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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED OCTOBER 30, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM --------------------
TO
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Commission File Number: 0-13351
NOVELL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 87-0393339
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
122 East 1700 South
Provo, Utah 84606
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
(801) 429-7000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.10 per share
Preferred Share Purchase Rights
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
The aggregate market value of the registrant's common stock held by
nonaffiliates on January 11, 1994 (based on the last reported price of the
Common Stock on the NASDAQ National Market System on such date) was
$6,084,873,630.
As of January 11, 1994 there were 308,833,023 shares of the registrant's
common stock outstanding.
Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended October 30, 1993, are incorporated by reference in Parts II and IV of
this Form 10-K to the extent stated herein. Portions of the Registrant's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held on
March 9, 1994, are incorporated by reference in Part III of this Form 10-K to
the extent stated herein.
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PART I
ITEM 1. BUSINESS
THE COMPANY
Novell, Inc. ("Novell" or the "Company") is an information system software
company, which develops, markets and services specialized and general purpose
operating system products and application programming tools. Novell's
NetWare(R), UnixWare(TM) and AppWare(TM) families of products provide matched
software components for distributing information resources within local, wide
area and internetworked information systems.
The Company was incorporated in Delaware on January 25, 1983. Novell's
executive offices are located at 122 East 1700 South, Provo, Utah 84606. Its
telephone number at that address is (801) 429-7000.
The Company sells its products domestically and internationally through 33
U.S. sales offices and 31 foreign offices. The Company sells its products
primarily through distributors and national retail chains, who in turn sell the
Company's products to retail dealers. The Company also sells its products
through OEMs, system integrators, and VARs.
The Company conducts product development activities in Cupertino, Monterey,
San Jose, Sunnyvale, and Walnut Creek, California; Boulder, Colorado; Natick,
Massachusetts; Summit, New Jersey; Austin, Texas; Provo, Salt Lake City, and
Sandy, Utah; Toronto, Canada; and Hungerford, U.K. It also contracts out some
product development activities to other third-party developers.
In December 1990, the Company announced that Canon, Fujitsu, NEC, Sony, and
Toshiba, five major Japanese computer companies, joined SOFTBANK Corporation and
Novell as investment partners in Novell Japan, Ltd., a Tokyo-based joint venture
inaugurated in April 1990. Novell has a 54% ownership interest, and accordingly,
the financial statements of Novell Japan, Ltd. are consolidated in the financial
statements of the Company, with the minority interest in profit or loss offset
within other income and expense.
In April 1991, the Company invested $15.0 million in UNIX System
Laboratories, Inc. (USL), a subsidiary of AT&T that develops and licenses the
UNIX operating system and other standards-based software to customers worldwide.
In December 1991, the Company announced the formation of Univel, a joint venture
with USL, formed to accelerate the expanded use of the UNIX operating system in
the personal computer and network computing marketplace. Novell and USL
contributed cash and technology rights to Univel. Then in June 1993, the Company
acquired the remaining portion of USL by issuing approximately 11.1 million
shares of Novell common stock valued at $321.8 million in exchange for all of
the outstanding stock of USL not previously owned by Novell and assumed
additional liabilities of $9.4 million. The transaction was accounted for as a
purchase and, on this basis, resulted in a one-time write-off of $268.7 million
for purchased research and development in the third quarter of fiscal 1993.
On October 28, 1991, the Company completed a merger with Digital Research
Inc. (DRI), a producer of personal computer operating software, whereby DRI
became a wholly owned subsidiary of Novell. There were 6.0 million shares of
Novell common stock exchanged for all of the outstanding stock of DRI. This
transaction was accounted for as a pooling of interests; however, prior year
financial statements have not been restated due to immateriality.
In April 1992, the Company purchased all of the outstanding stock of
International Business Software, Ltd. (IBS), a developer of distributed
computing technology for Apple Macintosh computers, for $5.2 million cash,
whereby IBS became a wholly owned subsidiary of Novell.
In June 1992, the Company purchased all of the outstanding stock of Annatek
Systems, Inc. (Annatek), a developer of software distribution products, for
$10.0 million cash, whereby Annatek became a wholly owned subsidiary of Novell.
In June 1993, the company purchased all of the outstanding stock not
previously owned by Novell of Serius Corporation (Serius), a developer of
object-based application tools, for $17.0 million cash and assumed
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liabilities of $5.0 million, whereby Serius became a wholly owned subsidiary of
Novell. Novell previously had invested cash of $1.1 million in Serius. This
transaction was accounted for as a purchase and, on this basis, resulted in a
one-time write-off of $22.1 million for purchased research and development in
the third quarter of fiscal 1993.
In June 1993, the Company acquired all of the outstanding stock of Software
Transformation, Inc. (STI), a developer of software development tools, by
issuing approximately 800,000 shares of Novell common stock in exchange for all
of the outstanding stock of STI. The transaction was accounted for as a pooling
of interests; however, prior periods were not restated due to immateriality.
In July 1993, the Company acquired all of the outstanding stock of Fluent,
Inc. (Fluent), a developer of multimedia software for personal computers, for
$18.5 million cash and assumed liabilities of $3.0 million, whereby Fluent
became a wholly owned subsidiary of Novell. The transaction was accounted for as
a purchase and, on this basis, resulted in a one-time write-off of $20.7 million
for purchased research and development in the third quarter of fiscal 1993.
The Company will continue to look for similar acquisitions, investments, or
strategic alliances which it believes complement its overall business strategy.
BUSINESS STRATEGY
Novell's business strategy is to be a leading supplier of software products
for the network computing industry. Over the past several years the Company has
issued common stock or paid cash to acquire technology companies, invested cash
in other technology companies, and formed strategic alliances with still other
technology companies. Novell undertook all of these transactions to promote the
growth of the network computing industry, and in many cases to also broaden the
Company's business as a system software supplier.
Novell believes that companies implement technologies to meet business
needs. People use technology to help them to be more productive in their jobs.
As a result of these motivations, customers have made the NetWare operating
system the most popular network solution in the industry. This is a direct
result of Novell's delivery of a networking environment that contributes to the
success of individuals and companies. Novell is focused on meeting customer
needs.
To meet the needs of its customers, over the past year Novell has embarked
on a strategy to combine the industry's most proven network operating system
with the industry's most proven application platform -- UNIX. This "matched
pair" combines the best network services with the best application services to
deliver to customers the best computing platform on which to run their
businesses. These strong operating systems combine with Novell's innovative
client/server application platform to deliver a total system software solution.
Novell's mission is to accelerate the growth of the network computing
industry through responsible leadership. The Company accomplishes this by
delivering an overall networking environment which includes industry leading
product technology, programs, and partnerships. The key elements of the
Company's overall business strategy are:
Technological Leadership.
Integration Platform. Novell's NetWare network operating system provides a
platform for the integration of multiple technologies. This includes the
seamless integration of multiple desktop systems and host environments.
Novell believes that the customer environments are inherently heterogeneous
and therefore require an information system that integrates dissimilar
technologies. The goal of Novell's strategy of integrating various desktop
systems is to allow IBM and IBM-compatible, Apple Macintosh, and UNIX-based
PCs and workstations to access and share simultaneously a common set of
network resources and information. This gives customers the freedom to
choose the desktop and application server systems that best fit their
application requirements. In addition to the integration of desktops, host
environments from vendors such as IBM, DEC, HP and Olivetti are integrated
into the NetWare network so that users can access host-based resources and
information from their desktops across the network. Novell continues to
extend this hardware and infrastructure integration to other communication
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devices such as PBXs and imbedded systems such as cash registers and
process control devices. The overall objective is to seamlessly connect
users by shielding them from the underlying network technology used to
share resources and information across heterogenous systems.
Network Services. Novell delivers advanced network services on top of the
integration platform. These services enhance the functionality available to
users on the network. In the first release of NetWare eleven years ago,
those services were file and print only. While Novell has continued to
enhance NetWare file and print services, the services provided by Novell
and third parties have expanded significantly to include communications,
network and systems management, messaging, directory, software licensing
and distribution, imaging and document management, and telephony services.
Novell continues to add network services through internal development
efforts, partnerships, and acquisitions.
Application Framework: AppWare. In addition to the programming interfaces
that Novell provides for application developers, Novell has begun
delivering AppWare -- a set of development tools that significantly eases
the development of true client/server applications. AppWare allows
application developers and internal IS development teams to deliver
distributed applications that integrate and take advantage of all of the
network services available in NetWare and UnixWare.
Directory Services. With the introduction of NetWare 4 in March 1993,
Novell began to deliver an industry leading distributed naming
service -- NetWare Directory Services (NDS). NDS allows administrators and
users to view the information and resources on the network in a simple and
integrated way. It provides for one common view of the network rather than
having to track resources by knowing on which server the resource resides.
NDS allows the user to login once into the network and access information
and resources independent of physical location. While this simplifies both
the administration and use of the network, NDS also improves the security
of network information with the use of encryption technology. The NetWare
Directory Service will continue to become the centerpiece of network
services and client/server applications for the next several years.
Programs
Technical Support Alliance. In May 1991 Novell announced the formation of
the Technical Support Alliance (TSA), with 37 current members including
Apple, Compaq, Hewlett-Packard, Intel, IBM, Lotus, Microsoft, Oracle and
WordPerfect. The TSA was organized to provide one-stop multivendor support.
Certified NetWare Engineer Program. Through the Certified NetWare Engineer
(CNE) program, Novell is strengthening the networking industry's Level I
support self-sufficiency. CNEs are individuals who receive high-level
training, information, and advanced technical telephone support (Level II)
from Novell. CNEs may be employed by resellers, independent support
organizations, or Novell Support Organizations (NSOs). The NSO program
pools the capabilities of the industry's best support providers. NSOs have
contractual agreements with Novell that are designed to ensure quality
service on a national or global level.
