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NOVELL, INC.

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NOVELL : Reports Financial Results for Fourth Fiscal Quarter and Full Fiscal Year 2010

12/02/2010 | 04:20pm EDT

WALTHAM, Mass., Dec. 2, 2010 /PRNewswire-FirstCall/ -- Novell, Inc. (Nasdaq: NOVL) today announced financial results for its fourth fiscal quarter and full fiscal year ended October 31, 2010. For the quarter, Novell reported net revenue of $207 million. This compares to net revenue of $216 million for the fourth fiscal quarter of 2009. GAAP income from operations for the fourth fiscal quarter of 2010 was $22 million. This compares to GAAP loss from operations of $259 million for the fourth fiscal quarter of 2009, which included a $279 million non-cash impairment charge to goodwill and intangible assets. GAAP net income in the fourth fiscal quarter of 2010 was $322 million, or $0.91 per share, which included $308 million in non-cash tax provision benefits, principally to release a valuation allowance for certain net deferred tax assets. This compares to a GAAP net loss of $256 million, or a $0.74 loss per share, for the fourth fiscal quarter of 2009. Foreign currency exchange rates favorably impacted net revenue by $1 million, operating expenses by $1 million and income from operations by $2 million compared to the same period last year.

On a non-GAAP basis, income from operations for the fourth fiscal quarter of 2010 was $38 million. This compares to non-GAAP income from operations of $37 million in the same period last year. Non-GAAP net income for the fourth fiscal quarter of 2010 was $25 million, or $0.07 per share. This compares to non-GAAP net income of $38 million, or $0.11 per share, for the fourth fiscal quarter of 2009. A reconciliation of GAAP to non-GAAP results is provided in the financial schedules as part of this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

For the full fiscal year 2010, Novell reported net revenue of $812 million and GAAP income from operations of $84 million. Comparatively, net revenue for the full fiscal year 2009 was $862 million and GAAP loss from operations was $206 million, which included a $279 million non-cash impairment charge to goodwill and intangible assets. GAAP net income for the full fiscal year 2010 was $378 million or $1.07 per share, which included $308 million in non-cash tax provision benefits, principally to release a valuation allowance for certain net deferred tax assets. This compares to a net loss of $213 million, or a $0.62 loss per share, for the full fiscal year 2009. Foreign currency exchange rates favorably impacted net revenue by $4 million and unfavorably impacted operating expenses by $10 million and income from operations by $6 million compared to the prior fiscal year.

On a non-GAAP basis, income from operations for the full fiscal year 2010 was $131 million. This compares to non-GAAP income from operations of $139 million in the prior year. Non-GAAP net income for the full fiscal year 2010 was $97 million, or $0.27 per share. This compares to non-GAAP net income of $117 million, or $0.34 per share, for the full fiscal year 2009.

"I am pleased with our fourth quarter performance," said Ron Hovsepian, President and CEO of Novell. "We continue to see strong performance from our Linux business with invoicing for Linux, excluding Microsoft certificates, up over 40% from the year-ago period and the prior fiscal year. We also saw some stabilization in the Collaboration Solutions business with invoicing decreasing 3% over the year-ago period. In addition, we continue to invest in the business while improving our GAAP and non-GAAP operating margins, which were 11% and 19%, respectively, for the quarter. Finally, we were profitable on a GAAP net income basis for the quarter and for the full year, even excluding discrete tax items."

Cash, cash equivalents and short-term investments were $1.1 billion at October 31, 2010, up from $1.0 billion last quarter. Days sales outstanding in accounts receivable was 76 days at the end of the fourth fiscal quarter of 2010, up from 75 days at the end of the year-ago quarter. Total deferred revenue was $651 million at the end of the fourth fiscal quarter of 2010, down from $689 million at the end of the year-ago quarter. For the fourth fiscal quarter of 2010, cash flow from operations was $52 million. This compares to cash flow from operations of $51 million for the fourth fiscal quarter of 2009. For the full fiscal year 2010, cash flow from operations was $76 million. This compares to cash flow from operations of $69 million for the full fiscal year 2009.

Further details on Novell's reported results are included in the financial schedules that are a part of this release.

In addition, as previously publicly disclosed, Novell entered into an Agreement and Plan of Merger, dated as of November 21, 2010, with Attachmate Corporation, a Washington corporation, and Longview Software Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Attachmate, upon the terms and subject to the conditions of which, Longview will be merged with and into Novell, with Novell continuing as the surviving corporation and a wholly-owned subsidiary of Attachmate.

Non-GAAP Financial Measures

We supplement our consolidated unaudited condensed financial statements presented in accordance with GAAP with certain non-GAAP financial measures. These non-GAAP measures include adjusted income from operations, adjusted operating margin, adjusted income from continuing operations, adjusted net income, adjusted income per share from continuing operations and adjusted net income per share. We provide non-GAAP financial measures to enhance an overall understanding of our current financial performance and prospects for the future and to enable investors to evaluate our performance in the same way that management does. Management uses these same non-GAAP financial measures to evaluate performance, allocate resources, and determine compensation. The non-GAAP financial measures do not replace the presentation of our GAAP financial results, but they eliminate expenses and gains that are excluded from most analysts' consensus estimates, that are unusual, and/or that arise outside of the ordinary course of business, such as, but not limited to, those related to stock-based compensation, acquisition-related intangible asset amortization, restructuring, asset impairments, litigation judgments and settlements, strategic alternatives review, the sale of business operations, long-term investments, property, plant and equipment, and unusual and discrete income tax effects.

