Business Objects Announces Preliminary Q3 2007 Results

Business Wire, Oct 7, 2007

PARIS & SAN JOSE, Calif. -- Business Objects (Nasdaq:BOBJ) (Euronext Paris ISIN code FR0004026250 - BOB), the world's leading provider of business intelligence (BI) solutions, today announced preliminary results for the third quarter of fiscal 2007. In a separate release issued today, the company announced that a tender offer agreement was signed with SAP AG, and that SAP will launch a direct cash tender offer for all outstanding shares, bonds and warrants of Business Objects at EU42 (approximately $59.64 at current exchange rates) per share.

Total revenue for the third quarter of 2007 is expected to be approximately $366 to $370 million, with license revenue of approximately $137 to $139 million; and services revenue of approximately $229 to $231 million. U.S. GAAP diluted earnings per share for the third quarter of 2007 are expected to be $0.04 to $0.06. Non-GAAP diluted earnings per share for the third quarter of 2007 are expected to be $0.36 to $0.39.

"We continued to generate double-digit year-over-year total revenue growth in all geographies, however, our license revenue was below expectations, which in turn caused a shortfall in earnings," said John Schwarz, chief executive officer of Business Objects. "We are disappointed with our results in the third quarter, but we are encouraged that demand for our solutions remains strong. We are confident that we have the best business intelligence solution and the strongest channel to reach the large and growing market for business analytics."

The revised third quarter expected results for Non-GAAP diluted earnings per share exclude a charge of approximately $7 million for the final settlement of previously disclosed litigation with Decision Warehouse, and approximately $21 million of amortization of intangibles, $13 million of Stock Based Compensation Expense, and $1.4 million of restructuring and in process R & D expenses from acquisitions.

Although not reflected in these preliminary results, the jury award in the ongoing trial with Informatica Corporation has now been reduced to approximately $12 million. The company previously accrued approximately $25 million as a loss contingency relating to the Informatica litigation and is re-evaluating this reserve in light of the ongoing developments in the case.

The estimated third quarter results set forth above do not include any costs or other charges related to the proposed acquisition of Business Objects by SAP AG.

The company currently anticipates releasing its financial results for the third quarter of 2007 on October 24, 2007.

Accounting Principles

Business Objects prepares its financial statements in accordance with US GAAP. Because the company is listed on both the Eurolist by Euronext[TM] in France and the Nasdaq Global Select Market in the United States, it is required to separately report consolidated financial statements prepared in accordance with both US GAAP and International Financial Reporting Standards ("IFRS"). The most significant differences between the two reporting standards for Business Objects relate to the treatment of stock-based compensation expense, the accounting for deferred tax assets on certain intercompany transactions, the accounting for business combinations and the accounting for the convertible bonds that the company issued in May, 2007.

In accordance with French regulations and IFRS, Business Objects filed with the Autorite des Marches Financiers in France its Document de Reference 2006 on April 6, 2007 under the registration number D.07-0285, which included its consolidated financial statements for the year ended on December 31, 2006, presented in accordance with International Financial Reporting Standards. The Document de Reference 2006 includes the consolidated information that Business Objects published on April 18, 2007 to the Bulletin des Annonces Legales Obligatoires ("BALO") in France.

Use of Non-GAAP Financial Measures

The non-GAAP financial measures such as earnings per share information for the third quarter of 2007 included in this press release are different from those otherwise presented under US GAAP as these non-GAAP measures exclude certain charges. These charges include the write-off of in-process research and development, amortization of intangible assets, stock-based compensation expense, restructuring costs and other non-recurring or non-cash charges. The non-GAAP tax rate differs from the US GAAP tax rate due to the elimination of the tax rate effect of the US GAAP expenses that are being eliminated to arrive at the non-GAAP expenses. Business Objects has provided these measures in addition to US GAAP financial results because management believes these non-GAAP measures provide a consistent basis for comparison between quarters and of growth rates year-over-year that are not influenced by certain non-cash charges or impacts of prior period acquisitions, and therefore are helpful in understanding Business Objects' underlying operating results. These non-GAAP measures are some of the primary measures Business Objects' management uses for planning and forecasting. These measures are not in accordance with, or an alternative to, US GAAP and these non-GAAP measures may not be comparable to information provided by other companies.