National Authorized Education Centers. Novell offers education to end
users through more than 1,200 established Novell Authorized Education
Centers (NAECs) worldwide, which use Novell-developed courses to instruct
more than 30,000 students per month in the use and maintenance of Novell
products. Novell also offers self-paced training products.
Novell Labs. Through its Independent Manufacturer Support Program (IMSP),
Novell works with third-party manufacturers to test and certify hardware
components designed to interoperate with the NetWare operating system.
Novell distributes these tests results to inform NetWare customers about
products that have formally demonstrated NetWare compatibility. In effect,
IMSP certification programs help vendors to market their products through
Novell's distribution channels. The primary goal of IMSP is to foster
working relationships between Novell and strategic third-party hardware
manufacturers. Secondary goals include promoting certified hardware to
industry resellers, anticipating industry hardware
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directions through comarketing efforts, and working with vendors to
codevelop critical network hardware components.
Client-Server NetWare Loadable Module (NLM) Testing Program. Novell is
committed to ensuring the highest quality customer solutions by raising the
level of importance that quality assurance and testing hold in the software
development cycle. The NLM testing program is a result of that commitment;
it allows developers to submit client-server NLM applications for testing.
Partnerships
Development Partners. When customers request a new network service be
added to the NetWare operating system, Novell investigates the most
effective way to deliver that functionality to the user. Very often the
best way is for Novell to partner with a company who has expertise in that
specific area. By partnering, the combination of Novell's expertise in
networks and the partner's expertise in the given product area combine to
deliver a better solution faster than if Novell would have attempted to
develop it alone.
Systems Partners. Novell partners with companies who have complimentary
software and hardware. The resulting solution is a powerful combination of
products that deliver enterprise-wide connectivity solutions. These
partners include system suppliers like IBM, DEC and HP, as well as system
integration experts like Memorex Telex, Arthur Andersen, EDS, etc.
Application Partners. Novell works very closely with application
developers to provide integrated software support for end users. Because
Novell does not market applications, relationships with software developers
can be very synergistic.
Multiple Channel Distribution Network. The Company markets a broad line of
the NetWare operating system and the UnixWare operating system through
distributors, dealers, value added resellers, systems integrators, and OEMs
as well as to major end users.
Worldwide Service and Support. The Company is committed to providing
service and support on a worldwide basis to its resellers and to their
end-user customers. The Company has established agreements with third party
service vendors to expand and complement the service provided directly by
the Company's service personnel and the Company's resellers.
PRODUCTS
The Company's products fall within three operating groups: NetWare Systems
Group (NSG), UNIX Systems Group (USG), and AppWare Systems Group (ASG).
NETWARE SYSTEMS GROUP. NSG develops operating systems products to meet
customer demands and include the following features.
Open Architecture. Novell maintains an open architecture in all of its
networking products. Application interfaces to all of the NetWare services
have been developed and published, allowing developers to take advantage of
NetWare functionality. NetWare applications interfaces provide access to
all NetWare services, including file and print, database, communications,
and messaging services.
The NetWare Directory Service will be the foundation for network
services and client/server applications for the next several years. Besides
enhanced NetWare file and print services, the services provided by Novell
and third parties will also include communications, network and systems
management, messaging, directory, software licensing and distribution,
imaging and document management, and telephony services.
Ease of Use. NetWare 4 reduces administrative costs by allowing network
supervisors to manage and administer their networks easily. A new graphical
utility called the NetWare Administrator consolidates all network
administration tools into a single console, giving intuitive control of the
entire network.
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Reliability. NetWare contains a wide variety of features that ensure
system reliability and data integrity. These features protect everything
from the storage medium to critical application files, allowing Novell to
provide the highest levels of network reliability in the industry.
Novell pioneered system fault tolerance in PC-based networks and
continues to lead the industry in this area. Novell's introduction of
mirrored server technology in 1992 provides the highest level of fault
tolerance for PC based networks.
Manageability. Through NetWare Distributed Management Services (NDMS),
Novell delivers industry leading products that provide network and systems
management capabilities. NetWare manages all of a customers critical
assets -- information, infrastructure, hardware, and software -- through
delivery of storage management, device, and software licensing and
distribution services.
Security. Throughout its history, the NetWare product line has provided
the tightest security features in the industry. Novell introduced the
concept of usernames, passwords, and user profiles to the network market in
NetWare as early as 1983. These user profiles list the resources to which a
user has access, and the rights he or she has while using that resource.
With version 2.15 of the NetWare operating system, network managers have
been able to specify the date, time, and location from which a user can
login to the network. Intruder detection and lockout features notify
supervisors of any unauthorized access attempt. NetWare 3 incorporates
additional security features including encrypted passwords over the wire.
NetWare 4 network operating system adds new security auditing capabilities
required in many security conscious network environments.
Workstation Independence. NetWare currently supports DOS, MS Windows,
OS/2, Macintosh, and UNIX workstations. By providing a network operating
system that can integrate all the standard workstation operating systems,
Novell gives users the freedom to choose their workstation environment
while ensuring them full network participation.
Hardware Independence. NetWare is hardware-independent and the Company has
close working relationships with more than 350 strategic third-party
hardware manufacturers. This independence and these relationships provide
the Company with a broad market for its networking software and the ability
to support new hardware as it is developed.
High Performance. When Novell introduced the Advanced NetWare network
operating system to the market in 1985, it represented a major improvement
in network operating system performance, and NetWare network operating
systems still lead the market in performance today. The NetWare 3 network
operating system extends Novell's performance leadership by providing end
users the potential of up to three times the performance of the NetWare 2
network computing products. The NetWare 4 network operating system allows
users and applications to gain access to network-wide information and
services transparently through technologies such as NetWare Directory
Services, new security capabilities, wide-area networking improvements, and
enhanced administration and management tools.
NETWARE OPERATING SYSTEMS PRODUCT LINE. The NetWare family of network
operating systems provides solutions to a wide variety of needs ranging
from small, simple networks to enterprise-wide networks and include the
following products.
NetWare 4. In March 1993, Novell introduced the NetWare 4 operating
system. An elaborate demonstration showed the ability of how one network
server can support 1,000 clients or how one client can access 1,000
servers.
Novell sees itself and NetWare at the center of the converging market
forces reshaping business computing on to downsized, or rightsized
information systems. Cohesively managed computer networks are taking on
computing responsibilities held by mainframe computers over the last three
decades.
NetWare has increasingly defined a system services environment that
supports this world-wide shift away from mainframe and mid-range computing
solutions to computer networks.
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Novell's NetWare 4 operating system is designed to deliver the power
and technology to meet downsizing requirements.
All Encompassing Environment. Delivering a manageable, global, directory
framework that provides connectivity to other computing platforms enables
users to access applications and system services regardless of their
physical location on the network.
System Fault Tolerance. Providing robust business-critical reliability to
a network using the concept of server mirroring allows the workflow of the
business to be uninterrupted even in the event of a hardware failure.
Large Scale Configurations. NetWare 4 supports single server
configurations up to 1,000 concurrent users, or clients, on each server.
NetWare 3. NetWare 3 is a proven, sophisticated connectivity tool for
businesses, departments, and workgroups of various sizes. NetWare 3 is a
full-featured, 32-bit network operating system that supports all key
desktop operating systems -- DOS, MS Windows, OS/2, UNIX, and
Macintosh -- as well as the IBM SAA environment. NetWare 3 provides a
high-performance integration platform for businesses requiring a
sophisticated network computing solution in a multivendor environment.
NetWare 3 offers centralized network management and is available in 5-,10-,
20-, 50-, 100-and 250-user versions, allowing organizations to standardize
on a high-performance networking solution regardless of their size.
NetWare Clients. As new desktop operating systems become available Novell
has continued its Open Desktop Strategy by offering NetWare clients and
redirectors for connection into NetWare through fulfillment and 1-800
numbers. This allows existing users of NetWare to update client network
components while maintaining their investment in NetWare servers. In 1992
Novell released Workstation kits for MS DOS, DR DOS, MS Windows 3.1 and
OS/2 2.0. These kits provide users and administrators with the ability to
get the latest desktop client support available and allows Novell the
flexibility to enhance the desktop support independently of NetWare
Operating System releases.
Messaging Services. Messaging technology provides communications
capabilities that allow messages to be sent between people, between
processes, or between a person and a process without using real-time links.
Novell also provides products with these capabilities.
NetWare MHS is a "store-and-forward" message handling service for the
Novell distributed computing platform. NetWare MHS platform supports a wide
range of services including Electronic mail (E-mail), workflow automation,
calendar and scheduling, and fax services.
Applications from more than 900 developers (including more than 150
commercial applications) operate on this foundation and support the NetWare
MHS platform.
For example, Indisy provides connectivity between mainframe,
minicomputer, and PC-based network users. Indisy's software provides for
the exchange of mail transparently across IBM SNA networks. In addition to
electronic mail, Indisy also provides software for the exchange of single
mail parcels containing spreadsheets, graphics and text, batch report
distribution, remote job submission, document translation, and other
functions.
NetWare for Macintosh. When used in conjunction with a NetWare
environment, NetWare for Macintosh brings the comprehensive networking
features of NetWare, such as enhanced security, resource accounting, and
fault tolerance, to the Apple Macintosh environment. NetWare for Macintosh
allows Macintosh, DOS, and OS/2 workstations to share data and resources in
a high-performance, secure network environment. This product is of special
interest to large-and medium-sized companies that have heterogeneous
computing environments.
NetWare for Macintosh comes in two versions: NetWare for Macintosh
4.01 and NetWare for Macintosh 3.12.
