<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Quarter Ended January 27, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _____
to _____
Commission File Number: 0-13351
NOVELL, INC.
(Exact name of registrant as specified in its charter)
Delaware 87-0393339
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1555 N. Technology Way
Orem, Utah 84057
(Address of principal executive offices and zip code)
(801) 222-6000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
As of February 24, 1996 there were 365,696,078 shares of the
registrant's common stock outstanding.
</PAGE>
<PAGE>
<TABLE>
Part I. Financial Information, Item 1. Financial Statements
NOVELL, INC.
CONSOLIDATED UNAUDITED CONDENSED BALANCE SHEETS
<S> <C> <C>
Jan. 27, Oct. 28,
Dollars in thousands, except per share data 1996 1995
- ---------------------------------------------------------------------------
ASSETS
Current assets
Cash and short-term investments $1,247,924 $1,321,231
Receivables, less allowances
($64,833 - January;
$74,857 - October) 518,027 470,437
Inventories 25,469 23,025
Prepaid expenses 46,641 50,576
Deferred income taxes 66,749 59,913
- ---------------------------------------------------------------------------
Total current assets 1,904,810 1,925,182
Property, plant and equipment, net 379,155 390,452
Other assets 71,299 101,196
- ---------------------------------------------------------------------------
Total assets $2,355,264 $2,416,830
===========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $78,471 $116,305
Accrued compensation 71,099 97,637
Accrued marketing liabilities 76,119 72,339
Other accrued liabilities 108,466 90,623
Income taxes payable 44,867 29,942
Deferred revenue 64,877 54,099
- ---------------------------------------------------------------------------
Total current liabilities 443,899 460,945
Minority interests 16,903 17,623
Shareholders' equity
Common stock, par value $.10 a share
Authorized - 600,000,000 shares
Issued - 365,516,551 shares-January
371,567,158 shares-October 36,552 37,157
Additional paid-in capital 639,622 737,481
Retained earnings 1,218,288 1,163,624
- ---------------------------------------------------------------------------
Total shareholders' equity 1,894,462 1,938,262
- ---------------------------------------------------------------------------
Total liabilities and shareholders' equity $2,355,264 $2,416,830
===========================================================================
See notes to consolidated unaudited condensed financial statements.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
NOVELL, INC.
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF INCOME
- --------------------------------------------------------------------------
Fiscal Quarter Ended
--------------------
<S> <C> <C>
Amounts in thousands, Jan. 27, Jan. 28,
except per share data 1996 1995
- ---------------------------------------------------------------------------
Net sales $437,919 $493,225
Cost of sales 96,011 116,875
- ---------------------------------------------------------------------------
Gross profit 341,908 376,350
Operating expenses
Sales and marketing 123,465 139,803
Product development 78,633 89,817
General and administrative 38,538 33,970
Restructuring charges 18,442 --
- ---------------------------------------------------------------------------
Total operating expenses 259,078 263,590
Income from operations 82,830 112,760
Other income (expense)
Investment income 14,900 9,567
Other, net (2,150) 258
- ---------------------------------------------------------------------------
Other income, net 12,750 9,825
- ---------------------------------------------------------------------------
Income before taxes 95,580 122,585
Income taxes 32,019 41,066
- ---------------------------------------------------------------------------
Net income $ 63,561 $ 81,519
===========================================================================
Weighted average shares outstanding 371,585 372,027
===========================================================================
Net income per share $ 0.17 $ 0.22
===========================================================================
See notes to consolidated unaudited condensed financial statements.
</PAGE>
</TABLE>
<PAGE>
<TABLE>
NOVELL, INC.