Legal Notice Regarding Forward-Looking Statements

This press release may include statements that are not historical in nature and that may be characterized as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including those related to future financial and operating results, targets, and prospects; future opportunities; market leadership and positioning; short-term and long-term trends; the macroeconomic environment; customer priorities; timing of realization of projections; functionality, characteristics, quality and performance capabilities of Novell's products and technology; and results achievable and benefits attainable through deployment of Novell's products and provision of services. Forward-looking statements forecasting growth in financial metrics are predicated on assumptions regarding improvements in the overall economy and the markets served by the Company and in which the Company operates, the timing of which are impossible to accurately predict. Actual results may differ materially from the results discussed in or implied by such forward-looking statements, which are based upon information that is currently available to us and/or management's current expectations and speak only as of the date hereof. We are subject to a number of risks, including, among others, the risk that the merger may be delayed or may not be consummated, the risk that the definitive merger agreement may be terminated in circumstances that require Novell to pay Attachmate a termination fee of $60 million; risks related to the diversion of management's attention from Novell's ongoing business operations; risks regarding the failure of Attachmate to obtain the necessary financing to complete the merger; the effect of the announcement of the merger on Novell's business relationships (including, without limitation, partners and customers), operating results and business generally; and risks related to obtaining the requisite consents to the merger, including, without limitation, the timing (including possible delays) and receipt of regulatory approvals from various governmental entities (including any conditions, limitations or restrictions placed on these approvals) and the risk that one or more governmental entities may deny approval, as well as risks related to indirect sales, growth rates of our business units, renewal of SUSE® Linux Enterprise Server subscriptions with customers who have received certificates from Microsoft, decline rates of Open Enterprise Server and NetWare® revenue, development of products and services, the intelligent workload management market, software vulnerabilities, delays in product releases, reliance on open source software, adequacy of renewal rates, uncertain economic conditions, competition, rapid technological changes, failure to expand brand awareness, adequacy of technical support, pricing pressures, system failures, integration of acquisitions, industry consolidation, challenges resulting from a global business, foreign research and development operations, loss of key employees, intellectual property infringement, litigation matters, unpredictable financial results, impairments, the timing of revenue recognition, our investments and effective use of our cash.

A detailed discussion of these and other factors that could affect our results is included in our SEC filings, including, but not limited to, our Quarterly Report on Form 10-Q for the period ended April 30, 2010 filed with the SEC on June 8, 2010 and our Current Report on Form 8-K filed with the SEC on November 22, 2010 (as amended), which may be obtained by calling (800) 317- 3195, or at our Investor Relations web page at: www.novell.com/company/ir.

We expressly disclaim any obligation, except as required by law, or undertaking to update or revise any forward-looking statements contained in this press release to reflect any change of expectations with regard thereto or to reflect any change in events, conditions, or circumstances on which any such forward-looking statement is based, in whole or in part.

Additional Information About the Merger and Where to Find It

In connection with the merger, Novell intends to file relevant materials with the SEC, including a proxy statement. Investors and security holders of Novell are urged to read these documents (if and when they become available) and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information about Novell, the merger and the other parties to the merger. Investors and security holders may obtain these documents (and any other documents filed by Novell and Attachmate with the SEC) free of charge at the SEC's website at http://www.sec.gov. In addition, the documents filed with the SEC by Novell may be obtained free of charge by directing such request to: Novell Investor Relations at 1-800-317-3195 or from the investor relations portion of Novell's website at http://www.novell.com/company/ir/. Investors and security holders are urged to read the definitive proxy statement and the other relevant materials when they become available before making any voting or investment decision with respect to the merger.

Novell and its directors and executive officers may be deemed to be participants in the solicitation of proxies from Novell's stockholders in respect of the merger. Information regarding Novell's directors and executive officers is contained in Novell's Annual Report on Form 10-K for the fiscal year ended October 31, 2009, its proxy statement for its 2010 Annual Meeting of Stockholders, dated February 26, 2010, and subsequent filings which Novell has made with the SEC. Stockholders may obtain additional information about the directors and executive officers of Novell and their respective interests with respect to the merger by security holdings or otherwise, which may be different than those of Novell's stockholders generally, by reading the definitive proxy statement and other relevant documents regarding the merger, when filed with the SEC. Each of these documents is, or will be, available as described above.

About Novell

Novell, Inc. (NASDAQ: NOVL), a leader in intelligent workload management, through WorkloadIQ(TM), helps organizations securely deliver and manage computing services across physical, virtual and cloud computing environments. We help customers reduce the cost, complexity, and risk associated with their IT systems through our solutions for identity and security, systems management, collaboration and Linux-based operating platforms. With our infrastructure software and ecosystem of partnerships, Novell integrates mixed IT environments, allowing people and technology to work as one. For more information, visit www.novell.com.

NetWare, Novell, the Novell logo, the N Logo, and SUSE are registered trademarks and WorkloadIQ is a trademark of Novell, Inc. in the United States and other countries. All third party trademarks are the property of their respective owners.

                           Novell, Inc.
     Consolidated Unaudited Condensed Statements of Operations
               (In thousands, except per share data)


                                                Fiscal Quarter Ended
                                                --------------------
                                        Oct 31, 2010         Oct 31, 2009
                                        ------------         ------------
    Net revenue:
      Software licenses                       $31,256               $31,382
      Maintenance and subscriptions           153,277               159,902
      Services (1)                             21,978                24,351
                                               ------                ------
    Total net revenue                         206,511               215,635
                                              -------               -------

    Cost of revenue:
      Software licenses                         2,538                 2,967
      Maintenance and subscriptions            22,517                24,276
      Services                                 20,013                20,426
    Total cost of revenue                      45,068                47,669
                                               ------                ------

    Gross profit                              161,443               167,966
                                              -------               -------

    Operating expenses:
      Sales and marketing                      67,841                68,760
      Product development                      41,718                45,756
      General and administrative               23,652                26,948
      Other operating expenses (2)              6,225               285,636
                                                -----               -------
    Total operating expenses                  139,436               427,100

    Income (loss) from operations              22,007              (259,134)
    Operating margin %                          10.7%               -120.2%

    Other income, net:
      Interest income, net                      2,588                 3,208
      Other income (expense)                      353                (2,392)
    Total other income, net                     2,941                   816
                                                -----                   ---

    Income (loss) from continuing
     operations before taxes                   24,948              (258,318)

    Income tax (benefit) expense             (296,640)               (2,629)
                                             --------                ------

    Income (loss) from continuing
     operations                               321,588              (255,689)

    Income from discontinued operations           610                     -
                                                  ---                   ---

    Net income (loss)                        $322,198             $(255,689)
                                             ========             =========


    Diluted earnings (loss) per share:

      Continuing operations                     $0.90                $(0.74)

      Net income (loss)                         $0.91                $(0.74)

    Weighted average shares                   356,010               347,043






                                                 Fiscal Year Ended
                                                 -----------------
                                        Oct 31, 2010          Oct 31, 2009
                                        ------------          ------------
    Net revenue:
      Software licenses                       $105,108             $116,919
      Maintenance and subscriptions            618,542              640,745
      Services (1)                              88,221              104,521
                                                ------              -------
    Total net revenue                          811,871              862,185
                                               -------              -------

    Cost of revenue:
      Software licenses                          8,506                9,174
      Maintenance and subscriptions             88,447               92,613
      Services                                  76,652               85,044
    Total cost of revenue                      173,605              186,831
                                               -------              -------

    Gross profit                               638,266              675,354
                                               -------              -------

    Operating expenses:
      Sales and marketing                      282,402              295,998
      Product development                      160,188              181,383
      General and administrative               101,118              102,172
      Other operating expenses (2)              10,121              302,293
                                                ------              -------
    Total operating expenses                   553,829              881,846