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NetWare for Macintosh 4.01 is the premier solution for integrating
Macintosh computers into the NetWare environment. It provides file
services, print services, administrative utilities, and AppleTalk routing
for Macintosh users on a NetWare 4 network. NetWare for Macintosh 4.01 also
allows fast and secure CD-ROM access and DOS-to-Macintosh application
mapping.
NetWare for Macintosh 3.12 provides NetWare file, print, routing, and
administrative utilities to Macintosh users and integrates them into the
NetWare 3 environment.
Personal NetWare. As the networking industry continues to grow, new users
are interested in simple and inexpensive entry level networking solutions
to connect small groups of users together in workgroups. In September 1991
Novell introduced a new peer-to-peer desktop networking product aimed at
this market called NetWare Lite 1.0. In July 1992 Novell released an
updated NetWare Lite 1.1 that improved the performance of NetWare Lite 1.0
by adding a full network caching and also improved the reliability and
Windows support.
Novell continued to enhance its desktop networking solutions with the
release of Personal NetWare in 1993. Personal NetWare is the ideal solution
for small businesses and for workgroups in larger businesses and
enterprise-wide NetWare networks. Personal NetWare allows users to connect
as many as 50 PCs running DOS or MS Windows so they can share hard disks,
printers, CD-ROM drives and other resources. In addition to tighter
integration with NetWare, Personal NetWare will include support for mobile
users and network management at the desktop.
Other features of Personal NetWare include a single-network view,
single login, full compatibility with other versions of the NetWare network
operating system, easy management and administration, security,
autoreconnect, and a flexible configuration to maximize memory use.
Novell DOS. In September 1991, the Company introduced DR DOS 6.0, a major
upgrade of its advanced DR DOS operating system. DR DOS 6.0 represents a
significant advance over DR DOS 5.0 and other competing products with
respect to features such as memory management, disk caching and
task-switching. The latest addition to Novell's desktop operating system
products is Novell DOS 7.
Novell DOS 7 is the first DOS that fully integrates advanced DOS
technology with networking. Novell DOS 7 advances the DOS standard by
providing state-of-the-art network and client management utilities,
workstation security, disk compression, and NetWare, with all inherent
peer-to-peer networking capabilities. Fully integrated networking makes
Novell DOS 7 the best DOS client operating system for the Novell NetWare
network operating system. It is also fully compatible with the installed
base of DOS and MS Windows applications.
COMMUNICATIONS AND CONNECTIVITY PRODUCTS. As the leader in local area
network technology, the Company has made a significant commitment to
implementing communications and connectivity services within the NetWare
environment.
Remote PC Access to Networks. The company provides two types of dial-in
services for remote PCs:
NetWare for SAA. NetWare for SAA 1.3B, which runs on both NetWare 3 and
NetWare 4 platforms, integrates the NetWare network operating system
with traditional IBM SNA mainframe and AS/400 environments. With NetWare
for SAA, NetWare clients can access host data and applications while
simultaneously accessing files and data on NetWare servers. Built as a
set of NetWare Loadable Modules (NLMs), NetWare for SAA capitalizes on
the high performance, security, name services, and administration
features on the NetWare operating system.
NetWare SNA Links. NetWare SNA Links 2.0 is an NLM that works with
NetWare for SAA to provide LAN-to-LAN communications over existing SNA
networks. With NetWare SNA Links, users in geographically dispersed
branch offices can access remote LAN and host resources over SDLC and
Token-Ring backbones without requiring specialized software on the host.
Network supervisors can administer branch office servers from a central
location using standard NetWare utilities and management products.
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When installed on a NetWare 3 server or a NetWare MultiProtocol Router
2.0, NetWare SNA Links can route IPX, IP, AppleTalk, and OSI over leased
lines using the Point-to-Point Protocol or using X.25 private or public
data networks.
INTERNETWORKING PRODUCTS. Novell's internetworking products connect NetWare
services at headquarters with services at branch offices, providing access to
information and NetWare resources.
NetWare MultiProtocol Router. The NetWare MultiProtocol Router v2.11 and
NetWare MultiProtocol Router Plus v2.11 are software-based bridge/routers that
run on 80386, 80486, and Pentium PCs. These bridge/routers enable users to
connect to remote offices using familiar NetWare and PC technology. NetWare
MultiProtocol Router is ideal for connecting local area networks by routing the
IPX, IP, AppleTalk, and OSI protocols over a wide range of LAN types, and
source-route bridging over Token-Ring. NetWare MultiProtocol Router Plus
provides remote routing and source-bridge routing over leased lines, Frame
Relay, and x.25.
UNIX SYSTEMS GROUP. USG provides a full suite of UNIX operating system and UNIX
connectivity products. Key products include:
Operating System Products. Novell's UnixWare operating system provides a
powerful application server and client for today's distributed computing
environments. The current product offerings are the UnixWare Application Server
1.1 and the UnixWare Personal Edition 1.1. UnixWare uses the network services
available from NetWare and the cross-platform development tools available from
AppWare to make applications available throughout the entire enterprise.
UnixWare is easy to use, enabling users to be productive right away. Its fully
graphical user interface gives users access to all the enterprise-wide
information and services available in the corporate computing environment with
simple point-and-click mouse functions. UnixWare also supports a variety of
international languages.
Optional products for the Application Server systems include: UnixWare
Server Merge for Windows, which provides UnixWare users with multiuser DOS
access and limited multiuser MS Windows access; UnixWare Online Data Manager
1.1, a UNIX System V, industry-standard, robust file system designed to maximize
system and data availability and improve I/O performance; and OracleWare
System-UnixWare Edition, a powerful applications data server platform which
integrates the UnixWare Application Server 1.1 operating system with Oracle 7
cooperative database server on a single CD-ROM disk.
Optional add-on products for UnixWare Personal Edition include UnixWare
NFS, which enables resource-sharing with other UNIX systems; UnixWare C2
Auditing, which records security-related events to help detect attempts to
breach security; and UnixWare Encryption Utilities, which provide support for
DES encryption and decryption.
Novell also supplies the UNIX operating system source code to other UNIX
system vendors. The latest version, UNIX System V Release 4.2 (SVR4.2), unifies
several earlier versions and offers greatly enhanced ease of use and ease of
administration features.
UNIX Connectivity Products. Novell provides several product families designed
to integrate NetWare into the UNIX and TCP/IP environments.
NetWare NFS provides UNIX workstations with transparent access to the
NetWare 3 and NetWare 4 file systems. Once NetWare NFS is installed,
workstations with NFS client services can share files with other NetWare
clients-such as DOS, Macintosh and OS/2 workstations. NetWare NFS enables UNIX
and NetWare clients to share all network printing devices. It also provides an X
Window System application that enables UNIX network supervisors to remotely
manage NetWare servers. NetWare FLeX/IP provides all the services delivered in
the NetWare NFS product except the transparent access to the NFS distributed
file system.
The NetWare NFS Gateway enables DOS and MS Windows users on NetWare to
transparently access files on NFS servers. It extends the users' reach into the
UNIX world yet preserves the familiar NetWare look and feel. The NetWare NFS
Gateway provides easy-to-use, server-based installation, administration and
management.
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Novell's popular LAN WorkPlace family of products provides users with fast,
direct access to enterprise-wide TCP/IP resources, including the Internet, from
a variety of desktop workstations. LAN WorkPlace for DOS offers unsurpassed
flexibility by including both DOS and MS Windows TCP/IP applications, as well as
new native language versions in French, German, Spanish, Portuguese and
Japanese. LAN WorkGroup provides the same versatile connectivity to DOS and MS
Windows users of large NetWare networks; its server-based installation,
maintenance and management greatly reduce administration time and costs. LAN
WorkPlace products are also available for such users of Macintosh and OS/2
systems. Mobile WorkPlace is the newest member of the family, enabling users to
access TCP/IP resources when they're on the road just as if they were in the
office.
NetWare/IP is another way for customers to tightly integrate NetWare
services into their TCP/IP environments. By installing NetWare/IP on existing
NetWare 3 and NetWare 4 servers, customers can create an environment that
supports both the TCP/IP and IPX transport protocols, or one that uses TCP/IP
only.
Novell also offers a solution for integrating Open Systems Interconnection
(OSI) with NetWare. NetWare FTAM from Firefox is a fully FOSIP-compliant FTAM
server that enables a variety of FTAM clients to access the NetWare 3 file
system. This standard protocol-based product provides a key to enabling
multivendor interoperability with NetWare systems.
APPWARE SYSTEMS GROUP. ASG provides tools and technologies for the development
of network-aware applications. Four key requirements are the focus of ASG's
product line: (1) object based tools and systems for use by corporate and
consulting developers for rapid network application development, (2) libraries
for use by commercial software vendors for writing portable source code,
covering dominant desktop and network system services, (3) transaction
processing monitor technology for the creation and management of mission-
critical corporate transaction applications, and (4) operating systems and
network access technologies for office, commercial, and industrial devices to
connect into local area networks.
AppWare Bus and AppWare Loadable Modules. The AppWare Bus and ALMs provide a
model for software components from separate vendors to work together in custom
applications. The AppWare Bus is a sophisticated engine for managing the
interactions between the ALM components. Novell and many third parties provide
high-level, easy to use ALMs covering network, DBMS, communications, multimedia,
and other application fields. When accessed by a development tool such as
Novell's Visual AppBuilder, the AppWare Bus allows all ALMs to be used rapidly
in any combination to create powerful applications. The AppWare Bus and ALMs are
usually bundled with other Novell products, and several OEM agreements are in
place for building within other vendors' development tools.
Visual AppBuilder. Visual AppBuilder is Novell's rapid development tool for
corporate and consulting developers. It provides an intuitive, visual interface
to application construction, empowering developers who need not necessarily be
fluent with traditional languages such as C and C++. Visual AppBuilder accesses
the AppWare Bus and ALMs to provide the component engine and component set for
developers to visually assemble into custom applications. Visual AppBuilder,
when combined with network ALMs, is one of the most effective tools for building
network-aware applications. Visual AppBuilder is targeted for sale through a
variety of distribution channels, and will be bundled with several other Novell
products.