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------
Fiscal Quarter Ended
--------------------
<S> <C> <C>
Jan. 27, Jan. 28,
Amounts in thousands 1996 1995
- ---------------------------------------------------------------------------
Cash flows from operating activities
Net income $63,561 $81,519
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Depreciation and amortization 24,919 23,067
Stock plans income tax benefits 2,343 4,734
(Increase) in receivables (47,590) (30,250)
(Increase) decrease in inventories (2,444) 5,717
Decrease in prepaid expenses 3,935 11,852
(Increase) in deferred income taxes (1,122) (1,505)
(Decrease) in current liabilities, net (17,046) (15,530)
- ---------------------------------------------------------------------------
Net cash provided from operating activities 26,556 79,604
- ---------------------------------------------------------------------------
Cash flows from financing activities
Issuance of common stock, net 5,597 7,667
Repurchase of common stock (106,117) --
- ---------------------------------------------------------------------------
Net cash (used) provided from
financing activities (100,520) 7,667
Cash flows from investing activities
Expenditures for property, plant
and equipment (12,784) (9,372)
(Increase) in short-term investments (30,324) (93,021)
Other 22,590 8,564
- ---------------------------------------------------------------------------
Net cash used by investing activities (20,518) (93,831)
- ---------------------------------------------------------------------------
Total (decrease) in cash and cash equivalents $(94,482) $(6,560)
Cash and cash equivalents - beginning of period 312,164 228,426
- ---------------------------------------------------------------------------
Cash and cash equivalents - end of period 217,682 221,866
Short-term investments - end of period 1,030,242 739,404
- ---------------------------------------------------------------------------
Cash and short-term investments - end of period $1,247,924 $961,270
===========================================================================
See notes to consolidated unaudited condensed financial statements.
</TABLE>
</PAGE>
<PAGE>
NOVELL, INC.
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
A. Quarterly Financial Statements
The accompanying consolidated unaudited condensed financial
statements have been prepared in accordance with the
instructions to Form 10-Q but do not include all of the
information and footnotes required by generally accepted
accounting principles and should therefore, be read in
conjunction with the Company's fiscal 1995 Annual Report to
Shareholders. These statements do include all normal
recurring adjustments which the Company believes necessary for
a fair presentation of the statements. The interim operating
results are not necessarily indicative of the results for a
full year.
B. Significant Events
In December 1995, Novell sold its UnixWare product line to the
Santa Cruz Operation, Inc. (SCO). The Company realized a
small gain and recorded $19 million of royalty revenue from
this transaction in the first quarter of fiscal 1996. Under
the agreement, Novell received approximately 6 million shares
of SCO common stock, resulting in an ownership position of
approximately 17% of the outstanding SCO common stock. The
agreement also calls for Novell to receive a revenue stream
from SCO based on revenue performance of the purchased
UnixWare product line. This revenue stream is not to exceed
$84 million net present value, and will end by the year 2002.
In addition, Novell will continue to receive revenue from
existing licenses for older versions of UNIX System source
code.
In March 1996, the Company completed the sale of its personal
productivity applications product line to Corel Corporation
(Corel). The Company received approximately 10 million shares
of Corel common stock and approximately $11 million in cash.
The Company will also be entitled to nominate a candidate for
Corel s Board of Directors. The Company expects to report a
slight one-time extraordinary gain in its second quarter of
fiscal 1996. Additionally, Corel licensed GroupWise Client
software, Envoy electronic publishing software, and other
technologies from Novell for a minimum royalty obligation of
$70 million over the next five years.
C. Cash and Short-term Investments
All marketable debt and equity securities are included in cash
and short-term investments and are considered available-for-
sale and carried at fair market value, with the unrealized
gains and losses, net of tax, included in shareholders
equity. Such securities are anticipated to be used for
current operations and are therefore classified as current
assets, even though some maturities may extend beyond one
year.
</PAGE>
<PAGE>
<TABLE>
The following is a summary of cash and short-term investments,
all of which are considered available-for-sale.
