(COMTEX) B: Rational Software Reports Record Revenue and Pro Forma Ne
B: Rational Software Reports Record Revenue and Pro Forma Net Income For Second
Quarter of Fiscal Year 2001
CUPERTINO, Calif., Oct 11, 2000 /PRNewswire via COMTEX/ -- Rational Software
Corporation (Nasdaq: RATL), the e-development company, today announced results
for the second fiscal quarter and six months ended September 30, 2000.
Revenue for the second quarter and six months ended September 30, 2000 was
$187.5 million and $357.8 million, respectively, compared to $128.2 million and
$245.6 million respectively, for the same periods last year. This reflects an
increase in both second quarter and year-to-date revenues of 46%.
The company reported pro forma net income and earnings per share on a diluted
basis for the second quarter of fiscal 2001 of $34.6 million and $0.17,
respectively, compared to pro forma net income and earnings per share of $19.3
million and $0.10, respectively, for the same period last year. This reflects an
increase in second quarter pro forma net income of 79% compared to the same
period last year.
"Rational's record second quarter results validate our strategy, our team's
execution, and Rational's focus on the success of our customers. As the economic
survival of every large business in the world increasingly depends on software,
our strategy of providing customers with a complete solution, based on the
Rational Suite products, is on target and gaining momentum," said Paul Levy,
chairman and co-founder of Rational. "Developing software is emerging as the
world's most important industry, and as Rational extends its leadership the
large businesses that depend on software are making the decision to depend on
Rational as their partner."
"In addition to record pro forma earnings, we're announcing a new strategic
alliance with Vignette Corporation to address the needs of e-businesses
challenged with managing content and code in complex e-business sites," said
Mike Devlin, CEO and cofounder of Rational. "We will be including Vignette's
content management capabilities into a new product, Rational Suite
ContentStudio. Rational Suite ContentStudio integrates market-leading products
from our respective companies -- Vignette's content management solution and
Rational ClearCase -- with Rational's other e-development tools to create a
unique offering that redefines content management for e-business."
The company reported pro forma net income and earnings per share on a diluted
basis for the six months ended September 30, 2000 of $61.5 million and $0.30,
respectively, compared to pro forma net income and earnings per share of $34.0
million and $0.18, respectively, for the same periods last year. This reflects
an increase in year-to-date pro forma net income of 81% 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 intangible assets related to recent
acquisitions, as well as the net activity (operating expenses and interest
income less portion allocated to minority interest) incurred by Catapulse, Inc.
As reported net income and earnings per share on a diluted basis for the second
quarter of fiscal 2001 was $19.7 million and $0.10, respectively, compared to as
reported net income and earnings per share of $19.3 million and $0.10,
respectively, for same period last year.
As reported net income and earnings per share on a diluted basis for the six
months ended September 30, 2000 was $39.0 million and $0.19, respectively,
compared to as reported net income and earnings per share of $34.0 million and
$0.18, respectively, for the same periods last year.
About Rational Software Corporation
Rational Software Corporation (Nasdaq: RATL), the e-development company, helps
organizations develop and deploy software for e-business, e-infrastructure, and
e-devices through a combination of tools, services and software engineering best
practices. Rational's e-development solution helps organizations overcome the
e-software paradox by accelerating time to market while improving quality.
Rational's integrated solution simplifies the process of acquiring, deploying
and supporting a comprehensive software development platform, reducing total
cost of ownership. IDC has recognized Rational as the market revenue leader in
multiple segments of the software development life-cycle management market for
three years in a row. Founded in 1981, Rational, one of the world's largest
Internet software companies, had revenues of $684 million in its twelve months
ended September, 2000 and employs more than 3,000 people around the world.
Additional information is available on the Internet at rational.com.
Rational Software Corporation
Pro Forma Statements of Operations
(in thousands of dollars, except per share data)
Three months ended September 30
(unaudited)
2000 % 1999 %
Net product revenue $107,966 58 $77,782 61
Consulting and support
Revenue 79,535 42 50,379 39
Total revenue 187,501 100 128,161 100
Cost of product
revenue 7,926 4 5,709 5
Cost of consulting and
support revenue 20,291 11 13,287 10
Total cost of
revenue 28,217 15 18,996 15
Gross margin 159,284 85 109,165 85
Product research and
development expenses 34,129 18 23,084 18
Sales and marketing
expenses 73,631 39 51,165 40
General and
administrative
expenses 10,687 6 10,520 8
Total operating
Expenses 118,447 63 84,769 66
Operating income 40,837 22 24,396 19
Other income, net 8,579 4 2,445 2
Income before income
taxes 49,416 26 26,841 21
Provision for income
taxes 14,816 8 7,516 6
Net income $34,600 18 $19,325 15
NOTE: PRO FORMA ONLY
Net income per common
share -- basic $0.19 $0.11
Shares used in
computing per share
amounts -- basic 186,789 173,780
Net income per common
share -- diluted $0.17 $0.10
Shares used in
computing per share
amounts -- diluted 205,858 187,896
Six months ended September 30
(unaudited)
2000 % 1999 %
Net product revenue $207,266 58 $150,197 61
Consulting and support
Revenue 150,532 42 95,387 39
Total revenue 357,798 100 245,584 100
Cost of product
revenue 13,746 4 11,719 5
Cost of consulting and
support revenue 38,467 11 24,900 10
Total cost of
revenue 52,213 15 36,619 15
Gross margin 305,585 85 208,965 85
Product research and
development expenses 66,029 18 45,609 19
Sales and marketing
expenses 144,581 41 100,526 41
General and
administrative
expenses 20,712 6 20,611 8
Total operating
Expenses 231,322 65 166,746 68
Operating income 74,263 20 42,219 17
Other income, net 13,561 4 5,029 2
Income before income
taxes 87,824 24 47,248 19
Provision for income
taxes 26,333 7 13,230 5
Net income $61,491 17 $34,018 14
NOTE: PRO FORMA ONLY
Net income per common
share -- basic $0.33 $0.20
Shares used in
computing per share
amounts -- basic 184,879 173,418
Net income per common
share -- diluted $0.30 $0.18
Shares used in
computing per share
amounts -- diluted 203,594 188,052
The above pro forma statements of operations for the quarter and six months
ended September 30, 2000 have been adjusted to present the Company's operating
results excluding acquisition costs related to recent acquisitions, (including
amortization of goodwill and purchased intangibles) operating expenses incurred
by Catapulse, Inc, and related adjustments for income taxes.