ALM SDK. The ALM SDK is a tool for C and C++ programmers to use to create new
ALMs. The interface to the AppWare Bus is provided, allowing any third party
programmer or vendor to create ALMs that interoperate with Novell's ALMs. The
ALM SDK is bundled with Visual AppBuilder.
AppWare Foundation. AppWare Foundation is a set of libraries which provide an
application programming interface (API) for C and C++ developers to write
portable source code. The problem of portability which is addressed by the
AppWare Foundation is perhaps one of the most important issues facing software
vendors today. Using the AppWare Foundation, a programmer may write code once
for a new application or software component, and simply recompile the code to
run on any of the dominant desktop computing systems, including MS Windows,
MacIntosh, UnixWare and other versions of UNIX, and soon OS/2 and Windows NT.
The Foundation offers such portable APIs covering graphical interfaces,
operating systems, network systems, and network services. AppWare Foundation is
targeted for sale through a variety of
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distribution channels, and several OEM relationships have been formed to
distribute the Foundation libraries as a part of third party development tools.
Tuxedo. Derived from Novell's 1993 acquisition of USL, Tuxedo is a
sophisticated transaction processing manager for mission critical
transaction-oriented applications. Tuxedo provides both client and server
software for connecting client applications and server services together with a
highly reliable, high-performance, secure, managed transaction connection. In
use today in mission critical applications within Fortune 500 companies, Tuxedo
is well recognized as a leading offering in its field. Its integration with
NetWare, via NLMs, and AppWare, via ALMs, provides those key Novell products
with effective transaction processing facilities. Tuxedo is sold largely through
OEM agreements with major system software vendors, and directly to large
corporate customers.
Extended Networks Group products. The Extended Networks Group is developing and
providing system software and application technologies for integrating office,
commercial, and industrial devices into NetWare networks. While its products are
not yet announced, they will include technology components such as:
FlexOS. Novell's FlexOS is a 32-bit real time operating system which is
most often embedded in business, commercial, and industrial devices to make
such devices "intelligent". Widely used today in point-of-sale and
industrial hardware systems, Flex OS will play an important role in the
extension of NetWare LANs into emerging device markets.
Device-centric ALMs. AppWare Loadable Modules which control devices
through NetWare networks will offer complete system control to application
developers. Given the other ALMs described above, applications will be able
to be created quickly integrating control over desktop computer functions,
network functions, and device functions.
PRODUCT DEVELOPMENT
Due to the rapid pace of technological change in its industry, the Company
believes that its future success will depend, in part, on its ability to enhance
and develop its network and communications software products to satisfactorily
meet specific market needs.
The Company's current product development activities include the
enhancement of existing products and the development of products that will
support (1) further integration of NetWare and UNIX environments and the
establishment of UnixWare as an industry-leading UNIX platform; (2) network
management services; (3) global naming services; (4) international networking
standards; (5) integrated peer services in NetWare clients; (6) integration of
current and future desktop operating systems into the overall networking
environment; (7) host-based versions of NetWare, such as NetWare for UNIX and
NetWare for OS/2; (8) processor independent versions of NetWare; (9) additional
network services; (10) technologies for distributed applications development and
operation; (11) AppWare ALMs for a broad range of Novell and UNIX services; and
(12) multiplatform and multivendor APIs for major network services.
During fiscal 1993, 1992, and 1991, product development expenses were
approximately $164.9 million, $120.8 million, and $77.9 million, respectively.
The Company's product development effort consists primarily of work performed by
employees; however, the Company also utilizes third-party technology partners to
assist with product development.
SALES AND MARKETING
Novell markets its NetWare family of network products and the UnixWare
operating system through distributors, dealers, vertical market resellers,
systems integrators, and OEMs who meet the Company's criteria, as well as to
major end users. In addition, the Company provides technical support, training,
and field service to its customers from its field offices and corporate
headquarters. The Company also conducts sales and marketing activities from its
offices in Cupertino, Monterey, San Jose, and Sunnyvale, California; Summit, New
Jersey; Austin, Texas; Provo and Sandy, Utah; and from its 33 U.S. domestic and
31 foreign field offices.
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Distributors. Novell has established a network of independent distributors,
which resell the Company's products to dealers, smaller VARs, and computer
retail outlets. As of December 31, 1993, there were approximately 21 domestic
distributors and approximately 113 foreign distributors.
Dealers. The Company also markets its products to large-volume dealers and
regional and national computer retail chains.
VARs and Systems Integrators. Novell also sells directly to value added
resellers and systems integrators who market data processing systems to vertical
markets, and whose volume of purchases warrants buying directly from the
Company.
OEMs. The Company licenses its network software to domestic and international
OEMs for integration with their products. With the acquisitions of USL and DRI,
the number of OEM agreements the Company has increased significantly as USL and
DRI have marketed their products quite extensively through OEMs, both
domestically and internationally.
End Users. Generally, the Company refers prospective end-user customers to its
resellers. However, the Company has the internal resources to work directly with
major end users and has developed master license agreements with approximately
150 of them to date. Additionally, some upgrade products are sold directly to
end users.
Export Sales. In fiscal 1993, 1992, and 1991, approximately 48%, 47%, and 44%,
respectively, of the Company's net sales were to customers outside the
U.S.--primarily distributors. (See Note L of Notes to Consolidated Financial
Statements.) To date, substantially all international sales except Japanese
sales have been invoiced by the Company in U.S. dollars, and in fiscal 1994 the
Company anticipates that substantially all foreign revenues except Japanese
sales, will continue to be invoiced in U.S. dollars. Except for Germany, which
accounted for 11% of revenue in fiscal 1993, 13% of revenue in fiscal 1992 and
10% of revenue in fiscal 1991, no one foreign country accounted for more than
10% of net sales in any period. Except for one multi-national distributor which
accounted for 12% of revenue in fiscal 1993, no customer accounted for more than
10% of revenue in any period.
Marketing. The Company's marketing activities include distribution of sales
literature and press releases, advertising, periodic product announcements,
support of NetWare user groups, publication of technical and other articles in
the trade press, and participation in industry seminars, conferences, and trade
shows. The marketing departments of the Company employ many technical
laboratories of networked computer equipment and individual device testing and
evaluation. The knowledge derived from these laboratories is the basis for the
technical publications published by the Company. These activities are designed
to educate the market about local area networks in general, as well as to
promote the Company's products. Through the Professional Developers Program, the
Company strongly supports independent software and hardware vendors in
developing products that work on NetWare networks. Thousands of multiuser
application software packages are now compatible with the NetWare operating
system. In March 1993, the ninth annual BrainShare Conference (formerly
Developers' Conference) was held to inform and educate developers about NetWare
product strategy, NetWare open architecture programming interfaces, and NetWare
third-party product certification programs.
SERVICE, SUPPORT, AND EDUCATION
The purpose of any service program is to help users get the most out of the
products they buy. Novell offers a variety of support alternatives and
encourages users to select the services that meet their own needs. These include
the worldwide service and support organization, the Technical Support Alliance,
the CNE program, NAECs, IMSP and the ClientServer NLM Testing Program.
MANUFACTURING SUPPLIERS
The Company's products, which consist primarily of software diskettes and
manuals, are duplicated by outside vendors. This allows the Company to minimize
the need for expensive capital equipment in an industry in which multiple
high-volume manufacturers are available.
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BACKLOG
Lead times for the Company's products are typically short. Consequently,
the Company does not believe that backlog is a reliable indicator of future
sales or earnings. The absence of significant backlog may contribute to
unpredictability in the Company's net income and to fluctuations in the
Company's stock price. See "Factors Affecting Earnings and Stock Price." The
Company's backlog of orders at January 21, 1994, was approximately $35.3
million, compared with $35.7 million at January 22, 1993.
COMPETITION
Novell competes in the highly competitive market for computer software,
including in particular, network operating systems, desktop operating systems
and related systems software. In the market for network operating systems,
Novell believes that the principal competitive factors are hardware independence
and compatibility, availability of application software, marketing strength in
desktop operating systems, system/performance, customer service and support,
reliability, ease of use, price/performance, and connectivity with minicomputer
and mainframe hosts.
The market for operating systems software, including network operating
systems and client operating systems, has become increasingly problematic due to
Microsoft's growing dominance in all sectors of the software business. The
Company does not have the product breadth and market power of Microsoft.
Microsoft's dominant position provides it with enormous competitive advantages,
including the ability to unilaterally determine the direction of future
operating systems and to leverage its strength in one or more product areas to
achieve a dominant position in new markets. This position may enable Microsoft
to increase its dominance even if the Company succeeds in continuing to
introduce products with superior performance and features to those offered by
Microsoft.
Microsoft's ability to offer networking functionality in future versions of
MS Windows and Windows NT, or to provide incentives to customers to purchase
certain products in order to obtain favorable sales terms or necessary
compatibility or information with respect to other products, may significantly
inhibit the Company's ability to maintain its business. Moreover, Microsoft's
ability to offer products on a bundled basis can be expected to impair the
Company's competitive position with respect to particular products. Novell may
be unable to maintain compatibility with Microsoft's key products, although
Novell will continue to seek to do so.
The Company has not succeeded in establishing significant sales from DR DOS
following its acquisition of Digital Research Inc. in October 1991. The Company
believes that it will continue to be at a substantial competitive disadvantage
in selling its client operating systems due in part to Microsoft's dominance and
certain of Microsoft's pricing and licensing practices. Such competitive
position and practices may prevent the Company from successfully offering
products to a broad variety of customers or from maintaining demand for these
products. There can be no assurance that the Company will be successful in
competing against Microsoft in any market or market segment in the future.
