<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 31, 1997
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) dentification No.)
122 East 1700 South
Provo, Utah 84606
(Address of principal executive offices and zip code)
(801) 861-7000
(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 28, 1997 there were 346,876,410 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. 31, Oct. 26,
Dollars in thousands, except per share data 1997 1996
- ---------------------------------------------------------------------------
ASSETS
Current assets
Cash and short-term investments $ 1,102,321 $ 1,024,755
Receivables, less allowances
($58,669 - January;
$60,940 - October) 393,490 452,327
Inventories 20,201 16,837
Prepaid expenses 53,578 59,009
Deferred income taxes 51,085 37,831
- ---------------------------------------------------------------------------
Total current assets 1,620,675 1,590,759
Property, plant and equipment, net 400,516 394,684
Other assets 61,812 64,023
- ---------------------------------------------------------------------------
Total assets $ 2,083,003 $ 2,049,466
===========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 73,518 $ 96,933
Accrued compensation 50,207 54,731
Accrued marketing liabilities 50,999 48,402
Other accrued liabilities 94,651 118,133
Income taxes payable 34,231
Deferred revenue 49,976 46,573
- ---------------------------------------------------------------------------
Total current liabilities 353,582 364,772
Minority interests 16,540 17,035
Put Warrants 46,650 52,150
Shareholders' equity
Common stock, par value $.10 a share
Authorized - 600,000,000 shares
Issued - 346,742,970 shares-January
346,059,050 shares-October 34,674 34,606
Additional paid-in capital 316,004 309,831
Retained earnings 1,317,469 1,266,657
Unearned stock compensation (2,239) (4,141)
Cumulative translation adjustment 679 1,183
Unrealized gain (loss) on investments (356) 7,373
- ---------------------------------------------------------------------------
Total shareholders' equity 1,666,231 1,615,509
- ---------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 2,083,003 $ 2,049,466
===========================================================================
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. 31, Jan. 27,
except per share data 1997 1996
- ---------------------------------------------------------------------------
Net sales $374,847 $437,919
Cost of sales 75,971 96,011
- ---------------------------------------------------------------------------
Gross profit 298,876 341,908
Operating expenses
Sales and marketing 127,890 123,465
Product development 71,755 78,633
General and administrative 37,731 38,538
Restructuring charges __ 18,442
- ---------------------------------------------------------------------------
Total operating expenses 237,376 259,078
Income from operations 61,500 82,830
Other income (expense)
Investment income 16,614 14,900
Other, net (2,837) (2,150)
- ---------------------------------------------------------------------------
Other income, net 13,777 12,750
- ---------------------------------------------------------------------------
Income before taxes 75,277 95,580
Income taxes 24,465 32,019
- ---------------------------------------------------------------------------
Net income $ 50,812 $ 63,561
===========================================================================
Weighted average shares outstanding 347,095 371,585
===========================================================================
Net income per share $ 0.15 $ 0.17
===========================================================================
See notes to consolidated unaudited condensed financial statements.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
NOVELL, INC.
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
<S> <C> <C>
Fiscal Quarter Ended
------------------------
Jan. 31, Jan. 27,
Amounts in thousands 1997 1996
- -----------------------------------------------------------------------------------
Cash flows from operating activities
Net income $ 50,812 $ 63,561
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Depreciation and amortization 23,816 24,919
Stock plans income tax benefits 1,803 2,343
Decrease (increase) in receivables 58,837 (47,590)
(Increase) in inventories (3,364) (2,444)
Decrease in prepaid expenses 5,431 3,935
(Increase) in deferred income taxes (13,049) (1,122)
(Decrease) in current liabilities, net (11,190) (17,046)
- -----------------------------------------------------------------------------------
Net cash provided from operating activities 113,096 26,556
- -----------------------------------------------------------------------------------
Cash flows from financing activities
Issuance of common stock, net 2,685 5,597
Repurchases of common stock -- (106,117)
Sale of put warrants 2,300 --
Settlement of put warrants (6,250) --
- -----------------------------------------------------------------------------------
Net cash (used) from financing activities (1,265) (100,520)
- -----------------------------------------------------------------------------------
Cash flows from investing activities
Expenditures for property, plant and equipment (27,543) (12,784)
Purchases of short-term investments (714,467) (1,062,216)
Maturities of short-term investments 506,110 889,193
Sales of short-term investments 166,868 161,820
Other 1,007 3,469
- -----------------------------------------------------------------------------------
Net cash (used) by investing activities (68,025) (20,518)
- -----------------------------------------------------------------------------------
Total Increase (decrease) in cash and cash equivalents $ 43,806 $ (94,482)
Cash and cash equivalents - beginning of period 145,521 312,164
- -----------------------------------------------------------------------------------
Cash and cash equivalents - end of period 189,327 217,682
Short-term investments - end of period 912,994 1,030,242
- -----------------------------------------------------------------------------------
Cash and short-term investments - end of period $1,102,321 $1,247,924
===================================================================================
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 preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
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 1996 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.