The following table reflects the differences between Pro forma and as-reported
net income.
Three months ended Six months ended
September 30 September 30
(unaudited) (unaudited)
2000 1999 2000 1999
As reported net
income $19,689 $19,325 $39,050 $34,018
Activity relating to
Catapulse:
Research and
development expenses 11,472 -- 18,055 --
Sales and marketing
expenses 4,765 -- 4,765 --
General and
administrative
expenses 1,412 -- 1,412 --
Interest earned on
cash and cash
equivalents (969) -- (2,022) --
Minority interest (5,707) -- (7,696) --
Total Catapulse
activity, net of
minority interest 10,973 -- 14,514 --
Amortization of goodwill
and purchased intangible
assets relating to
recent acquisitions 3,938 -- 7,927 --
Pro forma net income $34,600 $19,325 $61,491 $34,018
Rational Software Corporation
Condensed Consolidated Statements of Operations
(in thousands of dollars, except per share data)
Three months ended September 30
(unaudited)
2000 % 1999 %
Net product revenue $107,966 58 $77,782 61
Consulting and support
Revenue 79,535 42 50,379 39
Total revenue 187,501 100 128,161 100
Cost of product revenue 8,585 5 5,709 5
Cost of consulting
and support revenue 20,291 11 13,287 10
Total cost of
revenue 28,876 16 18,996 15
Gross margin 158,625 84 109,165 85
Product research and
development expenses 45,601 24 23,084 18
Sales and marketing
expenses 78,396 41 51,165 40
General and
administrative
expenses 15,377 8 10,520 8
Total operating
Expenses 139,374 73 84,769 66
Operating income 19,251 11 24,396 19
Other income, net 9,547 5 2,445 2
Income before income
taxes 28,798 16 26,841 21
Provision for income
taxes 14,816 8 7,516 6
Minority interest (5,707) (3) -- --
Net income $19,689 11 $19,325 15
Net income per common
share -- basic $0.11 $0.11
Shares used in
computing per share
amounts -- basic 186,789 173,780
Net income per common
share -- diluted $0.10 $0.10
Shares used in
computing per share
amounts -- diluted 205,858 187,896
Six months ended September 30
(unaudited)
2000 % 1999 %
Net product revenue $207,266 58 $150,197 61
Consulting and support
Revenue 150,532 42 95,387 39
Total revenue 357,798 100 245,584 100
Cost of product
revenue 15,073 4 11,719 5
Cost of consulting and
support revenue 38,467 11 24,900 10
Total cost of
revenue 53,540 15 36,619 15
Gross margin 304,258 85 208,965 85
Product research and
development expenses 84,084 23 45,609 19
Sales and marketing
expenses 149,346 42 100,526 41
General and
administrative
expenses 28,723 8 20,611 8
Total operating
Expenses 262,153 73 166,746 68
Operating income 42,105 12 42,219 17
Other income, net 15,582 4 5,029 2
Income before income
taxes 57,687 16 47,248 19
Provision for income
taxes 26,333 7 13,230 5
Minority interest (7,696) (2) -- --
Net income $39,050 11 $34,018 14
Net income per common
share -- basic $0.21 $0.20
Shares used in
computing per share
amounts -- basic 184,879 173,418
Net income per common
share -- diluted $0.19 $0.18
Shares used in
computing per share
amounts -- diluted 203,594 188,052
Rational Software Corporation
Condensed Consolidated Balance Sheets
(in thousands of dollars)
September 30, March 31,
2000 2000
Assets (unaudited)
Current assets:
Cash and cash equivalents and
short-term investments $1,020,366 $906,311
Accounts receivable, net 142,071 148,818
Prepaid expenses and other assets 18,738 10,671
Deferred tax asset 6,824 9,384
Total current assets 1,187,999 1,075,184
Property and equipment, net 68,807 52,440
Other assets, net 94,034 98,152
Total assets $1,350,840 $1,225,776
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $11,045 $8,496
Accrued employee benefits 62,717 49,290
Income taxes payable 42,381 24,323
Other accrued expenses 42,175 33,257
Accrued merger and integration expenses 3,883 5,147
Deferred revenue 129,222 122,813
Total current liabilities 291,423 243,326
Convertible subordinated notes 500,000 500,000
Other noncurrent liabilities 1,060 1,668
Total liabilities 792,483 744,994
Minority interest 16,881 24,475
Stockholders' equity:
Common stock 563,125 517,006
Accumulated deficit (21,649) (60,699)
Total stockholders' equity 541,476 456,307
Total liabilities and stockholders' equity $1,350,840 $1,225,776
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: www.rational.com
SOURCE Rational Software Corporation
CONTACT: Thomas F. Bogan, President, or Timothy A. Brennan, Chief
Financial Officer, of Rational Software Corporation, 408-863-
500, or
ir@rational.com
URL: rational.com
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(C) 2000 PR Newswire. All rights reserved.
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