<S> <C> <C> <C> <C>
Gross Gross Fair Market
Cost at Unrealized Unrealized Value at
(Dollars in thousands) Jan. 27, 1996 Gains Losses Jan. 27, 1996
- -------------------------------------------------------------------------------------------
Cash and cash equivalents
Cash $128,629 $ -- $ -- $128,629
Repurchase agreements 34,989 -- -- 34,989
Tax exempt money market fund 9,764 -- -- 9,764
Municipal securities 44,300 -- -- 44,300
- -------------------------------------------------------------------------------------------
Cash and cash equivalents $217,682 $ -- $ -- $217,682
- -------------------------------------------------------------------------------------------
Short-term investments
Municipal securities $366,221 $5,236 $ -- $371,457
Money market mutual funds 46,383 -- -- 46,383
Money market preferreds 425,300 4 -- 425,304
Mutual funds 87,414 56 -- 87,470
Equity securities 81,677 17,951 -- 99,628
- -------------------------------------------------------------------------------------------
Short-term investments $1,006,995 $23,247 $ -- $1,030,242
- -------------------------------------------------------------------------------------------
Cash and short-term
investments $1,224,677 $23,247 $ -- $1,247,924
- -------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Gross Gross Fair Market
Cost at Unrealized Unrealized Value at
(Dollars in thousands) Oct. 28, 1995 Gains Losses Oct. 28, 1995
- ----------------------------------------------------------------------------------------------
Cash and cash equivalents
Cash $152,930 $ -- $ -- $152,930
Repurchase agreements 23,794 -- -- 23,794
Tax exempt money market fund 63,065 -- -- 63,065
Municipal securities 72,375 -- -- 72,375
- ---------------------------------------------------------------------------------------------
Cash and cash equivalents $312,164 $ -- $ -- $312,164
- ---------------------------------------------------------------------------------------------
Short-term investments
Municipal securities $375,491 $3,220 $ -- $378,711
Money market mutual funds 38,475 -- -- 38,475
Money market preferreds 442,500 176 -- 442,676
Mutual funds 91,423 30 -- 91,453
Equity securities 23,055 34,697 -- 57,752
- ---------------------------------------------------------------------------------------------
Short-term investments $970,944 $38,123 $ -- $1,009,067
- ---------------------------------------------------------------------------------------------
Cash and short-term investments $1,283,108 $38,123 $ -- $1,321,231
- ---------------------------------------------------------------------------------------------
</TABLE>
During the first quarter of fiscal 1996 the Company had
realized gains of $4 million on the sale of securities
compared to no realized gains in the first quarter of fiscal
1995.
</PAGE>
<PAGE>
D. Income Taxes
The Company's estimated effective tax rate for both the first
quarter of fiscal 1996 and 1995 was 33.5%. The Company paid
cash amounts for income taxes of $2 million and $27 million,
in the first quarter of fiscal 1996 and 1995, respectively.
E. Commitments and Contingencies
The Company currently has a $10 million unsecured revolving
bank line of credit, with interest at the prime rate. The
line can be used for either letter of credit or working
capital purposes. The line is subject to the terms of a loan
agreement containing financial covenants and restrictions,
none of which are expected to significantly affect the
Company s operations. At January 27, 1996 there were no
borrowings, letter of credit acceptances or commitments under
such line.
The Company has an additional $10 million credit facility with
another bank which is not subject to a loan agreement. At
January 27, 1996 standby letters of credit of approximately
$300,000 were outstanding under this agreement.
The Company is a party to a number of legal claims arising in
the ordinary course of business. The Company believes the
ultimate resolution of the claims will not have a material
adverse effect on its financial position, results of
operations, or cash flows.
F. International Sales
The Company markets internationally both directly to end users
and through distributors who sell to dealers and end users.
For the fiscal quarters ended January 27, 1996 and January 28,
1995, sales to international customers were approximately $218
million and $222 million, respectively. In the first quarters
of fiscal 1996 and fiscal 1995, 63% and 59%, respectively, of
international sales were to European countries. No one
foreign country accounted for 10% or more of total sales in
either period. Except for one multi-national distributor,
which accounted for 13% of revenue in the first quarter of
1996 and 18% of revenue in the first quarter of fiscal 1995,
no customer accounted for more than 10% of revenue in any
period.
G. Net Income Per Share
Net income per share is computed using the weighted average
number of common shares outstanding during the periods,
including common stock equivalents (unless antidilutive).
Common stock equivalents consist of outstanding stock options.
</PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Introduction
Novell is the world s leading network software provider. Novell
software products provide the infrastructure for a networked
world, enabling Novell s customers to connect with other people and
the information they need, anytime and anyplace. Novell partners
with other technology and market leaders to help customers make
networks a part of their everyday lives. Over the past several
years, the Company has issued common stock or paid cash to acquire
technology companies, and formed strategic alliances with still
other technology companies.
In December 1995, Novell sold its UNIX and UnixWare product line to
the Santa Cruz Operation, Inc. (SCO). The Company realized a small
gain and recorded $19 million of royalty revenue from this
transaction in the first quarter of fiscal 1996. Under the
agreement, Novell received approximately 6 million shares of SCO
common stock, resulting in an ownership position of approximately
17% of the outstanding SCO common stock. The agreement also calls
for Novell to receive a revenue stream from SCO based on revenue
performance of the purchased UnixWare product line. This revenue
stream is not to exceed $84 million net present value, and will end
by the year 2002. In addition, Novell will continue to receive
revenue from existing licenses for older versions of UNIX System
source code.
