Novell Reports Preliminary Financial Results for Third Fiscal Quarter 2006

Novell Reports Preliminary Financial Results for Third Fiscal Quarter 2006

Novell, Inc. (NASDAQ:NOVL) today announced preliminary financial results for its third fiscal quarter ended July 31, 2006. These financial results are preliminary because Novell, during this quarter, began a self-initiated, voluntary review of the company’s historical stock-based compensation practices and related potential accounting impact. The financial results reported today do not take into account any adjustments that may be required in connection with the completion of the stock-based compensation review and should be considered preliminary until Novell files its Form 10-Q for the third fiscal quarter ended July 31, 2006.

Financial Results: For the third fiscal quarter 2006, Novell reported net revenue of $241 million, compared to net revenue of $252 million for the third fiscal quarter 2005. The loss available to common stockholders from continuing operations in the third fiscal quarter 2006 was $3 million or $0.01 loss per diluted common share. This compares to income available to common stockholders from continuing operations of $0.4 million, or $0.00 per diluted common share, for the third fiscal quarter 2005.

On a non-GAAP basis, adjusted income available to common stockholders from continuing operations for the third fiscal quarter 2006 was $20 million, or $0.05 per diluted common share. Those amounts excluded stock-based compensation, severance-related expenses, a loss on the planned disposition of our Japan consulting group, a gain on sale of property, plant and equipment and related adjustments for income taxes, debt interest expense and the allocation of earnings to preferred stockholders. This compares to non-GAAP adjusted income available to common stockholders from continuing operations of $13 million, or $0.03 per diluted common share, for the third fiscal quarter 2005. These amounts primarily exclude restructuring charges and related adjustments for income taxes, debt interest expense and the allocation of earnings to preferred stockholders.

In the third fiscal quarter 2006, Novell finalized the disposition of its Celerant consulting subsidiary. Accordingly, all Celerant financial results were excluded from Novell’s continuing operations for income statement reporting purposes. Celerant’s results for all periods presented are reported as discontinued operations.

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