In the first quarter of fiscal 1997, the Company implemented a
change to its fiscal year and month ending dates. The Company
will now recognize its fiscal year end on the last calendar
day of October, as opposed to prior years on the last Saturday
in October. Likewise, each fiscal month end will now end on
the last calendar day of each month, and each fiscal quarter
will have a unique number of days as opposed to the consistent
13 weeks in prior years. Implementing this change, resulted
in an extra five days in the first fiscal quarter of 1997
which the Company believes did not have a material impact on
its financial position, results of operations, or cash flows.
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 UNIX technology 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 ownership 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.
This resulted in an ownership position of approximately 17% of
the outstanding Corel common stock. The Company reported a
one-time gain of $20 million in the second quarter of fiscal
1996 related to this transaction. Net of tax, the gain was
$13 million, or $0.04 per share. Additionally, Corel licensed
GroupWise client software, Envoy electronic publishing
software, and other technologies from Novell for a minimum
royalty obligation of approximately $50 million over the next
five years.
During the second quarter of fiscal 1996, the Company
implemented a change to its traditional distribution stocking
policy that significantly reduced revenue and earnings in that
quarter. Because the Company has experienced strong growth in
revenue from software licensing programs, the Company decided
to reduce channel inventories to better match evolving
purchase patters. The Company estimates that it reduced
product inventories in the worldwide distribution channel
during the second fiscal quarter of 1996 by approximately $225
million. This was accomplished primarily by reducing
shipments to distributors during the second quarter.
Additionally, net returns of approximately $20 million were
accepted during the second quarter related to this policy
change.
</PAGE>
<PAGE>
<TABLE>
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. Municipal securities included in short-term
investments have contractual maturities from 1-5 years. Money
market preferreds have contractual maturities of less than 90
days. No other short-term investments have contractual
maturities. The cost of securities sold is based on the
specific identification method. 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.
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
Cost at Unrealized Unrealized Market Value at
(Dollars in thousands) Jan. 31, 1997 Gains Losses Jan. 31, 1997
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents
Cash $ 98,985 $ -- $ -- $ 98,985
Repurchase agreements 19,740 -- 19,740
Taxable money market fund 40,590 -- 40,590
Municipal securities 31,565 -- 31,565
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents $ 190,880 $ $ -- $ 190,880
- -------------------------------------------------------------------------------------------------
Short-term investments
Municipal securities $ 408,805 $ 2,481 $ -- $ 411,286
Money market preferreds 237,800 -- -- 237,800
Mutual funds 95,682 30 (3) 95,709
Equity securities 169,734 33,617 (36,705) 166,646
- -------------------------------------------------------------------------------------------------
Short-term investments $ 912,021 $ 36,128 $ (36,708) $ 911,441
- -------------------------------------------------------------------------------------------------
Cash and short-term investments $1,102,901 $ 36,128 $ (36,708) $1,102,321
- -------------------------------------------------------------------------------------------------
Gross Gross Fair
Cost at Unrealized Unrealized Market Value at
(Dollars in thousands) Oct. 26, 1996 Gains Losses Oct. 26, 1996
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents
Cash $ 77,374 $ -- $ -- $ 77,374
Repurchase agreements 4,526 -- -- 4,526
Tax exempt money market fund 36,821 -- -- 36,821
Municipal securities 26,800 -- -- 26,800
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents $ 145,521 $ -- $ -- $ 145,521
- -------------------------------------------------------------------------------------------------
Short-term investments
Municipal securities $ 376,510 $ 1,524 $ (12) $ 378,022
Money market mutual funds 78,514 -- -- 78,514
Money market preferreds 224,000 -- -- 224,000
Mutual funds 14,151 14 (10) 14,155
Equity securities 174,054 35,432 (24,943) 184,543
- -------------------------------------------------------------------------------------------------
Short-term investments $ 867,229 $36,970$ (24,965) $ 879,234
- -------------------------------------------------------------------------------------------------
Cash and short-term investments $1,012,750 $36,970 $ (24,965) $1,024,755
- -------------------------------------------------------------------------------------------------
During the first quarter of fiscal 1997 the Company had realized
gains of $6 million on the sale of securities compared to realized
gains of $4 million in the first quarter of fiscal 1996.