The application software development tools market in which Novell now
operates is also highly competitive. There can be no assurance that Novell will
be successful in competing in this market or any other market in the future.
LICENSES, PATENTS AND TRADEMARKS
The Company currently relies on copyright, patent, trade secret and
trademark law, as well as provisions in its license, distribution and other
agreements in order to protect its intellectual property rights. The Company
currently holds six United States patents and has numerous United States patents
pending. Additionally, the Company has a number of patents pending in foreign
jurisdictions. No assurance can be given that such patents pending will be
issued or, if issued, will provide protection for the Company's competitive
position. Although the company intends to protect its patent rights vigorously,
there can be no assurance that these measures will be successful. Additionally,
no assurance can be given that the claims on any patents held by the Company
will be sufficiently broad to protect the Company's technology. In addition, no
assurance can be given that any patents issued to the Company will not be
challenged, invalidated or
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circumvented or that the rights granted thereunder will provide competitive
advantages to the Company. The loss of patent protection on the Company's
technology or the circumvention of its patent protection by competitors could
have a material adverse effect on the Company's ability to compete successfully
in its products business.
The software industry is characterized by frequent litigation regarding
copyright, patent and other intellectual property rights. There can be no
assurance that third parties will not assert claims against the Company with
respect to existing or future products or that licenses will be available on
reasonable terms, or at all, with respect to any third party technology. In the
event of litigation to determine the validity of any third party claims, such
litigation could result in significant expense to the Company and divert the
efforts of the Company's technical and management personnel, whether or not such
litigation is determined in favor of the Company.
In the event of an adverse result in any such litigation, the Company could
be required to expend significant resources to develop non-infringing technology
or to obtain licenses to the technology which is the subject of the litigation.
There can be no assurance that the Company would be successful in such
development or that any such licenses would be available. In addition, the laws
of certain countries in which the Company's products are or may be developed,
manufactured or sold may not protect the Company's products and intellectual
property rights to the same extent as the laws of the United States.
EMPLOYEES
As of December 31, 1993, the Company had 4,335 employees. The functional
distribution of its employees was: sales and marketing -- 939; product
development and marketing-1,817; general and administrative -- 487; service,
support and education -- 807; operations -- 146; and joint ventures -- 139. Of
these, 349 employees are located in U.S. field offices, and 755 employees are in
offices outside the U.S. All other Company personnel are based at the Company's
facilities in Utah, California, Colorado, Massachusetts, New Jersey, or Texas.
None of the employees is represented by a labor union, and the Company considers
its employee relations to be excellent.
Competition for qualified personnel in the computer industry is intense. To
make a long-term relationship with the Company rewarding, Novell endeavors to
give its employees and consultants challenging work, educational opportunities,
competitive wages, and, through sales commission plans, bonuses, and stock
option and purchase plans, opportunities to participate financially in the
Company.
FACTORS AFFECTING EARNINGS AND STOCK PRICE
In addition to factors described above under "Competition" which may
adversely affect the Company's earnings and stock price, other factors may also
adversely affect the Company's earnings and stock price. The successful
combination of companies in the high technology industry may be more difficult
to accomplish than in other industries. There can be no assurance that Novell
will be successful in integrating acquired businesses into its own, that it will
retain their key technical and management personnel or that Novell will realize
any of the other anticipated benefits of the acquisitions.
The computer software industry has experienced delays in its product
development and "debugging" efforts, and the Company could experience such
delays in the future. Significant delays in developing, completing or shipping
new or enhanced products would adversely affect the Company. Furthermore, it can
be expected that as products become more complex, development cycles will become
longer and more expensive. There can be no assurance that Novell will be able to
respond effectively to technological changes or new product announcements by
others, or the Novell's research and development efforts will be successful.
The Company's industry is characterized by rapid technological change,
resulting in continuing pressure for price/performance improvements in response
to advances in computer software and hardware technology. The Company believes
that its future success will depend on its ability to continue to enhance its
current products and to develop and introduce new products that maintain its
technological leadership and achieve market acceptance.
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In particular, the Company has recently introduced the NetWare 4 operating
system, a new version of the NetWare operating system which provides increased
functionality as compared to prior releases of the NetWare product, including
the ability to support a substantial increase in the number of clients connected
on a single network. As with the introduction of any major new product or
upgrade, the introduction of the product may cause a deferral in orders or
reduction in demand for prior versions of the NetWare operating system, as
customers and value-added resellers evaluate the functionality of the new
product. Moreover, because the new product addresses new market segments and is
offered at a higher price than prior NetWare product releases, the Company is
unable to predict the level of demand for the NetWare 4 operating system which
will actually occur. Should orders and sales for either the NetWare 4 operating
system or prior versions of the NetWare product fall short of the Company's
objectives, the Company could experience excess inventories and unexpected
costs. As a result, the Company's future sales and earnings may be subject to
substantial fluctuations, particularly in the near term.
The introduction of new products also involves material marketing risks due
to the possibility of errors or shortfalls in product performance. Should any
new product experience a high rate of bugs or performance difficulties, the
Company could experience product returns, unexpected warranty expenses and lower
than expected sales. No assurance can be given as to the Company's financial
results during such periods.
The Company's future earnings and stock price could be subject to
significant volatility, particularly on a quarterly basis. The Company's
revenues and earnings may be unpredictable due to the Company's shipment
patterns. As is typical in the software industry, a high percentage of Novell's
revenues are earned in the third month of each fiscal quarter and tend to be
concentrated in the latter half of that month. Accordingly, quarterly financial
results are difficult to predict and quarterly financial results may fall short
of anticipated levels. Because the Company's backlog early in a quarter is not
generally large enough to assure that it will meet its revenue targets for any
particular quarter, quarterly results may be difficult to predict until the end
of the quarter. A shortfall in shipments at the end of any particular quarter
may cause the results of that quarter to fall significantly short of anticipated
levels. Due to analysts' expectations of continued growth and the high
price/earnings ratio at which the Company's common stock trades, any such
shortfall in earnings could have an immediate and very significant adverse
effect on the trading price of the Company's common stock in any given period.
As a result of the foregoing factors and other factors that may arise in
the future, the market price of the Company's common stock may be subject to
significant fluctuations over a short period of time. These fluctuations may be
due to factors specific to the Company, to changes in analysts' earnings
estimates, or to factors affecting the computer industry or the securities
markets in general.
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ITEM 1A. EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are the names, ages, titles with Novell, and present and
past positions of the persons currently serving as executive officers of Novell.
HAS BEEN
OFFICER
NAME AGE SINCE POSITION OR OFFICE
- ------------------------------------ --- -------- ----------------------------------------
Raymond J. Noorda................... 69 1983 Chairman of the Board, President, and
Chief Executive Officer
Mary M. Burnside.................... 46 1989 Office of the President and Chief
Operating Officer
James R. Tolonen.................... 44 1989 Office of the President and Chief
Financial Officer
Michael J. DeFazio.................. 47 1994 Executive Vice President, UNIX Systems
Group
John W. Edwards..................... 38 1992 Executive Vice President, AppWare
Systems Group
Richard W. King..................... 37 1993 Executive Vice President, NetWare
Systems Group
Kanwal S. Rekhi..................... 47 1989 Executive Vice President, Corporate
Technology and Director
David R. Bradford................... 43 1986 Senior Vice President, General Counsel,
and Corporate Secretary
Robert W. Davis..................... 36 1994 Senior Vice President, Corporate
Marketing
Ernest J. Harris.................... 46 1994 Senior Vice President, Human Resources
Joseph A. Marengi................... 40 1993 Senior Vice President, Worldwide Sales
Jan E. Newman....................... 33 1992 Senior Vice President, Service and
Support and Novell Labs
Stephen C. Wise..................... 39 1990 Senior Vice President, Finance
Darcy G. Mott....................... 41 1989 Treasurer
Raymond J. Noorda, a founder of the Company, has been President, Chief
Executive Officer, and a director of the Company since March 1983, and Chairman
of the Board since January 1986.
Mary M. Burnside joined the Company in January 1988 as Materials Manager.
In November 1988, she was promoted to Vice President, Operations. In January
1989 she became Senior Vice President, Operations and was elected a corporate
officer. In November 1991 she became Executive Vice President, Corporate
Services Group. In August 1993 she joined the Office of the President as Chief
Operating Officer.
James R. Tolonen became a Senior Vice President and Chief Financial Officer
of Novell in August 1989 and was elected a corporate officer. In August 1993 he
joined the Office of the President as Chief Financial Officer. He served as Vice
President, Finance, Chief Financial Officer, and Treasurer of Excelan since
1983. A Certified Public Accountant, he also served as Excelan's acting
President from April through August 1985.
John W. Edwards joined the Company in August 1988 as a Senior Marketing
Manager. In November 1989 he became a Product Line Manager and in April 1991 he
became a Director of Product Marketing. In November 1991 he was promoted to
Director of Marketing and in February 1992 he became Vice President, Marketing.
In April 1992 he became Executive Vice President, Desktop Systems Group and was
elected a corporate officer. In August 1993 he became Executive Vice President,
AppWare Systems Group.
Michael J. DeFazio joined the Company as Vice President, UNIX Systems
Group, when it acquired USL in June 1993. In January 1994 he became Executive
Vice President, UNIX Systems Group and was elected a corporate officer. Previous
to the acquisition, he was USL's Executive Vice President, UNIX System V
Software. Prior to the formation of USL in 1989 he was with AT&T, responsible
for business planning, product management, marketing and licensing for UNIX
System V and associated system software.
