAP net income of 4.8 million USD, or 0.06 USD per diluted share, reported in the prior quarter, and Non-GAAP net income of 3.5 million USD, or 0.04 USD per diluted share, reported in the second quarter of 2003.   

Borland generated 12.8 million USD in cash flow from operations and closed the second quarter of 2004 with 213.5 million USD in cash, cash equivalents and short-term investments.

"While we are pleased to report strong financial performance and execution across our business in the quarter, we believe there is still much opportunity for improvement," said Borland's president and chief executive officer, Dale L. Fuller. "I’m proud of our continued success at converting design wins into major, multi-product ALM engagements. The British Telecommunications relationship is a good example of our success at strategically aligning with our customers, enabling them to capture new  opportunities faster. Our ALM strategy is playing out in many of the ways we had envisioned and we are excited about the opportunities ahead.”

“We achieved solid operating income and cash flow in the quarter as a result of our relentless focus on  managing costs and increasing leverage in our sales model,” said Borland's senior vice president and chief  financial officer, Kenneth R. Hahn. “We have taken the right steps to improve our operating model and will continue to balance those improvements with opportunities to increase revenue. We believe our sales strategies and broader product suites are starting to take hold in the market and we remain confident in the long-term prospects for our business.”

In calculating Non-GAAP net income, Borland utilizes a financial measure of net income (loss) that  excludes restructuring, amortization of intangible assets, acquisition-related expenses, in-process research  and development and the related tax benefit ("Non-GAAP Net Income").  Investors are encouraged to  review the reconciliation of Non-GAAP financial measures to the most directly comparable GAAP  measures as provided below. 

Business Outlook 
Management provided the following financial guidance: 
For the quarter ending September 30, 2004, on a GAAP basis: 
•  The company expects revenues will be in the range of 75 - 78 million USD;  
•  Forecast earnings per share should be in the range of 0.00 to 0.02 USD.
For the quarter ending September 30, 2004, on a non-GAAP basis:  
•  Forecast earnings per share should be in the range of 0.05 to 0.07 USD.  

Non-GAAP Financial Measures 
Borland provides all information required in accordance with generally accepted accounting principles (GAAP), but it believes that evaluating its ongoing operating results may be difficult to understand if limited to reviewing only GAAP financial measures. Internally, Borland uses calculations of Non-GAAP net income and net income per share, each of which excludes restructuring, amortization of intangible assets, acquisition-related expenses, in-process research and development, and the related tax benefit, to evaluate its  ongoing operations and to allocate resources within the organization.

Borland's management does not itself, nor does it suggest that investors should, consider such Non-GAAP  financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Borland presents such Non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Borland's operating results in a manner that focuses on what management believes to be Borland's ongoing business operations. Management believes that the inclusion  of this Non-GAAP net income calculation provides consistency and comparability with past reports of  financial results and historically provided comparability to similar companies in Borland's industry. Investors  should note, however, that the Non-GAAP financial measures used by Borland may not be the same Non-GAAP financial measures as, and may not be calculated in the same manner as, that of other companies.  Borland's management believes it is useful for the company and investors to review both GAAP  information that includes the expenses, charges, gains, and losses mentioned below and the Non-GAAP  measures of net income and net income per share that exclude such charges to have a better understanding  of the overall performance of Borland's business and its ability to perform in subsequent periods. Whenever  Borland uses such a Non-GAAP financial measure, it provides a reconciliation of Non-GAAP financial  measures to the most closely applicable GAAP financial measure. Investors are encouraged to review the  related GAAP financial measures and the reconciliation of these Non-GAAP financial measures to their  most directly comparable GAAP financial measure. 

Borland excludes restructuring charges, including (i) employee severance and other termination benefits, (ii) lease termination costs and other expenses associated with exiting a facility, and (iii) other costs associated  with terminating contracts, from its Non-GAAP net income and net income per share calculations. Expenses related to restructuring have, in some cases, had a significant cash impact and effect on net  income as measured in accordance with GAAP. However, Borland's management believes such  restructuring charges are periodic costs incurred to realign its operating expenses with its anticipated future  revenues and, consequently, does not consider these restructuring costs as a normal component of its  expenses related to ongoing operations. As a result, Borland's management believes it is useful for itself and  investors to review both GAAP information that includes such charges and Non-GAAP measures of net  income that exclude these charges to have a better understanding of the overall performance of Borland's ongoing business operations and its performance in the periods presented.

In accordance with GAAP, Borland regularly amortizes the remaining value of certain intangible assets over  various periods. However, these amortization expenses result in no ongoing cash expenditures and  otherwise have no material impact on Borland's ongoing business operations. Similarly, from time to time,  Borland undertakes strategic acquisitions and investments. The expenses related to such acquisitions and  investments may or may not result in a significant cash impact or effect on net income as measured in  accordance with GAAP, but their impact is not directly related to Borland's ongoing business activities in  such periods. Consequently, Borland excludes the amortization of intangible assets, acquisition-related  expenses and in-process research and development expenses from its Non-GAAP financial measures. Borland believes that examination of both GAAP information that includes such charges and Non-GAAP financial measures that exclude such expenses provides management with a comparative measure between  product lines when allocating available resources. Borland believes that if it did not provide such Non-GAAP financial information, investors would not have all the necessary data to analyze Borland's ongoing  operations.

For the complete financial results press release, please go to the Borland web site.

-------------

About Borland
Borland Software Corp. (NASDAQ NM: BORL) is a world leader in platform independent software development and deployment solutions designed to accelerate the entire application development lifecycle. By connecting managers, testers, designers, developers, and implementers in real time, Borland enables enterprises worldwide to define and sustain their competitive advantage. For more information, visit: http://www.borland.com or for the Borland Developer Network, please visit http://bdn.borland.com. All Borland brands and products are trademarks or registered trademarks of Borland Software Corp. in the United States and other countries. All other marks are the property of their respective owners.

For further press information, please contact Viviane Brokerhof at LEWIS, the IT PR agency
Telephone: +31 (0)40 235 46 00
Fax: +31 (0)40 235 46 01
Email: vivianeb@lewispr.com
Web site: http://www.lewispr.com

For further general enquiries please contact Paulina Logchies at Borland
Telephone: +31 (0)20 503 51 00
Fax: +31 (0)20 503 51 70
Email: plogchies@borland.com
Web site: http://www.borland.com

All Borland brand and product names are trademarks or registered trademarks of Borland Software Corporation in the United States and other countries. All other marks are the property of their respective owners.

Safe Harbor Statement
For the complete Safe Harbor Statement, please look HERE.