</PAGE>
</TABLE>
<PAGE>
D. Income Taxes
The Company's estimated effective tax rate for the first
quarter of fiscal 1997 was 32.5% compared to 33.5% in the
first quarter of fiscal 1996. The Company paid cash amounts
for income taxes of $3 million and $2 million, in the first
quarter of fiscal 1997 and 1996, 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 31, 1997 there were no
borrowings, letter of credit acceptances or commitments under
such line.
The Company has an additional $5 million credit facility with
another bank which is not subject to a loan agreement. At
January 31, 1997 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. Put Warrants
In the first quarter of fiscal 1997, the Company sold put
warrants on 2 million shares of its common stock for $2
million, callable on specific dates in the third quarter of
fiscal 1997, giving a third party the right to sell shares of
Novell common stock to the Company at contractually specified
prices. During the first quarter of fiscal 1997, the Company
settled put warrants obligations on 2 million shares for cash
of $6 million. During fiscal 1996, the Company sold put
warrants on 9 million shares of its common stock for $12
million, callable on specific dates in the third and fourth
quarters of fiscal 1996 and the first and second quarters of
fiscal 1997. During fiscal 1996, the Company settled put
warrant obligations on 5 million shares for cash of $6
million. The put warrant liability is the amount the Company
would be obligated to pay if all the outstanding put warrants
were exercised at the strike price without a cash settlement.
The proceeds from the issuance of the put options were
accounted for as additional paid-in-capital. The Company
expects to settle the put warrant obligations with cash and
thereby eliminate the liability. As of the end of the first
quarter of fiscal 1997, the cash settlement would be
approximately $2 million.
G. 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 31, 1997 and January 27,
1996, sales to international customers were approximately $172
million and $218 million, respectively. In the first quarters
of fiscal 1997 and fiscal 1996, 62% and 63%, 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 18% of revenue in the first quarter of
1997 and 13% of revenue in the first quarter of fiscal 1996,
no customer accounted for more than 10% of revenue in any
period.
H. 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. The
Company offers a wide range of network solutions for distributed
network, Internet, intranet and small-business markets.
During fiscal 1996, Novell sold its UnixWare and personal
productivity applications product lines in exchange for significant
ownership interests in the two acquiring companies. Also during
fiscal 1996, the Company significantly reduced the amount of its
product held by distributors by reducing shipments into the
distribution channel by approximately $225 million in the second
quarter. These actions significantly reduced fiscal 1996 reported
revenue and make meaningful year-to-year comparisons difficult.
In the first quarter of fiscal 1997, the Company implemented a
change to its fiscal year and month ending dates. The Company will
now recognize its fiscal year end on the last calendar day of
October, as opposed to prior years on the last Saturday in October.
Likewise, each fiscal month end will now end on the last calendar
day of each month, and each fiscal quarter will have a unique
number of days as opposed to the consistent 13 weeks in prior
years. Implementing this change, resulted in an extra five days in
the first fiscal quarter of 1997 which the Company believes did not
have a material impact on its financial position, results of
operations, or cash flows
Results of Operations
Net Sales
Q1 Q1
1997 Change 1996
- -------------------------------------------------------------------
Net sales (millions) $375 -14% $438
===================================================================
Novell s product lines can be categorized into three areas, all
within the software industry. They are server operating
environments; network services; UNIX royalties, and education,
service and other. While revenue decreased from the first quarter
of 1996 to the first quarter of 1997, analysis of the individual
product categories characterizes the changes that have occurred.