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Richard W. King joined the Company in 1985 as Manager of Software
Development and was promoted to Vice President, Software Development in April
1986. In September 1987 he became Vice President, NetWare Products Division and
in September 1991 he became Vice President, Service and Support. Then in August
1993 he was promoted to Executive Vice President, NetWare Systems Group and was
elected a corporate officer.
Darrell L. Miller joined the Company in November 1987 as Vice President of
Corporate Marketing. In June 1988 he became Vice President and General Manager
of the Communications Products Division. In March 1989, he was promoted to
Executive Vice President, Software Group and was elected a corporate officer. In
March 1990, he became Executive Vice President, Strategic Relations. In November
1993, he resigned from the Company.
Kanwal S. Rekhi has been an Executive Vice President from June 1989 to the
present, and is currently Executive Vice President, Corporate Technology and a
director of the Company. Mr. Rekhi, a founder and executive officer of Excelan,
Inc., a company acquired by Novell in June 1989, served as Excelan's President
and Chief Executive Officer from 1988 to June 1989 and as Executive Vice
President of Business Development from 1986 to 1988. Mr. Rekhi was also
Secretary of Excelan from 1982 to 1988 and a member of its Board of Directors
from 1986 to June 1989.
David R. Bradford joined the Company in October 1985 as Corporate Counsel.
He became Corporate Secretary in January 1986, Senior Corporate Counsel in April
1986, and Senior Vice President, General Counsel, and Corporate Secretary in
April 1989.
Robert W. Davis joined the Company when it acquired Excelan in June 1989
where he had held various marketing positions since 1986. In November 1992 he
became Vice President, Connectivity Products and then in August 1993 he became
Vice President Marketing, UNIX Systems Group. In January 1994 he became Senior
Vice President, Corporate Marketing and was elected a corporate officer.
Ernest J. Harris joined the Company when it acquired Excelan in June 1989
as Vice President, Human Resources. He had served in the same capacity at
Excelan since 1984. In May 1990 he became Senior Vice President, Human Resources
and in January 1994 was elected a corporate officer.
Joseph A. Marengi joined the Company when it acquired Excelan in June 1989
where he had been National Sales Manager since January 1989. He served in
various sales positions with the Company until October 1992 when he became
Senior Vice President, Worldwide Sales. In August 1993 he was elected a
corporate officer.
Jan E. Newman joined the Company in June 1986 as a Programmer. In July 1988
he became Manager of Documentation and Testing, followed by a promotion to
Director of Software Services in November 1988. In March 1991 he became Vice
President, Support and Services and was made Vice President, NetWare Products in
November 1991. In April 1992 he became Executive Vice President, NetWare Systems
Group and was elected as a corporate officer. In August 1993 he became Senior
Vice President, Service and Support and Novell Labs.
Stephen C. Wise became Vice President, Accounting and Planning in January
1990 and was elected a corporate officer. In January 1991, he became Vice
President and Corporate Controller. In December 1993 he became Senior Vice
President, Finance. He had served previously as Corporate Controller and
Assistant Treasurer of Excelan since July 1984.
Darcy G. Mott, a Certified Public Accountant, joined the Company in
September 1986 as Manager, Financial Reporting and Taxes. He became Corporate
Controller in February 1989, was elected an officer in November 1989, and became
Treasurer in January 1991.
ITEM 2. PROPERTIES
The Company owns and occupies a 542,000 square-foot office complex in
Provo, Utah, which is used as corporate headquarters and a product development
center. In March 1993, the Company purchased a 52,000 square foot building in
San Jose, California, which it had previously leased. It is used primarily for
product
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development. The Company also owns a 175,000 square-foot office complex in
Austin, Texas. Approximately 80,000 square-feet of this complex is used as a
product development center and the remainder is leased to tenants. Additionally,
the Company owns a 100,000 square-foot office building in Herndon, Virginia. The
Company occupies approximately 1/2 of the space in this building and leases the
remainder to tenants. Additionally, the Company owns approximately 48 acres of
undeveloped land in San Jose, California and an additional 17 acres of
undeveloped land in Provo, Utah, for future expansion.
The Company has subsidiaries in Australia, Belgium, Brazil, Canada, France,
Germany, India, Italy, Japan, Korea, Mexico, South Africa, Spain, Sweden,
Switzerland, and the United Kingdom--each of which leases its facilities.
The Company leases offices for product development in Cupertino, Monterey,
San Jose, Sunnyvale, and Walnut Creek, California; Boulder, Colorado; Natick,
Massachusetts; Summit, New Jersey; Salt Lake City and Sandy, Utah; Toronto,
Canada; and Hungerford, U.K.; and a distribution facility in San Jose,
California. The Company also leases sales and support offices in Arizona,
California (6), Colorado, Connecticut, Florida (2), Georgia, Illinois,
Massachusetts (2), Michigan, Minnesota, Missouri, New Jersey, New York (2),
North Carolina, Ohio (2), Oregon, Pennsylvania (2), Tennessee, Texas (3), Utah,
Washington, Hong Kong, Singapore and Taiwan.
The terms of such leases vary from month to month to up to ten years.
ITEM 3. LEGAL PROCEEDINGS
On November 10, 1993, a suit was filed against Novell and certain of its
officers and directors alleging violation of federal securities laws. The
lawsuit was brought as a purported class action on behalf of purchasers of
Novell common stock from June 23, 1993 through July 26, 1993. Although the case
is in its earliest stages, Novell does not believe that the resolution of this
legal matter will have a material adverse effect on its financial position or
results of operations.
In December of 1991, Roger Billings and his International Academy of
Science, (the "Academy") filed suit against Novell alleging that the Company
infringes on a patent allegedly owned by the Academy. The case is still in its
pretrial phase. The Company believes that the ultimate resolution of this legal
proceeding will not have a material adverse effect on its financial position or
results of operations.
The Company is a party to a number of additional legal proceedings arising
in the ordinary course of its business. The Company believes the ultimate
resolution of these claims will not have a material adverse effect on its
financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The information required by Item 5 of Form 10-K is incorporated herein by
reference to the information contained in the section captioned "Novell, Inc.
Common Stock" on page 38 of the Company's Annual Report to Shareholders for the
fiscal year ended October 30, 1993.
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6 of Form 10-K is incorporated herein by
reference to the information contained in the section captioned "Selected
Consolidated Financial Data" on page 20 of the Company's Annual Report to
Shareholders for the fiscal year ended October 30, 1993.
18
19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by Item 7 of Form 10-K is incorporated herein by
reference to the information contained in the section captioned "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 21 through 24 of the Company's Annual Report to Shareholders for the
fiscal year ended October 30, 1993.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 of Form 10-K is incorporated herein by
reference to the Company's consolidated financial statements and related notes
thereto, together with the report of the independent auditors presented on pages
25 through 36 of the Company's Annual Report to Shareholders for the fiscal year
ended October 30, 1993, and to the information contained in the section
captioned "Selected Consolidated Quarterly Financial Data" on page 37 of the
Company's Annual Report to Shareholders for the fiscal year ended October 30,
1993.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The information required with respect to identification of directors is
incorporated herein by reference to the information contained in the section
captioned "Election of Directors" of the Registrant's definitive Proxy Statement
for the Annual Meeting of Shareholders to be held March 9, 1994, filed with the
Securities and Exchange Commission pursuant to Regulation 14A under the
Securities and Exchange Act of 1934, as amended. Information regarding executive
officers of Novell is set forth under the caption "Executive Officers" in Item
1a hereof.
Each director and each officer of the Company who is subject to Section 16
of the Securities Exchange Act of 1934 (the "Act") is required by Section 16(a)
of the Act to report to the Securities and Exchange Commission by a specified
date his or her transactions in the Company's securities. During the period from
November 1, 1992 to fiscal 1993 year end, Director Elaine R. Bond filed her Form
3 upon joining the Board of Directors in a timely manner but inadvertently
omitted a derivative security that she beneficially owned. She subsequently
amended such Form 3 to reflect such ownership, which amendment was filed late.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 of Form 10-K is incorporated by
reference to the information contained in the sections captioned "Executive
Compensation" of the Registrant's definitive Proxy Statement for the Annual
Meeting of Shareholders to be held March 9, 1994, filed with the Securities and
Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act
of 1934, as amended.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 of Form 10-K is incorporated by
reference to the information contained in the section captioned "Securities
Ownership of Certain Beneficial Owners and Management" of the Registrant's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
March 9, 1994, filed with the Securities and Exchange Commission pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended.
19
20
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 of Form 10-K is incorporated by
reference to the information contained in the section captioned "Compensation
Committee Interlocks and Insider Participation" of the Registrant's definitive
Proxy Statement for the Annual Meeting of Shareholders to be held on March 9,
1994, filed with the Securities and Exchange Commission pursuant to Regulation
14A under the Securities Act of 1934, as amended.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this annual report on
Form 10-K for Novell, Inc.:
1. The Consolidated Financial Statements, the Notes to Consolidated
Financial Statements and the Report of Ernst & Young, Independent
Auditors, listed below are incorporated herein by reference to
pages 25 through 36 of the Company's Annual Report to Shareholders
for the fiscal year ended October 30, 1993.
Consolidated Statements of Operations for the fiscal years ended
October 30, 1993, October 31, 1992, and October 26, 1991.
Consolidated Balance Sheets at October 30, 1993 and October 31, 1992.
Consolidated Statements of Shareholders' Equity for the fiscal years
ended October 30, 1993, October 31, 1992, and October 26, 1991.
Consolidated Statements of Cash Flows for the fiscal years ended
October 30, 1993, October 31, 1992, and October 26, 1991.
Notes to Consolidated Financial Statements.
Report of Ernst & Young, Independent Auditors.
PAGE
----
2. Financial Statement Schedules:
Schedule I -- Marketable Securities...................................... 22
Schedule VIII -- Valuation and Qualifying Accounts....................... 24
Schedule X -- Supplementary Income Statement Information................. 25
Schedules other than those listed above are omitted because they are not
applicable or because the required information is shown in
the consolidated financial statements or notes thereto.