    Income (loss) from operations               84,437             (206,492)
    Operating margin %                           10.4%               -23.9%

    Other income, net:
      Interest income, net                      10,790               15,275
      Other income (expense)                     6,860              (12,757)
    Total other income, net                     17,650                2,518
                                                ------                -----

    Income (loss) from continuing
     operations before taxes                   102,087             (203,974)

    Income tax (benefit) expense              (275,279)              10,666
                                              --------               ------

    Income (loss) from continuing
     operations                                377,366             (214,640)

    Income from discontinued operations            610                1,904
                                                   ---                -----

    Net income (loss)                         $377,976            $(212,736)
                                              ========            =========


    Diluted earnings (loss) per share:

      Continuing operations                      $1.07               $(0.62)

      Net income (loss)                          $1.07               $(0.62)

    Weighted average shares                    353,447              345,493



    (1) Services includes professional services, technical support and
    training services.
    (2) See Page 9 of 12 for a detail of other operating expenses.


    Revisions were made to prior period amounts in order to conform to
    the current period's presentation.

                                Novell, Inc.
               Consolidated Unaudited Condensed Balance Sheets
                               (In thousands)


                                         Oct 31, 2010  Oct 31, 2009
                                         ------------  ------------
    Assets

      Current assets:
          Cash and cash equivalents           $685,594      $591,656
          Short-term investments               441,096       391,809
          Restricted cash                            -        53,033
          Receivables, net                     171,607       177,898
          Prepaid expenses                      16,233        17,708
          Current deferred income taxes         49,169         5,521
          Other current assets                  33,725        26,747
                                                ------        ------
      Total current assets                   1,397,424     1,264,372

      Property, plant and equipment, net       156,033       170,459
      Long-term investments                          -        10,303
      Goodwill                                 353,415       356,033
      Intangible assets, net                    28,746        36,621
      Deferred income taxes                    243,583        26,717
      Other assets                              46,797        38,403
                                                ------        ------

      Total assets                          $2,225,998    $1,902,908
                                            ==========    ==========


    Liabilities and Stockholders'
     Equity

      Current liabilities:
          Accounts payable                     $26,785       $37,628
          Accrued compensation                  83,181        87,928
          Other accrued liabilities             86,223        97,154
          Deferred revenue                     487,590       495,245
                                               -------       -------
      Total current liabilities                683,779       717,955

      Deferred income taxes                      7,622         8,403
      Other long-term liabilities               35,655        48,502
      Long-term deferred revenue               163,394       193,526
                                               -------       -------

      Total liabilities                        890,450       968,386

      Stockholders' equity                   1,335,548       934,522
                                             ---------       -------

      Total liabilities and
       stockholders' equity                 $2,225,998    $1,902,908
                                            ==========    ==========


    Revisions were made to prior period amounts in order to conform to
    the current period's presentation.

                           Novell, Inc.
     Consolidated Unaudited Condensed Statements of Cash Flows
                          (In thousands)


                                              Fiscal Quarter Ended
                                              --------------------
                                       Oct 31, 2010        Oct 31, 2009
                                       ------------        ------------

    Cash flows from operating
     activities
        Net income (loss)                   $322,198           $(255,689)
        Adjustments to reconcile net
         income (loss) to net cash
         provided
          by operating activities:
         Stock-based compensation
          expense                              8,232               5,683
         Depreciation and amortization         7,896               9,657
         Change in accounts receivable
          allowances                          (1,166)                827
         Utilization of previously
          reserved acquired net
          operating losses                         -               2,125
         Net gain on sale of property,
          plant and equipment                      -              (2,199)
         Gain on debenture repurchases             -                   -
         Income from discontinued
          operations                            (610)                  -
         Impairment of long-term
          investments                              -                   -
         Net gain on sale of
          previously impaired
          investments                           (218)               (300)
         Impairment of goodwill and
          intangible assets                        -             279,135
         Gain on sale of subsidiaries              -                   -
         Deferred income taxes              (272,654)             (3,071)
        Changes in assets and
         liabilities, excluding the
          effect of acquisitions and
           dispositions                      (12,085)             15,250
                                             -------              ------

      Net cash provided by
       operating activities                   51,593              51,418
                                              ------              ------

    Cash flows from investing
     activities
        Purchases of property, plant
         and equipment                        (2,410)             (7,324)
        Net proceeds from the sale of
         property, plant and
         equipment                                 -              10,748
        Short-term investment
         activity                             (1,936)             (5,199)
        Long-term investment
         activity                                218                 300
        Change in restricted cash             17,723                 (25)
        Cash proceeds from sale of
         discontinued operations                 233                   -
        Net cash paid for
         acquisitions                              -                   -
        Other                                  6,520               1,330
                                               -----               -----

      Net cash provided by (used
       in) investing activities               20,348                (170)
                                              ------                ----

    Cash flows from financing
     activities
         Issuances of common stock             1,292                 641
         Excess tax effects from
          stock-based compensation             2,226                  13
         Debt repayment                            -              (4,087)
         Debenture repurchases                     -                   -
                                                 ---                 ---

      Net cash provided by (used
       in) financing activities                3,518              (3,433)
                                               -----              ------

    Effect of exchange rate
     changes on cash                           5,085               6,977
                                               -----               -----
    Increase (decrease) in cash
     and cash equivalents                     80,544              54,792
    Cash and cash equivalents -
     beginning of period                     605,050             536,864
                                             -------             -------

    Cash and cash equivalents -
     end of period                          $685,594            $591,656
                                            ========            ========




                                                 Fiscal Year Ended
                                                 -----------------
                                        Oct 31, 2010       Oct 31, 2009
                                        ------------       ------------

    Cash flows from operating
     activities
        Net income (loss)                    $377,976          $(212,736)
        Adjustments to reconcile net
         income (loss) to net cash
         provided
          by operating activities:
         Stock-based compensation
          expense                              29,057             25,881
         Depreciation and amortization         30,298             40,675
         Change in accounts receivable
          allowances                           (1,833)               444
         Utilization of previously
          reserved acquired net
          operating losses                          -              2,580
         Net gain on sale of property,
          plant and equipment                       -             (2,199)
         Gain on debenture repurchases              -                (11)
         Income from discontinued
          operations                             (610)            (1,904)
         Impairment of long-term
          investments                               -              5,466
         Net gain on sale of previously
          impaired investments                 (7,413)              (300)
         Impairment of goodwill and
          intangible assets                         -            279,135
         Gain on sale of subsidiaries               -                (16)
         Deferred income taxes               (261,878)             8,610
        Changes in assets and
         liabilities, excluding the
          effect of acquisitions and
           dispositions                       (90,050)           (76,855)
                                              -------            -------