Server operating environments revenues increased by 10% or $23
million in the first quarter of 1997 compared to the first quarter
of 1996. Growth in the IntranetWare product family of $54 million
or 41% growth from the first quarter of 1996 was somewhat offset by
a decrease in the NetWare 3 product family of $31 million or a 32%
decline from the first quarter of 1996.
Network services revenues decreased by 14% or $13 million in the
first quarter of 1997 compared to the first quarter of 1996. The
decrease is mainly the result of decreases in TCP/IP access
products of $13 million, Host Connectivity products of $3 million
and NetWare multi-protocol router of $2 million, somewhat offset by
34% growth or a $7 million increase in GroupWise, the Company s
electronic messaging workgroup application.
UNIX royalties revenue decreased 68% or $21 million in the first
quarter of 1997 compared to the first quarter of 1996. The
decrease 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 the first quarter of 1996.
Education, service and other revenues decreased by 21% or $9
million in the first quarter of 1997 compared to the first quarter
of 1996. The decrease was a result of lower revenues in training
and other product categories, with an increase in service related
revenue.
International sales represented 46% of total sales in the first
quarter of 1997 compared to 50% in the first quarter of 1996. This
change is a result of a 8% decrease in domestic revenues compared
to a 21% decrease in international revenues in the first quarter of
fiscal 1997 compared to the first quarter of fiscal 1996.
</PAGE>
<PAGE>
Gross Profit
Q1 Q1
1997 Change 1996
- ------------------------------------------------------------------
Gross profit (millions) $299 -13% $342
Percentage of net sales 80% 78%
==================================================================
The gross margin percentage increased in the first quarter of
fiscal 1997 compared to the first quarter of fiscal 1996 due to
lower material costs due to an increase in licensing revenue and
the decrease in sales from the lower margin personal productivity
applications product line.
Operating Expenses
Q1 Q1
1997 Change 1996
- -----------------------------------------------------------------
Sales and marketing (millions) $128 4% $123
Percentage of net sales 34% 28%
- -----------------------------------------------------------------
Product development (millions) $72 -9% $79
Percentage of net sales 19% 18%
- ------------------------------------------------------------------
General and administrative (millions) $38 -3% $39
Percentage of net sales 10% 9%
- ------------------------------------------------------------------
Restructuring charges (millions) -- -- $18
Percentage of net sales -- 4%
- ------------------------------------------------------------------
Total operating expenses (millions) $237 -8% $259
Percentage of net sales 63% 59%
==================================================================
Sales and marketing expenses increased as a percentage of net sales
in the first quarter of fiscal 1997 compared to the first quarter
of fiscal 1996. The increase as a percentage of net sales and in
absolute dollars is attributable to higher 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 increased as a percentage of net sales
in the first quarter of fiscal 1997 compared to the first quarter
of fiscal 1996 but decreased in absolute dollars primarily due to
the sale of the UnixWare and personal productivity application
product lines.
General and administrative expenses increased as a percentage of
net sales in the first quarter of fiscal 1997 compared to the first
quarter of fiscal 1996, while decreasing slightly in absolute
dollars.
During the first quarter of fiscal 1996 the Company incurred 18
million of tax deductible restructuring charges for redundant
facilities and excess personnel as the Company prepared for the
sale of its personal productivity applications product line.
Overall, operating expenses, excluding nonrecurring charges, have
declined less rapidly than revenues in the first quarter of fiscal
1997 compared to the first quarter of fiscal 1996 due to sales and
marketing expenses associated with new product releases.
Q1 Q1
1997 Change 1996
- ------------------------------------------------------------------
Employees 5,796 -19% 7,137
Annualized revenue per employee (000's) $257 9% $235
==================================================================
In fiscal 1996, the Company reduced its employment by 1,725
employees as the Company completed the sale of it s UnixWare and
personal productivity applications product lines and terminated
or transitioned former UnixWare and personal productivity group
employees to Corel, SCO, and other third parties.
