July 23, 2002

NetIQ Announces Fourth Quarter and Fiscal Year End Results

Revenues increase sequentially to $278 million for the year – up 67% year over year


Press Release

SAN JOSE, Calif.

NetIQ Corporation (Nasdaq: NTIQ), a leading provider of Systems Management, Security Management and Web Analytics solutions, today announced record financial results for the fourth quarter and fiscal year-ended June 30, 2002. Revenues for the fourth quarter of fiscal 2002 increased 30% to $76.2 million, compared with $58.6 million for the same period last year. Supplemental net income was $13.8 million or $0.26 per diluted share for the fourth quarter of fiscal 2002, compared with $7.5 million or $0.14 per diluted share for the fourth quarter of fiscal 2001. Year-over year increases in fourth quarter supplemental net income and diluted earnings per share were 84% and 86%, respectively. Based on generally accepted accounting principles, net loss was $180.9 million and basic and diluted net loss per share was $3.46 for the fourth quarter of fiscal 2002, compared with a net loss of $186.8 million and basic and diluted net loss per share of $3.55 for the fourth quarter of fiscal 2001.

Revenues for the twelve months ended June 30, 2002 were $278.2 million, compared with $166.9 million for the same period last year, an increase of 67%. Supplemental net income for the fiscal year increased 74% to $49.8 million or $0.90 per diluted share, compared with $28.6 million or $0.63 per diluted share for the same period last year. Based on generally accepted accounting principles, net loss was $730.5 million and basic and diluted net loss per share was $13.74 for the twelve months ended June 30, 2002, compared with a net loss of $523.8 million and basic and diluted net loss per share of $12.48 for the same period last year.

Supplemental net income is intended to present the company's results of operations excluding employee stock-based compensation, amortization of goodwill and other intangibles, a restructuring charge and the write-off of acquired in-process research and development costs in fiscal 2001, and related income tax effects. The exclusion of such items is not in accordance with and is not intended as a substitute for generally accepted accounting principles, and may not be consistent with similar measures used by other companies.

In the three-month period ended June 30, 2002, amortization of goodwill was $187.9 million and amortization of other intangibles was $10.4 million. In the twelve-month period ended June 30, 2002, amortization of goodwill was $751.8 million and amortization of other intangibles was $41.3 million. Amortization of employee stock-based compensation totaled $344,000 and $3.2 million in the three and twelve-month periods ended June 30, 2002. The company will adopt Statement of Financial Accounting Standards (SFAS) 142 on July 1, 2002, the start of fiscal year 2003. Upon adoption, the Company will cease amortization of goodwill and evaluate the remaining goodwill balance of approximately $916 million and re-evaluate the useful lives of the other intangible assets. The company expects to record a charge reducing the carrying value of goodwill upon adoption of SFAS 142.

Revenues from the previously announced licensing agreement with Microsoft were $25.0 million and $85.0 million in the three and twelve-month periods ended June 30, 2002, compared with $10.0 million and $25.0 million in the three and twelve-month periods ended June 30, 2001. Excluding license fees from this agreement, revenues for the three and twelve-month periods were $51.2 million and $193.2 million, respectively, representing increases of 5% and 36% compared with the same periods last year. Revenues from Microsoft are expected to be $60.0 million and $5.0 million in fiscal 2003 and 2004.

The merger with WebTrends Corporation completed in March 2001 was accounted for under the purchase method of accounting. WebTrends' revenues and operating results have been included in NetIQ's statements of operations from the date of acquisition forward. Therefore, WebTrends revenues and operating results are not included in the results for the first three quarters of fiscal 2001.

"This has been a very exciting year and quarter for NetIQ. We met our expectations for revenues and earnings and, once again this quarter, we grew revenues even after excluding license fees from Microsoft. Bookings growth was strong for performance and availability products. We are particularly pleased with the contributions from our new VoIP, SQL Management, UNIX and XMP products," said Chuck Boesenberg, president and CEO of NetIQ. "Building on a great organization, we added significant experience and talent to our board of directors, global sales management and technology teams in the last quarter and throughout the last fiscal year.

"Our strong financial results are due substantially to our continuing focus on customer satisfaction, product development, solid strategic alliances and execution of our business plan. We will continue to build our business strategically by enhancing our infrastructure and realigning the business units for long-term growth," added Boesenberg.

"Our balance sheet remains very strong. At the end of the fiscal year cash and short-term investments were $475.9 million and deferred revenue increased 12% from the third quarter," said Jim Barth, chief financial officer of NetIQ. "We also repurchased approximately 4 million common shares during the fourth quarter for $88.6 million."

Fourth Quarter Operating and Product Highlights:

  • NetIQ expanded its management team with the appointments of Michael Lehman to the NetIQ board of directors and Dr. Richard Schell as general manager of the Performance and Availability business unit and chief technology officer of the company. Mr. Lehman recently retired as chief financial officer at Sun Microsystems. The company also added considerable strength to its international sales management.
  • NetIQ and Research In Motion announced their alliance focused on providing IT departments with advanced performance monitoring and diagnostic tools for BlackBerry Enterprise Server.
  • WebTrends Reporting Center™ version 5.0 and AppManager® 5.0, two significant new versions of these flagship products, were released.
  • The company also introduced new versions of AppAnalyzer™, VoIP Manager™ and Chariot® products and new software modules extending AppManager and Microsoft Operations Manager 2000 (MOM), including the NetIQ module for Sybari's Antigen product and the NetIQ® Security Management Pack™ (SMP) for MOM.

NetIQ Analyst/Investor Conference Call:
NetIQ will conduct a conference call at 1:30 p.m. pacific daylight time today to discuss the quarter's results in more detail.

Call-in numbers are 1-888-447-8321 and 1-706-634-1488 (outside the U.S.). A replay will be available through July 30, 2002 at 1-800-642-1687 and 1-706-645-9291 (outside the U.S.). The passcode for the live call and replay is "4656246". An audio webcast of the call can be accessed from the company's website, http://www.netiq.com/About_NetIQ/Investor_Relations/InvestorConferenceCall.asp.

About NetIQ
Founded in 1995, NetIQ Corporation (Nasdaq: NTIQ) is a leading provider of Systems Management, Security Management and Web Analytics solutions. Historically focused on the Windows management market, NetIQ now delivers cross-platform solutions that enhance business performance resulting in higher returns on infrastructure and Web investments. NetIQ products are sold across all continents directly and through a network of authorized NetIQ partners and resellers. The company is headquartered in San Jose, Calif., with development and operational personnel in Houston, Texas; Raleigh, N.C.; Bellevue, Wash.; and Portland, Ore. For more information, please visit the company's web site at www.netiq.com or call 888-323-6768.

Safe Harbor Statement
Statements in this press release other than statements of historical fact are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. The company's future results could differ materially from the results discussed herein. Factors that could cause or contribute to such differences include the current uncertain business climate; risks inherent in technology businesses, including the timing and successful development of new products; our ability to retain and hire technical personnel and other employees; changing relationships with customers, suppliers and strategic partners; unanticipated costs associated with development and marketing activities; customer acceptance of new product offerings; pricing of new products, and competition in our various product lines. For a more comprehensive discussion of risks and uncertainties relating to our business, please read the discussions of these risks in documents we file from time to time with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2001.

Let's Talk


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Amy Sachrison
Director
Media and Analyst Relations

Phone: (713) 418-5368
Email: amy.sachrison@netiq.com