      Net cash provided by operating
       activities                              75,547             68,770
                                               ------             ------

    Cash flows from investing
     activities
        Purchases of property, plant
         and equipment                        (17,648)           (22,087)
        Net proceeds from the sale of
         property, plant and equipment              -             10,748
        Short-term investment
         activity                             (42,663)             5,100
        Long-term investment activity           8,847              4,209
        Change in restricted cash              53,033               (332)
        Cash proceeds from sale of
         discontinued operations                  938              1,036
        Net cash paid for acquisitions              -            (48,472)
        Other                                   7,899              7,228
                                                -----              -----

      Net cash provided by (used in)
       investing activities                    10,406            (42,570)
                                               ------            -------

    Cash flows from financing
     activities
         Issuances of common stock              8,940              3,566
         Excess tax effects from stock-
          based compensation                    2,226             (2,775)
         Debt repayment                             -             (4,658)
         Debenture repurchases                      -           (125,537)
                                                  ---           --------

      Net cash provided by (used in)
       financing activities                    11,166           (129,404)
                                               ------           --------

    Effect of exchange rate
     changes on cash                           (3,181)            14,826
                                               ------             ------
    Increase (decrease) in cash
     and cash equivalents                      93,938            (88,378)
    Cash and cash equivalents -
     beginning of period                      591,656            680,034
                                              -------            -------

    Cash and cash equivalents -
     end of period                           $685,594           $591,656
                                             ========           ========

                                               Novell, Inc.
                            Unaudited Non-GAAP Adjusted Income From Operations
                                              (In thousands)


                                                   Fiscal Quarter Ended
                                                   --------------------
                                                Oct 31,
                                                 2010         Oct 31, 2009
                                               --------       ------------

    GAAP income (loss) from operations           $22,007         $(259,134)
                                                 -------         ---------

      Adjustments:
        Stock-based compensation expense:
         Cost of revenue                             876               512
         Sales and marketing                       2,385             1,659
         Product development                       2,151             1,721
         General and administrative                2,820             1,791
                                                   -----             -----
             Sub-total                             8,232             5,683
                                                   -----             -----

        Acquisition-related intangible asset
         amortization:
         Cost of revenue                           1,129             2,098
         Sales and marketing                         630             2,706
                                                     ---             -----
             Sub-total                             1,759             4,804
                                                   -----             -----

        Other operating expenses (income):
         Restructuring expense                         -             8,700
         Strategic alternatives review expense     6,225                 -
         Litigation related activity                   -                 -
         Gain on sale of subsidiaries                  -                 -
         Net gain on sale of property, plant
          and equipment                                -            (2,199)
         IT outsourcing transition costs               -                 -
         Impairment of goodwill and intangible
          assets                                       -           279,135
                                                     ---           -------
             Sub-total                             6,225           285,636
                                                   -----           -------


      Total operating adjustments                 16,216           296,123

    Non-GAAP income from operations              $38,223           $36,989
                                                 =======           =======

    Non-GAAP operating margin %                    18.5%             17.2%




                                                       Fiscal Year Ended
                                                       -----------------
                                               Oct 31, 2010      Oct 31, 2009
                                               ------------      ------------

    GAAP income (loss) from operations              $84,437         $(206,492)
                                                    -------         ---------

      Adjustments:
        Stock-based compensation expense:
         Cost of revenue                              3,053             2,649
         Sales and marketing                          8,038             7,015
         Product development                          8,227             9,332
         General and administrative                   9,739             6,885
                                                      -----             -----
             Sub-total                               29,057            25,881
                                                     ------            ------

        Acquisition-related intangible asset
         amortization:
         Cost of revenue                              4,895             9,984
         Sales and marketing                          2,980             7,296
                                                      -----             -----
             Sub-total                                7,875            17,280
                                                      -----            ------

        Other operating expenses (income):
         Restructuring expense                        2,774            25,200
         Strategic alternatives review expense        9,222                 -
         Litigation related activity                 (1,875)                -
         Gain on sale of subsidiaries                     -               (16)
         Net gain on sale of property, plant
          and equipment                                   -            (2,199)
         IT outsourcing transition costs                  -               173
         Impairment of goodwill and intangible
          assets                                          -           279,135
                                                        ---           -------
             Sub-total                               10,121           302,293
                                                     ------           -------


      Total operating adjustments                    47,053           345,454

    Non-GAAP income from operations                $131,490          $138,962
                                                   ========          ========

    Non-GAAP operating margin %                       16.2%             16.1%

                                                 Novell, Inc.
                                    Unaudited Non-GAAP Adjusted Net Income
                                    (In thousands, except per share data)


                                                     Fiscal Quarter Ended
                                                     --------------------
                                              Oct 31, 2010      Oct 31, 2009
                                              ------------      ------------

    GAAP net income (loss)                        $322,198         $(255,689)
                                                  --------         ---------


      Operating adjustments (detailed above)        16,216           296,123
      Non-operating expenses (income)
       adjustments:
        Net gain on sale of previously
         impaired investments                         (218)             (300)
        Gain on debenture repurchases                    -                 -
        Impairment of long-term investments              -                 -
           Sub-total                                  (218)             (300)
                                                      ----              ----

      Total pre-tax adjustments                     15,998           295,823

      Income tax adjustments                      (312,118)           (2,130)

      Income from discontinued operations             (610)                -
                                                      ----               ---

      Total net adjustments                       (296,730)          293,693

    Non-GAAP net income and non-GAAP
     income
      from continuing operations                   $25,468           $38,004
                                                   =======           =======


    GAAP net income (loss) per share                 $0.91            $(0.74)
      Total adjustments detailed above               (0.84)             0.85
                                                     -----              ----

    Non-GAAP net income per share and
     non-GAAP
      income from continuing operations per
       share                                         $0.07             $0.11
                                                     =====             =====


    GAAP weighted average shares                   356,010           347,043

        Change from basic to diluted weighted
         average shares                                  -             1,707
                                                       ---             -----

    Non-GAAP weighted average shares               356,010           348,750
                                                   =======           =======




                                                      Fiscal Year Ended
                                                      -----------------
                                              Oct 31, 2010      Oct 31, 2009
                                              ------------      ------------

    GAAP net income (loss)                        $377,976         $(212,736)
                                                  --------         ---------