In March 1996, the Company completed the sale of its personal
productivity applications product line to Corel Corporation
(Corel). The Company received approximately 10 million shares of
Corel common stock and approximately $11 million in cash. The
Company will also be entitled to nominate a candidate for Corel s
Board of Directors. The Company expects to report a slight one-
time extraordinary gain in its second quarter of fiscal 1996.
Additionally, Corel licensed GroupWise Client software, Envoy
electronic publishing software, and other technologies from Novell
for a minimum royalty obligation of $70 million over the next five
years.
<TABLE>
<S> <C> <C> <C>
Results of Operations
- -------------------------------------------------------------------
Net Sales
Q1 Q1
1996 Change 1995
- -------------------------------------------------------------------
Net sales (millions) $438 -11% $493
===================================================================
</TABLE>
Novell has four product groups, all within the software industry.
They are the NetWare Systems Group, the Novell Applications Group,
the UNIX Systems Group, and the Information Access and Management
Group. While revenue decreased from the first quarter of 1995 to
the first quarter of 1996, analysis of the individual product
groups characterizes the changes that have occurred.
NetWare Systems Group (NSG) revenues declined by 12% or $30 million
in the first quarter of 1996 compared to the first quarter of
1995. Growth in the NetWare 4 product family of $58 million or 80%
growth from the first quarter of 1995 was more than offset by a
decrease in the NetWare 3 product family of $78 million or a 45%
decline from the first quarter of 1995.
Novell Applications Group (NAG) revenues decreased by 56% or $78
million in the first quarter of 1996 compared to the first quarter
of 1995. The decrease is the result of an $84 million or 67%
decrease, quarter over quarter, in personal productivity
applications products, due to the Windows application market
slowdown as customers migrate to the Windows 95 platform and
Novell s announced intention to exit this line of business.
GroupWise, the Company s electronic messaging workgroup
application, contribution $21 million in first quarter 1996
revenue, a 39% increase from the year ago quarter.
UNIX Systems Group (USG) revenues increased 98% in the first
quarter of 1996 compared to the first quarter of 1995. The
increase was attributable to a one-time $19 million paid up royalty
recognized in the sale of UNIX and the UnixWare product line to SCO
in December 1995.
Information Access and Management Group (IAMG) revenues increased
by 40% in the first quarter of 1996 compared to the first quarter
of 1995. The increase was a result of higher revenues in most
product categories, with a particularly strong increase in the
network management products as a result of the release of
ManageWise in October 1995.
</PAGE>
<PAGE>
International sales represented 50% of total sales in the first
quarter of 1996 compared to 45% in the first quarter of 1995. This
change is a result of a 19% decrease in domestic revenues compared
to a 2% decrease in international revenues in the first quarter of
fiscal 1996 compared to the first quarter of fiscal 1995.
<TABLE>
<S> <C> <C> <C>
Gross Profit
Q1 Q1
1996 Change 1995
- -------------------------------------------------------------------
Gross profit (millions) $342 -9% $376
Percentage of net sales 78% 76%
===================================================================
</TABLE>
The gross margin percentage increased in the first quarter of
fiscal 1996 compared to the first quarter of fiscal 1995 due to
lower material costs and variances somewhat offset by higher
royalties, training and education costs and service costs as a
percentage of revenues. Future fluctuations in the gross profit
margin will be primarily attributable to price changes, changes in
sales mix by product or distribution channel, and special product
promotions.
<TABLE>
<S> <C> <C> <C>
Operating Expenses
Q1 Q1
1996 Change 1995
- -----------------------------------------------------------------------
Sales and marketing (millions) $123 -12% $140
Percentage of net sales 28% 28%
- -----------------------------------------------------------------------
Product development (millions) $79 -12% $90
Percentage of net sales 18% 18%
- -----------------------------------------------------------------------
General and administrative (millions) $39 -15% $34
Percentage of net sales 9% 7%
- -----------------------------------------------------------------------
Restructuring charges (millions) $18 -- --
Percentage of net sales 4% --
- -----------------------------------------------------------------------
Total operating expenses (millions) $259 -2% $264
Percentage of net sales 59% 53%
=======================================================================
</TABLE>
Sales and marketing expenses remained flat as a percentage of net
sales in the first quarter of fiscal 1996 compared to the first
quarter of fiscal 1995. The decrease in absolute dollars is
attributable to lower domestic sales expenses and corporate
marketing expenses. Sales and marketing expenses fluctuate as a
percentage of net sales in any given period due to product
promotions, advertising or other discretionary expenses.