Other Income (Expense)
Q1 Q1
1997 Change 1996
- ------------------------------------------------------------------
Other income (expense), net (millions) $14 8% $13
Percentage of net sales 4% 3%
==================================================================
</PAGE>
<PAGE>
The primary component of other income (expense) is investment
income, which was $17 million in the first quarter of fiscal 1997
compared to $15 million in the first quarter of fiscal 1996. The
increase is the result of higher realized capital gains as well as
higher average yields on lower average cash balances. 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.
Income Taxes
Q1 Q1
1997 Change 1996
- -------------------------------------------------------------------
Income taxes (millions) $24 -25% $32
Percentage of net sales 6% 7%
Effective tax rate 33% 34%
===================================================================
The Company's estimated tax rate for fiscal 1997 is 32.5%, compared
to 30.0% in fiscal 1996. The effective tax rate for fiscal 1997 is
higher than the effective tax rate for fiscal 1996 as a result of
higher anticipated earnings in fiscal 1997.
Net Income and Net Income Per Share
Q1 Q1
1997 Change 1996
- -------------------------------------------------------------------
Net income (millions) $51 -20% $64
Percentage of net sales 14% 15%
Net income per share $.15 -12% $.17
===================================================================
Liquidity and Capital Resources
Q1 Q4
1997 Change 1996
- -------------------------------------------------------------------
Cash and short-term investments (millions) $1,102 8% $1,025
Percentage of total assets 53% 50%
===================================================================
Cash and short-term investments increased to $1,102 million at
January 31, 1997 from $1,025 million at October 26, 1996. The major
reason for this increase was the $113 million provided by operation
activities, offset by the $28 million of cash used for expenditures
on property, plant and equipment, and the $8 million used 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 31, 1997, the Company's principal unused sources of
liquidity consisted of cash and short-term investments and available
borrowing capacity of approximately $15 million under its credit
facilities. The Company's liquidity needs are principally for the
Company's financing of accounts receivable, capital assets,
strategic investments and flexibility in a dynamic and competitive
operating environment.
During the first fiscal quarter of 1997, 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. Investments
will continue in product development and in new and existing areas
of technology. Cash may also be used to acquire technology through
purchases and strategic acquisitions. Capital expenditures in
fiscal 1997 are anticipated to be approximately $80 million, but
could be reduced if the growth of the Company is less than presently
anticipated.
</PAGE>
<PAGE>
Future Results
The Company s future results of operations involve a number of risks
and uncertainties. Among the factors that could cause actual
results to differ materially from historical results are the
following: business conditions and the general economy; competitive
factors, such as rival operating systems, acceptance of new products
and price pressures; availability of third-party compatible products
of reasonable prices; risk of nonpayment of accounts or notes
receivable; risks associated with foreign operations; risk of
inventory obsolescence due to shifts in technologies or market
demand; timing of software product introductions; and litigation.
Novell believes that it has the product offerings, facilities,
personnel, and competitive and financial resources for continued
business success, but future revenues, costs, margins, product mix,
and profits are all influenced by a number of factors, as discussed
above.
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 31, 1997.
- -----------------------------
*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, 1997 /s/ Joseph A. Marengi
---------------------
Joseph A. Marengi
President and Chief Operating Officer
Principal Executive Officer)
Date: March 12, 1997 /s/ James R. Tolonen
--------------------
James R. Tolonen
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
</PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 139,327
<SECURITIES> 912,994
<RECEIVABLES> 393,490
<ALLOWANCES> (58,669)
<INVENTORY> 20,201
<CURRENT-ASSETS> 1,620,675
<PP&E> 747,289
<DEPRECIATION> (346,773)
<TOTAL-ASSETS> 2,083,003
<CURRENT-LIABILITIES> 353,582
<BONDS> 0
0
0
<COMMON> 34,674
<OTHER-SE> 1,631,557
<TOTAL-LIABILITY-AND-EQUITY> 2,083,003
<SALES> 374,847
<TOTAL-REVENUES> 374,847
<CGS> 75,971
<TOTAL-COSTS> 75,971
<OTHER-EXPENSES> 237,376
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 75,277
<INCOME-TAX> 24,465
<INCOME-CONTINUING> 50,812
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,812
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