      Operating adjustments (detailed above)        47,053           345,454
      Non-operating expenses (income)
       adjustments:
        Net gain on sale of previously
         impaired investments                       (7,413)             (300)
        Gain on debenture repurchases                    -               (11)
        Impairment of long-term investments              -             5,466
           Sub-total                                (7,413)            5,155
                                                    ------             -----

      Total pre-tax adjustments                     39,640           350,609

      Income tax adjustments                      (320,153)          (19,219)

      Income from discontinued operations             (610)           (1,904)
                                                      ----            ------

      Total net adjustments                       (281,123)          329,486

    Non-GAAP net income and non-GAAP
     income
      from continuing operations                   $96,853          $116,750
                                                   =======          ========


    GAAP net income (loss) per share                 $1.07            $(0.62)
      Total adjustments detailed above               (0.80)             0.96
                                                     -----              ----

    Non-GAAP net income per share and
     non-GAAP
      income from continuing operations per
       share                                         $0.27             $0.34
                                                     =====             =====


    GAAP weighted average shares                   353,447           345,493

        Change from basic to diluted weighted
         average shares                                  -             2,328
                                                       ---             -----

    Non-GAAP weighted average shares               353,447           347,821
                                                   =======           =======

                      Novell, Inc.
     Consolidated Unaudited Condensed Segment Results
                      (in thousands)

                                    Fiscal
                                    Quarter
                                     Ended
                                    October
                                      31,
                                      2010

                                                      Security,
                                                   Management and
                                                       Operating
                                                       Platforms           %
                                                      ----------         ---
    Net revenue:
      Software licenses                                    $18,915       14.7
      Maintenance and
       subscriptions                                        93,360       72.8
      Services                                              16,044       12.5
                                                            ------       ----
    Total net revenue                                      128,319      100.0
                                                           -------      -----

    Cost of revenue:
      Software licenses                                      1,938        1.5
      Maintenance and
       subscriptions                                        14,546       11.3
      Services                                              14,627       11.4
    Total cost of revenue                                   31,111       24.2
                                                            ------       ----

    Gross profit                                            97,208       75.8
                                                            ------       ----

    Operating expenses:
      Sales and marketing                                   52,139       40.6
      Product development                                   31,239       24.3
      General and
       administrative                                       13,419       10.5
      Other operating expenses                                   -          -
    Total operating expenses                                96,797       75.4
                                                            ------       ----

    Income (loss) from
     operations                                               $411        0.3
                                                              ====        ===



                                    Fiscal
                                    Quarter
                                     Ended
                                      July
                                      31,
                                      2010

                                                      Security,
                                                   Management and
                                                       Operating
                                                       Platforms        %
                                                      ----------        ---
    Net revenue:
      Software licenses                                    $15,819       12.8
      Maintenance and
       subscriptions                                        92,333       74.8
      Services                                              15,354       12.4
                                                            ------       ----
    Total net revenue                                      123,506      100.0
                                                           -------      -----

    Cost of revenue:
      Software licenses                                      1,842        1.5
      Maintenance and
       subscriptions                                        14,428       11.7
      Services                                              13,165       10.7
    Total cost of revenue                                   29,435       23.8
                                                            ------       ----

    Gross profit                                            94,071       76.2
                                                            ------       ----

    Operating expenses:
      Sales and marketing                                   54,949       44.5
      Product development                                   29,720       24.1
      General and
       administrative                                       13,854       11.2
      Other operating expenses                                   -          -
    Total operating expenses                                98,523       79.8
                                                            ------       ----

    Income (loss) from
     operations                                            $(4,452)     (3.6)
                                                           =======       ====




                                    Fiscal
                                    Quarter
                                     Ended
                                    October
                                      31,
                                      2009

                                                      Security,
                                                   Management and
                                                       Operating
                                                       Platforms        %
                                                      ----------        ---
    Net revenue:
      Software licenses                                    $19,430       14.8
      Maintenance and
       subscriptions                                        94,189       71.6
      Services                                              17,859       13.6
                                                            ------       ----
    Total net revenue                                      131,478      100.0
                                                           -------      -----

    Cost of revenue:
      Software licenses                                      2,247        1.7
      Maintenance and
       subscriptions                                        14,816       11.3
      Services                                              14,908       11.3
    Total cost of revenue                                   31,971       24.3
                                                            ------       ----

    Gross profit                                            99,507       75.7
                                                            ------       ----

    Operating expenses:
      Sales and marketing                                   51,305       39.0
      Product development                                   35,077       26.7
      General and
       administrative                                       16,294       12.4
      Other operating expenses                                   -          -
    Total operating expenses                               102,676       78.1
                                                           -------       ----

    Income (loss) from
     operations                                            $(3,169)     (2.4)
                                                           =======       ====






                                    Fiscal
                                    Quarter
                                     Ended
                                    October
                                      31,
                                      2010


                                                    Collaboration
                                                     Solutions            %
                                                     ---------           --
    Net revenue:
      Software licenses                                   $12,341       15.8
      Maintenance and
       subscriptions                                       59,917       76.6
      Services                                              5,934        7.6
                                                            -----        ---
    Total net revenue                                      78,192      100.0
                                                           ------      -----

    Cost of revenue:
      Software licenses                                       408        0.5
      Maintenance and
       subscriptions                                        6,822        8.7
      Services                                              4,722        6.0
    Total cost of revenue                                  11,952       15.3
                                                           ------       ----

    Gross profit                                           66,240       84.7
                                                           ------       ----

    Operating expenses:
      Sales and marketing                                  12,687       16.2
      Product development                                   8,328       10.7
      General and
       administrative                                       7,413        9.5
      Other operating expenses                                  -          -
    Total operating expenses                               28,428       36.4
                                                           ------       ----

    Income (loss) from
     operations                                           $37,812       48.4
                                                          =======       ====



                                    Fiscal
                                    Quarter
                                     Ended
                                      July
                                      31,
                                      2010


                                                    Collaboration
                                                     Solutions         %
                                                     ---------         ---
    Net revenue:
      Software licenses                                    $9,149       12.1
      Maintenance and
       subscriptions                                       60,126       79.7
      Services                                              6,199        8.2
                                                            -----        ---
    Total net revenue                                      75,474      100.0
                                                           ------      -----

    Cost of revenue:
      Software licenses                                       325        0.4
      Maintenance and
       subscriptions                                        6,755        9.0
      Services                                              4,834        6.4
    Total cost of revenue                                  11,914       15.8
                                                           ------       ----

    Gross profit                                           63,560       84.2
                                                           ------       ----