Product development expenses remained flat as a percentage of net
sales in the first quarter of fiscal 1996 compared to the first
quarter of fiscal 1995 but decreased in absolute dollars as a
result of lower headcount and third party development costs.
General and administrative expenses increased as a percentage of
net sales in the first quarter of fiscal 1996 compared to the first
quarter of fiscal 1995. The increase is attributable to higher
information services and human resources costs.
During the first quarter of 1996, the Company wrote off $18 million
of tax deductible restructuring charges for severance and
redundant facilities as the Company prepared for the sale of its
personal productivity applications business.
Overall, operating expenses, excluding nonrecurring charges, have
declined more rapidly than revenues in the first quarter of fiscal
1996 compared to the first quarter of fiscal 1995 due to company-
wide cost controls as the Company took significant actions to
refocus Novell to network software.
<TABLE>
<S> <C> <C> <C>
Q1 Q1
1996 Change 1995
- ---------------------------------------------------------------------------
Employees 7,137 -6% 7,808
Annualized revenue per employee (000's) $235 -3% $243
===========================================================================
</TABLE>
</PAGE>
<PAGE>
In the first quarter of 1995, Novell reduced its employment by 625
employees as the Company prepared for the sale of its personal
productivity applications business.
<TABLE>
<S> <C> <C> <C>
Other Income (Expense)
Q1 Q1
1996 Change 1995
- --------------------------------------------------------------------------
Other income (expense), net (millions) $13 30% $10
Percentage of net sales 3% 2%
==========================================================================
</TABLE>
The primary component of other income (expense) is investment
income, which was $15 million in the first quarter of fiscal 1996
compared to $10 million in the first quarter of fiscal 1995. The
increase is the result of higher average cash balances as well as
higher average yields. In order to achieve potentially higher
returns, a limited portion of the Company's investment portfolio is
invested in mutual funds which incur some market risk. The Company
believes that the market risk has been limited by diversification
and by use of a funds management timing service which switches
funds out of mutual funds and into money market funds when preset
signals occur.
<TABLE>
<S> <C> <C> <C>
Income Taxes
Q1 Q1
1996 Change 1995
- --------------------------------------------------------------------------
Income taxes (millions) $32 -22% $41
Percentage of net sales 7% 8%
Effective tax rate 34% 34%
==========================================================================
</TABLE>
The Company's estimated tax rate for fiscal 1996 is 33.5%, the same
as in fiscal 1995.
<TABLE>
<S> <C> <C> <C>
Net Income and Net Income Per Share
Q1 Q1
1996 Change 1995
- --------------------------------------------------------------------------
Net income (millions) $64 -22% $82
Percentage of net sales 15% 17%
Net income per share $.17 -23% $.22
==========================================================================
</TABLE>
<TABLE>
<S> <C> <C> <C>
Liquidity and Capital Resources
Q1 Q4
1996 Change 1994
- -------------------------------------------------------------------------------
Cash and short-term investments (millions) $1,248 -6% $1,321
Percentage of total assets 53% 55%
===============================================================================
</TABLE>
</PAGE>
<PAGE>
Cash and short-term investments decreased to $1,248 million at
January 27, 1996 from $1,321 million at October 28, 1995. The major
reason for this decrease was the $106 million used to repurchase
Novell common stock during the quarter, offset by the $27 million of
cash provided by operating activities, the $5 million provided by
other financing activities, and the $10 million provided by other
investing activities. The investment portfolio is diversified among
security types, industry groups, and individual issuers. The
Company's principal source of liquidity has been from operations.
At January 27, 1996, the Company's principal unused sources of
liquidity consisted of cash and short-term investments and available
borrowing capacity of approximately $20 million under its credit
facilities. The Company's liquidity needs are principally for the
Company's financing of accounts receivable, capital assets,
acquisitions and strategic investments and to have flexibility in a
dynamic and competitive operating environment.