3. Exhibits:
A list of the exhibits required to be filed as part of this report is set
forth in the Exhibit Index, which immediately precedes such exhibits, and
is incorporated herein by this reference thereto.......... 26
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the quarter
ended October 30, 1993.
20
21
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
NOVELL, INC.
(Registrant)
Date: January 24, 1994 By /s/ RAYMOND J. NOORDA
(Raymond J. Noorda, Chairman of the
Board,
President and Chief Executive
Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
NAME TITLE DATE
- ------------------------------------------
/s/ RAYMOND J. NOORDA Chairman of the Board, January 24, 1994
(Raymond J. Noorda) President, Chief Executive
Officer and Director
(Principal Executive
Officer)
/s/ JAMES R. TOLONEN Office of the President January 24, 1994
(James R. Tolonen) and Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ KANWAL S. REKHI Executive Vice President January 24, 1994
(Kanwal S. Rekhi) Corporate Technology
and Director
/s/ ELAINE R. BOND Director January 24, 1994
(Elaine R. Bond)
/s/ JACK L. MESSMAN Director January 24, 1994
(Jack L. Messman)
/s/ LARRY W. SONSINI Director January 24, 1994
(Larry W. Sonsini)
/s/ IAN R. WILSON Director January 24, 1994
(Ian R. Wilson)
21
22
NOVELL, INC.
SCHEDULE I -- MARKETABLE SECURITIES
NUMBER OF CARRYING
SHARES OR MARKET AMOUNT
UNITS -- VALUE IN THE
PRINCIPAL OF EACH 10/30/93
NAME OF ISSUER AND OF BONDS COST OF ISSUE AT BALANCE
TITLE OF ISSUE OR NOTES EACH ISSUE 10/30/93 SHEET
- ------------------------------------------- --------- ------------ ------------
TAX-EXEMPT MUNICIPAL
INSTRUMENTS:(1)
Arapahoe, CO Capital Improvement Trust
Fund.................................. 2,300,000 $ 2,300,000 $ 2,300,000 $ 2,300,000
Arapahoe, CO Capital Improvement Trust
Fund.................................. 1,500,000 $ 1,500,000 $ 1,500,000 $ 1,500,000
Blackrock Insured Series T-28............ 100 $ 4,993,200 $ 5,000,000 $ 4,993,200
Blackrock Insured Series T-28............ 24 $ 1,199,760 $ 1,200,000 $ 1,199,760
Brazos Higher Education Series A......... 1,500,000 $ 1,500,000 $ 1,500,000 $ 1,500,000
Connecticut Special TO Revenue Bonds..... 3,880,000 $ 3,880,000 $ 3,880,000 $ 3,880,000
Connecticut General Obligation Bonds..... 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000
Dallas Fort Worth Regional Airport
Bond.................................. 5,000,000 $ 5,000,000 $ 5,000,000 $ 5,000,000
Hawaii State Housing & Finance Corp...... 5,000,000 $ 5,000,000 $ 5,000,000 $ 5,000,000
Homestead, FL Spec Insur Assess Rev C1... 2,000,000 $ 2,000,000 $ 2,000,000 $ 2,000,000
Homestead, FL Spec Insur Assess Rev D9... 1,900,000 $ 1,900,000 $ 1,900,000 $ 1,900,000
Illinois HDA Series A.................... 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000
Illinois HDA Series 86A.................. 1,765,000 $ 1,765,000 $ 1,765,000 $ 1,765,000
Intercapital Insured Income Trust 2...... 60 $ 3,000,000 $ 3,000,000 $ 3,000,000
Intercapital Insured Income Trust Series
4..................................... 60 $ 3,000,000 $ 3,000,000 $ 3,000,000
Intercaptial Insured AMP Series
Thursday.............................. 80 $ 4,000,000 $ 4,000,000 $ 4,000,000
Intercapital Insured Income Trust Series
W..................................... 100 $ 5,000,000 $ 5,000,000 $ 5,000,000
Intercapital Quality Muni Income Series
1..................................... 45 $ 2,250,000 $ 2,250,000 $ 2,250,000
Intercapital Quality Muni Trust Series
A..................................... 66 $ 3,300,000 $ 3,300,000 $ 3,300,000
Intercapital Quality Income Series 5..... 60 $ 3,000,000 $ 3,000,000 $ 3,000,000
Joliet Regional Port District, IL ADJ
IBR................................... 2,400,000 $ 2,400,000 $ 2,400,000 $ 2,400,000
Kentucky HC Revenue Bonds................ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000
Lee County, FL School Board CTF Series
A..................................... 2,000,000 $ 2,000,000 $ 2,000,000 $ 2,000,000
Lone Star Airport Series B-1............. 1,700,000 $ 1,700,000 $ 1,700,000 $ 1,700,000
St Francis, Louisiana PFA................ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000
Maine State Educational Loan Marketing
Corp.................................. 4,000,000 $ 4,000,000 $ 4,000,000 $ 4,000,000
Maine State Housing Authority............ 4,500,000 $ 4,500,000 $ 4,500,000 $ 4,500,000
Maryland State CDA DHCD SFM.............. 2,545,000 $ 2,545,000 $ 2,545,000 $ 2,545,000
Massachusetts State HFA.................. 4,000,000 $ 4,000,000 $ 4,000,000 $ 4,000,000
Massachusetts HFA SFMR Series 7.......... 2,685,000 $ 2,685,000 $ 2,685,000 $ 2,685,000
Michigan State BAE Series A.............. 2,500,000 $ 2,500,000 $ 2,500,000 $ 2,500,000
Minnesota HFA SFMR....................... 4,000,000 $ 4,000,000 $ 4,000,000 $ 4,000,000
Missouri State EI & ERA Series A......... 1,800,000 $ 1,791,018 $ 1,800,000 $ 1,791,018
Montana Board of Housing SFMR C-2........ 2,055,000 $ 2,055,000 $ 2,055,000 $ 2,055,000
Muniyield Florida Insured Fund........... 60 $ 3,000,000 $ 3,000,000 $ 3,000,000
Muniyield Insured Fund IB................ 100 $ 5,000,000 $ 5,000,000 $ 5,000,000
Muniyield Insured Fund IE................ 60 $ 3,000,000 $ 3,000,000 $ 3,000,000
Muniyield New Jersey Fund................ 60 $ 3,000,000 $ 3,000,000 $ 3,000,000
Muniyield Qual Fund II-B Series B........ 100 $ 4,987,650 $ 5,000,000 $ 4,987,650
Muniyield Quality I-A Fund............... 100 $ 5,000,000 $ 5,000,000 $ 5,000,000
Nuveen Insured Cal Prem Inc Muni Fund.... 69 $ 3,450,000 $ 3,450,000 $ 3,450,000
Nuveen Pennsylvania Quality Income
Thursday.............................. 80 $ 4,000,000 $ 4,000,000 $ 4,000,000
Nuveen Premium Income Muni Fund.......... 3,000,000 $ 2,997,120 $ 3,000,000 $ 2,997,120
Nuveen Quality Inc Series M.............. 60 $ 3,000,000 $ 3,000,000 $ 3,000,000
Ohio State Highway GO Series R........... 4,500,000 $ 4,598,955 $ 4,500,000 $ 4,598,955
Orange County, CA Apt. Development
Corp.................................. 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000
Orlando, FL UCW&E Revenue Refunding...... 3,065,000 $ 3,065,000 $ 3,065,000 $ 3,065,000
Palm Beach County, FL School District
GO.................................... 3,435,000 $ 3,437,301 $ 3,435,000 $ 3,437,301
Panhandle Plains, TX HEW Series 92-A
SLRB.................................. 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000
Pennsylvania Housing Finance Agency...... 3,250,000 $ 3,250,000 $ 3,250,000 $ 3,250,000
Pittsburgh PA URAHI 92-A................. 2,000,000 $ 2,000,000 $ 2,000,000 $ 2,000,000
22
23
NUMBER OF CARRYING
SHARES OR MARKET AMOUNT
UNITS -- VALUE IN THE
PRINCIPAL OF EACH 10/30/93
NAME OF ISSUER AND OF BONDS COST OF ISSUE AT BALANCE
TITLE OF ISSUE OR NOTES EACH ISSUE 10/30/93 SHEET
- ------------------------------------------- --------- ------------ ------------
Rhode Island H&MFC Ser 86-A.............. 1,500,000 $ 1,500,000 $ 1,500,000 $ 1,500,000
Sisters of Charity Health Facility....... 1,300,000 $ 1,300,000 $ 1,300,000 $ 1,300,000
Tooele County, UT Series 1992-A WTRB..... 2,700,000 $ 2,700,000 $ 2,700,000 $ 2,700,000
Tooele County, UT Series 1992-A WTRB..... 4,000,000 $ 4,000,000 $ 4,000,000 $ 4,000,000
Tooele County, UT Series 1992-A WTRB..... 2,000,000 $ 2,000,000 $ 2,000,000 $ 2,000,000
Utah State General Obligation Series
92-C.................................. 2,500,000 $ 2,500,000 $ 2,500,000 $ 2,500,000
Van Kampen Merritt Muni Trust Series D... 60 $ 3,000,000 $ 3,000,000 $ 3,000,000
Van Kampen Merritt Pennsylvania.......... 75 $ 3,750,000 $ 3,750,000 $ 3,750,000
Van Kampen Merritt Trust Inv Grade A..... 70 $ 3,500,000 $ 3,500,000 $ 3,500,000
Van Kampen Merritt Trust Inv Grade
Florida............................... 60 $ 3,000,000 $ 3,000,000 $ 3,000,000
Vermont HFA Series 88-A.................. 3,085,000 $ 3,085,000 $ 3,085,000 $ 3,085,000
Wake County, NC Industrial Facilities
PCR................................... 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000
Washington State HF SFMR Series 92....... 2,260,000 $ 2,260,000 $ 2,260,000 $ 2,260,000
Wisconsin State GO Refunding Series 1.... 3,880,000 $ 3,880,000 $ 3,880,000 $ 3,880,000
Wisconsin State GO Refunding............. 2,000,000 $ 2,000,000 $ 2,000,000 $ 2,000,000
------------ ------------ -----------
SUBTOTAL......................... $200,025,004 $199,955,000 $200,025,004
MONEY MARKET FUNDS American Bond Fund...... 7,898,556 $ 7,898,556 $ 7,898,556 $ 7,898,556