    Operating expenses:
      Sales and marketing                                  13,708       18.2
      Product development                                   7,743       10.3
      General and
       administrative                                       7,615       10.1
      Other operating expenses                                  -          -
    Total operating expenses                               29,066       38.5
                                                           ------       ----

    Income (loss) from
     operations                                           $34,494       45.7
                                                          =======       ====




                                    Fiscal
                                    Quarter
                                     Ended
                                    October
                                      31,
                                      2009


                                                    Collaboration
                                                     Solutions         %
                                                     ---------         ---
    Net revenue:
      Software licenses                                   $11,952       14.2
      Maintenance and
       subscriptions                                       65,713       78.1
      Services                                              6,492        7.7
                                                            -----        ---
    Total net revenue                                      84,157      100.0
                                                           ------      -----

    Cost of revenue:
      Software licenses                                       384        0.5
      Maintenance and
       subscriptions                                        7,603        9.0
      Services                                              5,101        6.1
    Total cost of revenue                                  13,088       15.6
                                                           ------       ----

    Gross profit                                           71,069       84.4
                                                           ------       ----

    Operating expenses:
      Sales and marketing                                  13,090       15.6
      Product development                                   8,958       10.6
      General and
       administrative                                       8,863       10.5
      Other operating expenses                                  -          -
    Total operating expenses                               30,911       36.7
                                                           ------       ----

    Income (loss) from
     operations                                           $40,158       47.7
                                                          =======       ====






                                    Fiscal
                                    Quarter
                                     Ended
                                    October
                                      31,
                                      2010


                                                      Common
                                                   Unallocated
                                                   -----------
    Net revenue:
      Software licenses                                     $-
      Maintenance and
       subscriptions                                         -
      Services                                               -
                                                           ---
    Total net revenue                                        -
                                                           ---

    Cost of revenue:
      Software licenses                                    192
      Maintenance and
       subscriptions                                     1,149
      Services                                             664
    Total cost of revenue                                2,005
                                                         -----

    Gross profit                                        (2,005)
                                                        ------

    Operating expenses:
      Sales and marketing                                3,015
      Product development                                2,151
      General and
       administrative                                    2,820
      Other operating expenses                           6,225
    Total operating expenses                            14,211
                                                        ------

    Income (loss) from
     operations                                       $(16,216)
                                                      ========




                                    Fiscal
                                    Quarter
                                     Ended
                                      July
                                      31,
                                      2010


                                                      Common
                                                   Unallocated
                                                   -----------
    Net revenue:
      Software licenses                                     $-
      Maintenance and
       subscriptions                                         -
      Services                                               -
                                                           ---
    Total net revenue                                        -
                                                           ---

    Cost of revenue:
      Software licenses                                    188
      Maintenance and
       subscriptions                                     1,350
      Services                                             620
    Total cost of revenue                                2,158
                                                         -----

    Gross profit                                        (2,158)
                                                        ------

    Operating expenses:
      Sales and marketing                                2,135
      Product development                                1,937
      General and
       administrative                                    1,836
      Other operating expenses                             878
    Total operating expenses                             6,786
                                                         -----

    Income (loss) from
     operations                                        $(8,944)
                                                       =======





                                    Fiscal
                                    Quarter
                                     Ended
                                    October
                                      31,
                                      2009


                                                      Common
                                                   Unallocated
                                                   -----------
    Net revenue:
      Software licenses                                     $-
      Maintenance and
       subscriptions                                         -
      Services                                               -
                                                           ---
    Total net revenue                                        -
                                                           ---

    Cost of revenue:
      Software licenses                                    336
      Maintenance and
       subscriptions                                     1,857
      Services                                             417
    Total cost of revenue                                2,610
                                                         -----

    Gross profit                                        (2,610)
                                                        ------

    Operating expenses:
      Sales and marketing                                4,365
      Product development                                1,721
      General and
       administrative                                    1,791
      Other operating expenses                         285,636
    Total operating expenses                           293,513
                                                       -------

    Income (loss) from
     operations                                      $(296,123)
                                                     =========







                                    Fiscal
                                    Quarter
                                     Ended
                                    October
                                      31,
                                      2010




                                                      Total             %
                                                      -----            --
    Net revenue:
      Software licenses                                $31,256          15.1
      Maintenance and
       subscriptions                                   153,277          74.2
      Services                                          21,978          10.6
                                                        ------          ----
    Total net revenue                                  206,511         100.0
                                                       -------         -----

    Cost of revenue:
      Software licenses                                  2,538           1.2
      Maintenance and
       subscriptions                                    22,517          10.9
      Services                                          20,013           9.7
    Total cost of revenue                               45,068          21.8
                                                        ------          ----

    Gross profit                                       161,443          78.2
                                                       -------          ----

    Operating expenses:
      Sales and marketing                               67,841          32.9
      Product development                               41,718          20.2
      General and
       administrative                                   23,652          11.5
      Other operating expenses                           6,225           3.0
    Total operating expenses                           139,436          67.5
                                                       -------          ----

    Income (loss) from
     operations                                        $22,007          10.7
                                                       =======          ====




                                    Fiscal
                                    Quarter
                                     Ended
                                      July
                                      31,
                                      2010




                                                      Total         %
                                                      -----         ---
    Net revenue:
      Software licenses                                $24,968          12.5
      Maintenance and
       subscriptions                                   152,459          76.6
      Services                                          21,553          10.8
                                                        ------          ----
    Total net revenue                                  198,980         100.0
                                                       -------         -----

    Cost of revenue:
      Software licenses                                  2,355           1.2
      Maintenance and
       subscriptions                                    22,533          11.3
      Services                                          18,619           9.4
    Total cost of revenue                               43,507          21.9
                                                        ------          ----

    Gross profit                                       155,473          78.1
                                                       -------          ----

    Operating expenses:
      Sales and marketing                               70,792          35.6
      Product development                               39,400          19.8
      General and
       administrative                                   23,305          11.7
      Other operating expenses                             878           0.4
    Total operating expenses                           134,375          67.5
                                                       -------          ----

    Income (loss) from
     operations                                        $21,098          10.6
                                                       =======          ====





                                    Fiscal
                                    Quarter
                                     Ended
                                    October
                                      31,
                                      2009




                                                      Total         %
                                                      -----         ---
    Net revenue:
      Software licenses                                $31,382          14.6
      Maintenance and
       subscriptions                                   159,902          74.2
      Services                                          24,351          11.3
                                                        ------          ----
    Total net revenue                                  215,635         100.0
                                                       -------         -----

    Cost of revenue:
      Software licenses                                  2,967           1.4
      Maintenance and
       subscriptions                                    24,276          11.3
      Services                                          20,426           9.5
    Total cost of revenue                               47,669          22.1
                                                        ------          ----

    Gross profit                                       167,966          77.9
                                                       -------          ----

    Operating expenses:
      Sales and marketing                               68,760          31.9
      Product development                               45,756          21.2
      General and
       administrative                                   26,948          12.5
      Other operating expenses                         285,636         132.5
    Total operating expenses                           427,100         198.1
                                                       -------         -----

    Income (loss) from
     operations                                      $(259,134)       (120.2)
                                                     =========        ======





    Revisions were made to prior period amounts in order to conform to
    the current period's presentation.

