<PAGE> 1
[VERITAS LOGO] NEWS
VERITAS Software
1600 Plymouth Street
Mountain View, CA 94043
650.335.8000
FOR IMMEDIATE RELEASE
VERITAS(R) SOFTWARE REPORTS RECORD SECOND QUARTER RESULTS;
REVENUE UP 77% TO $275.4 MILLION FOR THE QUARTER
Billion Dollar Revenue Annual Run Rate Surpassed
MOUNTAIN VIEW, CALIF. - JULY 18, 2000 - VERITAS Software Corporation
(Nasdaq: VRTS), the data availability company, today announced record financial
results for its second quarter ended June 30, 2000. The Company achieved second
quarter revenue of $275.4 million, an increase of 77% over last year's pro forma
second quarter revenue of $155.7 million. Pro forma net income, which excludes
purchase accounting adjustments, increased to $57.2 million in the second
quarter from $29.3 million for the same period prior year, a 95% increase.
Diluted pro forma net income per share for the second quarter was $0.13, an 86%
increase from $0.07 for the same period last year. VERITAS Software's pro forma
operating margin increased to 31% for the second quarter, up over two points
from last year's second quarter results.
The Company's as-reported revenue for the second quarter was $275.4
million, up over 140% compared with $114.6 million for the same period last
year. For the second quarter, VERITAS Software reported a net loss of $172.3
million, or $0.43 per share, compared with a net loss of $162.3 million, or
$0.59 per share on a diluted basis for the prior year. Included in the current
period's net loss is $235.3 million of purchase accounting amortization.
Included in the prior period's net loss are one-time charges of $103.1 million
for the write-off of in-process research and development, $11.0 million for
merger and restructuring and $76.6 million of purchase accounting amortization.
"VERITAS Software is now operating at an annualized revenue run-rate
well in excess of $1 billion, a major milestone for the Company," said Mark
Leslie, chairman and CEO of VERITAS Software. "Our continued success this
quarter was marked by strong sales growth across all products, geographies and
channels. We announced key strategic partnerships with IBM and with Oracle and
Sun that expand our reach into new market segments. The quarter also featured a
number of technology and product developments in the areas of clustering, data
replication and storage area networking that support our extended business
vision to focus on data availability software as an opportunity for future
growth and investment."
-more-
<PAGE> 2
VERITAS Software Q2'00 Earnings Release
Page 2 of 5
On a pro forma basis for the six-month period ended June 30, 2000 and
1999, VERITAS Software had revenue of $520.1 million and $290.5 million,
respectively, a 79% year-over-year increase. Net income increased to $108.9
million from pro forma net income of $57.1 million in the prior period, a 91%
increase. Pro forma diluted net income per share was $0.25, compared with $0.14
for the same period last year, a 79% increase.
The Company's as-reported revenue for the six-month period ended June
30, 2000 was $520.1 million, compared with $186.6 million for the same period
last year. For the six-month period, VERITAS Software reported a net loss of
$346.7 million, or $0.87 per share, compared with a net loss of $148.7 million,
or $0.61 per share for the same period in the prior year.
To better facilitate financial reporting, the Company has added an
additional financial table to its earnings releases: "Pro forma Statements of
Operations." These pro forma statements are intended to present the Company's
operating results excluding purchase accounting adjustments. For 1999, the
Company's operating results include the results of Seagate Software NSMG and
TeleBackup Systems effective at the beginning of the period.
The Company will host a conference call today at 2:00 p.m. Pacific Time,
5:00 p.m. Eastern Time to discuss its results. The replay number for the call is
800-633-8284 or 858-812-6440 (#157-35-993).
ABOUT VERITAS SOFTWARE: VERITAS Software Corporation (Nasdaq:VRTS)
provides essential data availability software solutions that enable customers to
protect and access their business-critical data for Business Without
Interruption(TM) . The Company's corporate headquarters is located at 1600
Plymouth Street, Mountain View, CA 94043. Telephone: (650) 335-8000. Fax: (650)
335-8050. Email: [email protected]. WWW site: HTTP://WWW.VERITAS.COM.
###
FOR FURTHER INFORMATION CONTACT:
Ken Lonchar, Senior Vice President and CFO, VERITAS Software
(650) 526-2501, [email protected]
Dave Galiotto, Vice President of Finance/Investor Relations, VERITAS Software
(650) 318-4047, [email protected]
Erin Jones, Public Relations Director, VERITAS Software
(805) 783-4528, [email protected]
This press release may include estimates and forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and 21E of the
Securities Exchange Act of 1934. These forward-looking statements involve a
number of risks and uncertainties, including the timely development and market
acceptance of our products and our ability to manage our business effectively,
that could cause the actual results we achieve to differ materially from such
forward-looking statements. For more information regarding potential risks, see
the "Factors That May Affect Future Results" section of our most recent reports
on Form 10-K and Form 10-Q on file with the SEC.
VERITAS, VERITAS Software, the VERITAS logo, Business Without Interruption and
other product names are trademarks or registered trademarks of VERITAS Software
Corporation in the US and other countries. Other product names mentioned herein
may be trademarks and/or registered trademarks of their respective companies.