During the first fiscal quarter of 1996, the Company has continued
to generate cash from operations. The Company anticipates being
able to fund its current operations and capital expenditures planned
for the foreseeable future with existing cash and short-term
investments together with internally generated funds. Borrowings
under the Company's credit facilities, or public offerings of equity
or debt securities are available if the need arises. As the Company
grows, investments will continue in product development in new and
existing areas of technology. Cash may also be used to acquire
technology through purchases and strategic acquisitions. Capital
expenditures in fiscal 1996 are anticipated to be approximately $60
million, but could be reduced if the growth of the Company is less
than presently anticipated. In addition, the Company has announced
a share repurchase program whereby the Company is authorized to
repurchase up to 37 million shares of its common stock in the open
market during fiscal 1996. During the first quarter of 1996,
approximately 7 million shares were repurchased and retired at a
cost of approximately $106 million.
Forward Looking Information
Looking forward to its second fiscal quarter, Novell decided to
implement a change to its traditional distribution stocking policy
that will significantly reduce revenue and earnings in that quarter.
Because the Company is experiencing rapid growth in revenue from
expanding multi-product network software licensing programs, the
Company has decided to reduce and rebalance channel inventories to
change the mix of product in the channel and better match evolving
purchase patterns. The Company intends to reduce product
inventories by up to $225 million across its worldwide distribution
channels in its second quarter of 1996. This reduction is expected
to decrease second quarter revenue by a corresponding amount and
will likely result in a moderate loss in the quarter. The resetting
of channel inventories is expected to reduce ongoing cost of sales
and lessen costs associated with channel promotions and product
rotations, thereby leading to improved earnings in the second half
of the year.
The above statements relating to Novell s change in distribution
stocking policy are forward looking and involve a number of risks
and uncertainties. As such, actual results could materially differ
from those we are projecting in these forward looking statements.
Unanticipated declines in revenue due to competitive, market and
general economic factors could limit the Company s ability to gain
the benefit of improved earnings resulting from the new channel
inventory structure. Novell s projections of increasing licensing
revenue are based on historical trends which, should they reverse,
would negatively impact growth projections of revenue and earnings.
Further uncertainties are associated with any impact to our
distribution channel resulting from this change in distribution
stocking policy. Novell believes this action is in the best
interests of its customers, channel partners and shareholders, but
implementing this program may result in some short-term business
interruption as the Company, our partners, and customers work
through this change.
</PAGE>
<PAGE>
Part II. Other Information
Except as listed below, all information required by items in Part II
is omitted because the items are inapplicable or the answer is
negative.
Item 1. Legal Proceedings.
The information required by this item is incorporated herein by
reference to Footnote E of the Company s financial statements
contained in Part I, Item 1 of this Form 10-Q.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Description
- ------- -------------
27* Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Registrant during the
quarter ended January 27, 1996.
- --------------------------
*Filed herewith
</PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Novell, Inc.
------------
(Registrant)
Date: March 12, 1996 /s/ Robert J. Frankenberg
-------------------------
Robert J. Frankenberg
Chairman of the Board,
President, Chief Executive
Officer and Director
(Principal Executive Officer)
Date: March 12, 1996 /s/ James R. Tolonen
-------------------------
James R. Tolonen
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: March 12, 1996 /s/ Stephen C. Wise
-------------------------
Stephen C. Wise
Senior Vice President, Finance
(Principal Accounting Officer)
</PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-26-1996
<PERIOD-END> JAN-27-1996
<CASH> 217,682
<SECURITIES> 1,030,242
<RECEIVABLES> 518,027
<ALLOWANCES> (64,833)
<INVENTORY> 25,469
<CURRENT-ASSETS> 1,904,810
<PP&E> 691,569
<DEPRECIATION> (312,414)
<TOTAL-ASSETS> 2,355,264
<CURRENT-LIABILITIES> 443,899
<BONDS> 0
<COMMON> 36,552
0
0
<OTHER-SE> 1,857,910
<TOTAL-LIABILITY-AND-EQUITY> 2,355,264
<SALES> 437,919
<TOTAL-REVENUES> 437,919
<CGS> 96,011
<TOTAL-COSTS> 96,011
<OTHER-EXPENSES> 259,078
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 95,580
<INCOME-TAX> 32,019
<INCOME-CONTINUING> 63,561
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,561
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