      Novell, Inc.
      Unaudited Trended Segment Revenue by Software Licenses and
      Maintenance and Services
      (In thousands)


                                                         Fiscal Year
                                          Q4 2009    %          2009   %
                                          -------    --         ----   --
    Security, management and operating
     platforms
        Open platform solutions
          Linux platform products
           Software licenses                    $-     -          $-     -
           Maintenance and subscriptions    39,011  18.1     149,162  17.3
                                            ------           -------
                                            39,011  18.1     149,162  17.3
          Other open platform products
           Software licenses                    21   0.0         125   0.0
           Maintenance and subscriptions     1,979   0.9       7,592   0.9
                                             -----             -----
                                             2,000   0.9       7,717   0.9


        Total open platform solutions       41,011  19.0     156,879  18.2
                                            ------  ----     -------  ----


        Identity and security management
          Identity, access and compliance
           management
           Software licenses                10,360   4.8      31,908   3.7
           Maintenance and subscriptions    19,606   9.1      80,340   9.3
                                            ------            ------
                                            29,966  13.9     112,248  13.0
          Other identity and security
           management
           Software licenses                   426   0.2       1,965   0.2
           Maintenance and subscriptions     1,781   0.8       6,837   0.8
                                             -----             -----
                                             2,207   1.0       8,802   1.0


        Total identity and security
         management                         32,173  14.9     121,050  14.0
                                            ------  ----     -------  ----


        Systems and resource management
           Software licenses                 8,623   4.0      33,806   3.9
           Maintenance and subscriptions    31,812  14.8     126,963  14.7

        Total systems and resource
         management                         40,435  18.8     160,769  18.6



        Total security, management and
         operating platforms               113,619  52.7     438,698  50.9



    Collaboration solutions
          OES and NetWare-related
           Software licenses                 5,504   2.6      20,232   2.3
           Maintenance and subscriptions    38,080  17.7     157,524  18.3
                                            ------           -------
                                            43,584  20.2     177,756  20.6
          Collaboration
           Software licenses                 3,827   1.8      14,822   1.7
           Maintenance and subscriptions    20,477   9.5      85,123   9.9
                                            ------            ------
                                            24,304  11.3      99,945  11.6
          Other collaboration solutions
           Software licenses                 2,621   1.2      14,061   1.6
           Maintenance and subscriptions     7,156   3.3      27,204   3.2
                                             -----            ------
                                             9,777   4.5      41,265   4.8


        Total collaboration solutions       77,665  36.0     318,966  37.0



        Total software licenses,
         maintenance
          and subscriptions
           Software licenses                31,382  14.6     116,919  13.6
           Maintenance and subscriptions   159,902  74.2     640,745  74.3
                                           -------           -------
        Total product revenue              191,284  88.7     757,664  87.9
                                           -------  ----     -------  ----

        Services                            24,351  11.3     104,521  12.1
                                            ------  ----     -------  ----

      Total net revenue                   $215,635 100.0    $862,185 100.0
                                          ======== =====    ======== =====




                                                 Q3 2010    %   Q4 2010    %
                                                 -------    --  -------    --
    Security, management and operating
     platforms
        Open platform solutions
          Linux platform products
           Software licenses                           $-     -       $-     -
           Maintenance and subscriptions           35,506  17.8   36,256  17.6
                                                   ------         ------
                                                   35,506  17.8   36,256  17.6
          Other open platform products
           Software licenses                            1   0.0       70   0.0
           Maintenance and subscriptions            2,108   1.1    2,505   1.2
                                                    -----          -----
                                                    2,109   1.1    2,575   1.2


        Total open platform solutions              37,615  18.9   38,831  18.8
                                                   ------  ----   ------  ----


        Identity and security management
          Identity, access and compliance
           management
           Software licenses                        7,991   4.0   10,912   5.3
           Maintenance and subscriptions           22,502  11.3   21,856  10.6
                                                   ------         ------
                                                   30,493  15.3   32,768  15.9
          Other identity and security management
           Software licenses                          260   0.1      393   0.2
           Maintenance and subscriptions            1,303   0.7    1,072   0.5
                                                    -----          -----
                                                    1,563   0.8    1,465   0.7


        Total identity and security management     32,056  16.1   34,233  16.6
                                                   ------  ----   ------  ----


        Systems and resource management
           Software licenses                        7,567   3.8    7,540   3.7
           Maintenance and subscriptions           30,914  15.5   31,671  15.3

        Total systems and resource management      38,481  19.3   39,211  19.0



        Total security, management and
         operating platforms                      108,152  54.4  112,275  54.4



    Collaboration solutions
          OES and NetWare-related
           Software licenses                        5,225   2.6    6,128   3.0
           Maintenance and subscriptions           35,161  17.7   35,478  17.2
                                                   ------         ------
                                                   40,386  20.3   41,606  20.1
          Collaboration
           Software licenses                        1,980   1.0    3,271   1.6
           Maintenance and subscriptions           18,978   9.5   18,867   9.1
                                                   ------         ------
                                                   20,958  10.5   22,138  10.7
          Other collaboration solutions
           Software licenses                        1,944   1.0    2,942   1.4
           Maintenance and subscriptions            5,987   3.0    5,572   2.7
                                                    -----          -----
                                                    7,931   4.0    8,514   4.1


        Total collaboration solutions              69,275  34.8   72,258  35.0



        Total software licenses, maintenance
          and subscriptions
           Software licenses                       24,968  12.5   31,256  15.1
           Maintenance and subscriptions          152,459  76.6  153,277  74.2
                                                  -------        -------
        Total product revenue                     177,427  89.2  184,533  89.4
                                                  -------  ----  -------  ----

        Services                                   21,553  10.8   21,978  10.6
                                                   ------  ----   ------  ----

      Total net revenue                          $198,980 100.0 $206,511 100.0
                                                 ======== ===== ======== =====