<PAGE> 3
VERITAS Software Q2'00 Earnings Release
Page 3 of 5
VERITAS SOFTWARE CORPORATION
PRO FORMA STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET REVENUE:
User license fees $ 224,851 $ 132,510 $ 429,167 $ 248,076
Services 50,585 23,228 90,909 42,391
--------- --------- --------- ---------
TOTAL NET REVENUE 275,436 155,738 520,076 290,467
COST OF REVENUE:
User license fees 8,199 5,043 19,977 10,420
Services 20,165 8,737 38,464 16,226
--------- --------- --------- ---------
TOTAL COST OF REVENUE 28,364 13,780 58,441 26,646
--------- --------- --------- ---------
GROSS PROFIT 247,072 141,958 461,635 263,821
OPERATING EXPENSES:
Selling and marketing 106,109 60,694 193,692 110,495
Research and development 39,205 26,544 74,318 49,428
General and administrative 17,595 10,809 32,506 19,476
--------- --------- --------- ---------
TOTAL OPERATING EXPENSES 162,909 98,047 300,516 179,399
--------- --------- --------- ---------
Income from operations 84,163 43,911 161,119 84,422
Interest and other income, net 12,777 3,332 24,040 7,574
Interest expense (7,525) (1,409) (15,048) (2,847)
--------- --------- --------- ---------
Income before income taxes 89,415 45,834 170,111 89,149
Provision for income taxes 32,189 16,500 61,240 32,094
--------- --------- --------- ---------
PRO FORMA NET INCOME $ 57,226 $ 29,334 $ 108,871 $ 57,055
========= ========= ========= =========
PRO FORMA NET INCOME PER SHARE - BASIC $ 0.14 $ 0.08 $ 0.27 $ 0.15
========= ========= ========= =========
PRO FORMA NET INCOME PER SHARE - DILUTED $ 0.13 $ 0.07 $ 0.25 $ 0.14
========= ========= ========= =========
SHARES USED IN PER SHARE CALCULATION - BASIC 400,787 380,097 397,645 372,334
========= ========= ========= =========
SHARES USED IN PER SHARE CALCULATION - DILUTED 437,653 414,254 437,457 403,436
========= ========= ========= =========
</TABLE>
The pro forma statements of operations are intended to present the Company's
operating results excluding purchase accounting adjustments. For 1999, the
Company's operating results include the results of NSMG and TeleBackup assuming
the companies had been combined at the beginning of the period.
Purchase accounting adjustments would include amortization of developed
technology, amortization of goodwill and intangibles, restructuring and other
merger costs, in-process research and development costs, and related adjustments
for income tax provisions.
<PAGE> 4
VERITAS Software Q2'00 Earnings Release
Page 4 of 5
VERITAS SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET REVENUE:
User license fees $ 224,851 $ 93,296 $ 429,167 $ 149,082
Services 50,585 21,352 90,909 37,470
--------- --------- --------- ---------
TOTAL NET REVENUE 275,436 114,648 520,076 186,552
COST OF REVENUE:
User license fees 8,199 2,827 19,977 4,782
Services 20,165 8,254 38,464 14,781
Amortization of developed technology 15,553 5,006 30,948 5,006
--------- --------- --------- ---------
TOTAL COST OF REVENUE 43,917 16,087 89,389 24,569
--------- --------- --------- ---------
GROSS PROFIT 231,519 98,561 430,687 161,983
OPERATING EXPENSES:
Selling and marketing 106,109 44,572 193,692 71,395
Research and development 39,205 20,550 74,318 34,366
General and administrative 17,595 7,122 32,506 10,411
Amortization of goodwill and other intangibles 219,758 71,557 439,517 71,557
In-Process research and development -- 103,100 -- 103,100
Acquisition and restructuring costs -- 11,000 -- 11,000
--------- --------- --------- ---------
TOTAL OPERATING EXPENSES 382,667 257,901 740,033 301,829
--------- --------- --------- ---------
Income (loss) from operations (151,148) (159,340) (309,346) (139,846)
Interest and other income, net 12,777 3,148 24,040 6,179
Interest expense (7,525) (1,409) (15,048) (2,842)
--------- --------- --------- ---------
Income (loss) before income taxes (145,896) (157,601) (300,354) (136,509)
Provision for income taxes 26,445 4,728 46,370 12,237
--------- --------- --------- ---------
NET INCOME (LOSS) $(172,341) $(162,329) $(346,724) $(148,746)
========= ========= ========= =========
NET INCOME (LOSS) PER SHARE - BASIC $ (0.43) $ (0.59) $ (0.87) $ (0.61)
========= ========= ========= =========
NET INCOME (LOSS) PER SHARE - DILUTED $ (0.43) $ (0.59) $ (0.87) $ (0.61)
========= ========= ========= =========
SHARES USED IN PER SHARE CALCULATION - BASIC 400,787 275,467 397,645 245,493
========= ========= ========= =========
SHARES USED IN PER SHARE CALCULATION - DILUTED 400,787 275,467 397,645 245,493
========= ========= ========= =========
</TABLE>
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VERITAS Software Q2'00 Earnings Release
Page 5 of 5
VERITAS SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
---------- ----------
(UNAUDITED)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and short-term investments $ 944,568 $ 692,381
Accounts receivable, net 138,545 132,180
Deferred income taxes 23,803 23,803
Other current assets 16,024 13,381
---------- ----------
TOTAL CURRENT ASSETS 1,122,940 861,745
Long-term investments 56,138 65,036
Property and equipment 106,525 76,958
Goodwill and other intangibles 2,757,674 3,226,749
Other non-current assets 34,267 2,789
---------- ----------
TOTAL ASSETS $4,077,544 $4,233,277
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 37,108 $ 30,229
Accrued compensation and benefits 52,181 35,560
Accrued acquisition and restructuring costs 19,903 24,202
Other accrued liabilities 48,530 47,531
Income taxes payable 322 6,804
Deferred revenue 126,119 86,979
---------- ----------
TOTAL CURRENT LIABILITIES 284,163 231,305
NON-CURRENT LIABILITIES:
Convertible subordinated notes 456,587 451,044
Deferred income taxes 136,834 157,867
---------- ----------
TOTAL NON-CURRENT LIABILITIES 593,421 608,911
Stockholders' equity 3,199,960 3,393,061
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,077,544 $4,233,277
========== ==========
</TABLE>