American Capital-High Yield
Tax-Exempt-A.......................... 4,494,241 $ 4,494,241 $ 4,494,241 $ 4,494,241
Fidelity Spartan Money Market Fund....... 6,907,372 $ 6,907,372 $ 6,907,372 $ 6,907,372
Fidelity Tax-Exempt Money Market Trust... 3,811,922 $ 3,811,922 $ 3,811,922 $ 3,811,922
Kemper High Yield Money Market Fund...... 17,711,225 $ 17,711,225 $ 17,711,225 $17,711,225
Putnum Daily Dividend Trust MM Fund...... 4,523,528 $ 4,523,528 $ 4,523,528 $ 4,523,528
Sentra Prime Cash Money Market Fund...... 4,549,797 $ 4,549,797 $ 4,549,797 $ 4,549,797
Stein Roe Cash Reserve Money Market
Fund.................................. 1,273,546 $ 1,273,546 $ 1,273,546 $ 1,273,546
------------ ------------ -----------
SUBTOTAL......................... $ 51,170,187 $ 51,170,187 $51,170,187
MUTUAL FUNDS
American High Income..................... 90,760 $ 1,382,389 $ 1,406,785 $ 1,382,389
Calvert Tax Free Reserves................ 1,177,578 $ 12,572,876 $ 12,623,631 $12,572,876
Fidelity Advisor High Yield.............. 478,461 $ 5,665,358 $ 5,746,319 $ 5,665,358
Kemper US Government Securities.......... 527,401 $ 4,894,280 $ 4,899,554 $ 4,894,280
Kemper Diversified Income................ 551,040 $ 4,601,185 $ 4,628,737 $ 4,601,185
Liberty High Income Bond Fund............ 451,618 $ 5,039,908 $ 5,103,278 $ 5,039,908
Putnam High Yield Adv-Bbct............... 1,127,643 $ 11,693,655 $ 11,693,655 $11,693,655
Putnam Income Fund....................... 654,265 $ 4,815,392 $ 4,815,392 $ 4,815,392
Putnam High Yield-BBBA................... 882,251 $ 11,601,601 $ 11,601,601 $11,601,601
------------ ------------ -----------
SUBTOTAL......................... $ 62,266,644 $ 62,518,952 $62,266,644
OTHER
Kansas City Power & Light A.............. 5,000,000 $ 5,000,000 $ 5,000,000 $ 5,000,000
Lasmo Funding A.......................... 3 $ 3,000,000 $ 3,000,000 $ 3,000,000
Lasmo Funding C.......................... 4 $ 4,000,000 $ 4,000,000 $ 4,000,000
Gupta Common Stock....................... 1,535,000 $ 9,593,750 $ 23,025,000 $ 9,593,750
Hummer Winblad Venture Partners II....... 200,000 $ 200,000 $ 200,000 $ 200,000
West One Time Deposit.................... 345,000 $ 345,000 $ 345,000 $ 345,000
------------ ------------ -----------
SUBTOTAL......................... $ 22,138,750 $ 35,570,000 $22,138,750
TOTAL............................ $335,600,585 $349,214,139 $335,600,585
------------ ------------ -----------
------------ ------------ -----------
- ------------
(1) The portfolio includes tax exempt municipal bonds with put features and
interest rates that are reset periodically as specified with no fluctuation.
It also includes tax exempt commercial paper, and tax exempt auction rate
instruments.
23
24
NOVELL, INC.
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
ACCOUNTS RECEIVABLE ALLOWANCE
----------------------------------------------------
BALANCE AT ADDITIONS BALANCE AT
BEGINNING CHARGED TO END OF
OF PERIOD OPERATIONS DEDUCTIONS(1) PERIOD
---------- ---------- ------------- ----------
Fiscal year ended October 26, 1991....... $14,212,000 $8,737,000 $1,976,000 $20,973,000
Fiscal year ended October 31, 1992....... $20,973,000 $14,353,000 $ 584,000 $34,742,000
Fiscal year ended October 30, 1993....... $34,742,000 $18,868,000 $9,344,000 $44,266,000
- ------------
(1) Write-off of uncollectible accounts
24
25
NOVELL, INC.
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
CHARGES TO COSTS AND EXPENSES
-----------------------------------------------------------------
FISCAL YEAR ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
OCTOBER 26, OCTOBER 31, OCTOBER 30,
1991 1992 1993
----------------- ----------------- -----------------
Royalties........................ $ 7,906,000 $11,726,000 $16,441,000
Advertising costs................ $27,980,000 $35,652,000 $38,719,000
25
26
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------
3.1 Restated Certificate of Incorporation.(4) (Exhibit 3.1)............................
3.2 By-Laws. (1)(Exhibit 3.1)..........................................................
4.1 Reference is made to Exhibit 3.1...................................................
4.2 Form of certificate representing the shares of Novell Common Stock.(1)(Exhibit
4.3)...............................................................................
4.3 Rights Agreement dated December 7, 1988, between Novell, Inc. and Mellon Bank
(East) N.A., as Rights Agent, relating to the Shareholder Rights Plan.(3)(Exhibit
1)
10.1 Novell, Inc. Stock Option Plan.(8)(Exhibit 10.15)..................................
10.2 Novell, Inc., Employee Retirement and Savings Plan dated December 8, 1986.
(2)(Exhibit 10.9)..................................................................
10.3 Agreement and Plan of Reorganization dated March 23, 1989, among Novell, Inc.;
LansubCorporation; and Excelan, Inc.(5)(Appendix A)................................
10.4 Novell/Excelan Stock Option Plan. (6)(Exhibit 4.3).................................
10.5 Novell, Inc. 1989 Employee Stock Purchase Plan.(7)(Exhibit 4.1)....................
10.6 Agreement and Plan of Reorganization dated July 16, 1991, among Novell, Inc.; MDAC
Corp.; and Digital Research Inc. (9) (Appendix A)..................................
10.7 Novell, Inc. 1991 Stock Plan.(10)(Exhibit 10.1)....................................
10.8 Agreement and Plan of Reorganization and Merger dated February 12, 1993, among
Novell, Inc.; Novell Acquisition Corp.; UNIX System Laboratories, Inc.; and
American Telephone and Telegraph Company. (11)(Appendix A).........................
10.9 UNIX System Laboratories, Inc. Stock Option Plan.(12) (Exhibit 4.3)
11 Statement regarding computation of per-share earnings.(13).........................
13 Company's Annual Report to Shareholders for the fiscal year ended October 30,
1993.(13)..........................................................................
22 Subsidiaries of the Registrant.(13)................................................
24 Consent of Ernst & Young, independent auditors.(13)................................
- ----------
(1) Incorporated by reference to the Exhibit identified in parentheses, filed
as an exhibit in the Registrant's Registration Statement on Form S-1, filed
November 30, 1984, and amendments thereto (File No. 2-94613).
(2) Incorporated by reference to the Exhibit identified in parentheses, filed
as an exhibit in the Registrant's Annual Report on Form 10-K, filed for the
fiscal year ended October 25, 1986 (File No. 0-13351).
(3) Incorporated by reference to the Exhibit identified in parentheses, filed
as an exhibit in the Registrant's Current Report on Form 8-K, dated
December 7, 1988 (File No. 0-13351).
(4) Incorporated by reference to the Exhibit identified in parentheses, filed
as an exhibit in the Registrant's Annual Report on Form 10-K, filed for the
fiscal year ended October 29, 1988 (File No. 0-13351).
(5) Incorporated by reference to the Appendix identified in parentheses, filed
as an appendix in the Registrant's Registration Statement on Form S-4,
filed May 9, 1989 (File No. 33-28470).
(6) Incorporated by reference to the Exhibit identified in parentheses, filed
as an exhibit in the Registrant's Registration Statement on Form S-8, filed
on July 27, 1989 (File No. 33-29798).
(7) Incorporated by reference to the Exhibit identified in parentheses, filed
as an exhibit in the Registrant's Registration Statement on Form S-8, filed
September 28, 1989 (File No. 33-31299).
(8) Incorporated by reference to the Exhibit identified in parentheses, filed
as an exhibit in the Registrant's Registration Statement on Form S-8, filed
on September 4, 1990 (File No. 33-36673).
(9) Incorporated by reference to the Appendix identified in parentheses, filed
as an appendix in the Registrant's Registration Statement on Form S-4,
filed September 24, 1991 (File No. 33-42254).
(10) Incorporated by reference to the Exhibit identified in parentheses, filed
as an exhibit in the Registrant's Registration Statement on Form S-8, filed
June 5, 1992 (File No. 33-48395).
(11) Incorporated by reference to the Exhibit identified in parentheses, filed
as an exhibit in the Registrant's Registration Statement of Form S-4, filed
May 13, 1993 (File No. 33-60120).
(12) Incorporated by reference to the Exhibit identified in parentheses, filed
as an exhibit in the Registrant's Registration Statement on Form S-8, filed
July 2, 1993 (File No. 33-65440).
(13) Filed herewith.
26