                                         Fiscal Year          Change from
                                                2010   %   Q4 2009 to Q4 2010
                                                ----   --  ------------------
    Security, management and
     operating platforms
        Open platform solutions
          Linux platform products
           Software licenses                      $-     -                 $-
           Maintenance and subscriptions     144,411  17.8             (2,755)
                                             -------                   ------
                                             144,411  17.8             (2,755)
          Other open platform products
           Software licenses                     109   0.0                 49
           Maintenance and subscriptions       8,088   1.0                526
                                               -----                      ---
                                               8,197   1.0                575


        Total open platform solutions        152,608  18.8             (2,180)
                                             -------  ----             ------


        Identity and security
         management
          Identity, access and
           compliance management
           Software licenses                  34,508   4.3                552
           Maintenance and subscriptions      88,637  10.9              2,250
                                              ------                    -----
                                             123,145  15.2              2,802
          Other identity and security
           management
           Software licenses                   1,416   0.2                (33)
           Maintenance and subscriptions       4,926   0.6               (709)
                                               -----                     ----
                                               6,342   0.8               (742)


        Total identity and security
         management                          129,487  15.9              2,060
                                             -------  ----              -----


        Systems and resource
         management
           Software licenses                  29,549   3.6             (1,083)
           Maintenance and subscriptions     126,502  15.6               (141)

        Total systems and resource
         management                          156,051  19.2             (1,224)



        Total security, management and
         operating platforms                 438,146  54.0             (1,344)



    Collaboration solutions
          OES and NetWare-related
           Software licenses                  20,831   2.6                624
           Maintenance and subscriptions     144,794  17.8             (2,602)
                                             -------                   ------
                                             165,625  20.4             (1,978)
          Collaboration
           Software licenses                   9,555   1.2               (556)
           Maintenance and subscriptions      77,282   9.5             (1,610)
                                              ------                   ------
                                              86,837  10.7             (2,166)
          Other collaboration solutions
           Software licenses                   9,140   1.1                321
           Maintenance and subscriptions      23,902   2.9             (1,584)
                                              ------                   ------
                                              33,042   4.1             (1,263)


        Total collaboration solutions        285,504  35.2             (5,407)



        Total software licenses,
         maintenance
          and subscriptions
           Software licenses                 105,108  12.9               (126)
           Maintenance and subscriptions     618,542  76.2             (6,625)
                                             -------                   ------
        Total product revenue                723,650  89.1             (6,751)
                                             -------  ----             ------

        Services                              88,221  10.9             (2,373)
                                              ------  ----             ------

      Total net revenue                     $811,871 100.0            $(9,124)
                                            ======== =====            =======



                                          Change from
                                    Q4 2009 to Q4 2010    FY 2009 to FY 2010
                                    ------------------    ------------------
    Security, management and
     operating platforms
        Open platform solutions
          Linux platform products
           Software licenses          -               $-                 -
           Maintenance and
            subscriptions          (7.1)          (4,751)             (3.2)
                                   ----           ------              ----
                                   (7.1)          (4,751)             (3.2)
          Other open platform
           products
           Software licenses      233.3              (16)            (12.8)
           Maintenance and
            subscriptions          26.6              496               6.5
                                   ----              ---               ---
                                   28.8              480               6.2



        Total open platform
         solutions                 (5.3)          (4,271)             (2.7)
                                   ----           ------              ----


        Identity and security
         management
          Identity, access and
           compliance management
           Software licenses        5.3            2,600               8.1
           Maintenance and
            subscriptions          11.5            8,297              10.3
                                   ----            -----              ----
                                    9.4           10,897               9.7
          Other identity and
           security management
           Software licenses       (7.7)            (549)            (27.9)
           Maintenance and
            subscriptions         (39.8)          (1,911)            (28.0)
                                  -----           ------             -----
                                  (33.6)          (2,460)            (27.9)



        Total identity and
         security management        6.4            8,437               7.0
                                    ---            -----               ---


        Systems and resource
         management
           Software licenses      (12.6)          (4,257)            (12.6)
           Maintenance and
            subscriptions          (0.4)            (461)             (0.4)


        Total systems and
         resource management       (3.0)          (4,718)             (2.9)




        Total security,
         management and operating
         platforms                 (1.2)            (552)             (0.1)



    Collaboration solutions
          OES and NetWare-related
           Software licenses       11.3              599               3.0
           Maintenance and
            subscriptions          (6.8)         (12,730)             (8.1)
                                   ----          -------              ----
                                   (4.5)         (12,131)             (6.8)
          Collaboration
           Software licenses      (14.5)          (5,267)            (35.5)
           Maintenance and
            subscriptions          (7.9)          (7,841)             (9.2)
                                   ----           ------              ----
                                   (8.9)         (13,108)            (13.1)
          Other collaboration
           solutions
           Software licenses       12.2           (4,921)            (35.0)
           Maintenance and
            subscriptions         (22.1)          (3,302)            (12.1)
                                  -----           ------             -----
                                  (12.9)          (8,223)            (19.9)



        Total collaboration
         solutions                 (7.0)         (33,462)            (10.5)



        Total software licenses,
         maintenance
          and subscriptions
           Software licenses       (0.4)         (11,811)            (10.1)
           Maintenance and
            subscriptions          (4.1)         (22,203)             (3.5)
                                   ----          -------              ----
        Total product revenue      (3.5)         (34,014)             (4.5)
                                   ----          -------              ----

        Services                   (9.7)         (16,300)            (15.6)
                                   ----          -------             -----

      Total net revenue            (4.2)        $(50,314)             (5.8)
                                   ====         ========              ====


                           Novell, Inc.
         Major IT Software and Solutions Included Within
                        Reported Line Items


      Security, Management and Operating Platforms

        Open Platform Solutions

          Linux Platform Products

            > SUSE LINUX Enterprise Server
            > SUSE LINUX Enterprise Desktop

          Other Open Platform Products

            > SUSE Engineering


        Identity and Security Management

          Identity, Access and Compliance Management

            > Identity Manager
            > SecureLogin
            > Access Manager
            > Sentinel

          Other Identity and Security Management

            > eDirectory


        Systems and Resource Management

          > ZENworks Suite
          > ZENworks Patch Management
          > ZENworks Asset Management
          > ZENworks Linux Management
          > ZENworks Configuration Management
          > PlateSpin
          > Business Service Management


      Collaboration Solutions

          Open Enterprise Server and NetWare-Related

            > Open Enterprise Server (OES)
            > NetWare
            > Cluster Services

          Collaboration

            > GroupWise
            > Teaming + Conferencing

          Other Collaboration Solutions

            > BorderManager


      Services

          > Professional Services
          > Technical Support Services
          > Training Services

SOURCE Novell, Inc.


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