BW20030828002046 20030828T130350Z UTC
( BW)(MERANT)(MRN) 1st Quarter Results
Business Editors
UK REGULATORY NEWS
ST. ALBANS, England & HILLSBORO, Ore.--(BUSINESS WIRE)--Aug. 28,
2003--
Merant Announces First Quarter Financial Results
Merant (London Stock Exchange (LSE):MRN) (Nasdaq/NM:MRNT), a leading
provider of software and services for managing code, content and other
business-critical assets, announces results for the first quarter
ended 31 July, 2003. Financial figures and comparisons presented below
are on the basis of continuing operations.
Highlights on First Quarter Fiscal 2004 Results:
-- Revenues grew 1.2 percent to $29.8 million compared to the first
quarter of fiscal 2003
-- Operating profits (EBITA) grew to $1.0 million from the $0.1
million reported in the first quarter of the prior year
-- Days Sales Outstanding (DSO) improved 7 days to 70 compared to the
same quarter in the previous year
-- Licence fees included 14 transactions valued at over $100,000,
driven by continued growth in the Company's flagship Dimensions
product line
-- Increased pipeline of business for the Company's newly released
Dimensions "Enterprise Edition" Software
-- Strong revenue visibility. First quarter maintenance fee revenue
accounted for 53 percent of total revenue for the quarter
-- Cash of $67.0 million, with no debt
US $, in millions Q1 Q1
2004 2003
--------------------------------------------------------- ----- ------
Revenue 29.8 29.5
EBITA 1.0 0.1
(Earnings before interest, taxes, amortisation and
exceptional charges)
PBT (Profit before taxes including interest income)(1) 1.2 0.6
EPS (Earnings per share)(1) 0.01 0.01
Goodwill amortisation, taxes and other exceptional
charges (1.3) (14.2)
Net (Loss) (0.1) (13.6)
--------------------------------------------------------- ----- ------
(1) Before exceptional restructuring charges, taxes and goodwill
amortisation
Financial information is reported in accordance with UK GAAP
(Revenue also in accordance with U.S. GAAP)
Gerry Perkel, President and CEO of Merant commented:
"We were pleased to see our operating profits continue to improve year
over year despite continuing economic challenges worldwide," commented
Gerry Perkel, President and CEO. "In addition, we were especially
pleased to see continued strength in our Dimensions product line,
bolstered in the past quarter by our release of Merant Dimensions 8
and our new Dimensions Enterprise Edition solution. Both of these
product introductions are a key component of our longer term growth
strategy."
First Quarter Fiscal 2004 Results:
Operating earnings before interest and taxes (excluding charges for
goodwill amortisation and restructuring) in the first quarter
increased to $1.0 million compared to the $0.1 million reported in the
first quarter of fiscal 2003. Revenue for the first quarter increased
1.2 percent to $29.8 million compared to the $29.5 million reported in
the first quarter of the previous year.
Licence fee revenue accounted for approximately 35 percent of total
revenue for the first quarter and included 14 licence fee transactions
valued at over $100,000, of which one transaction was valued over $1
million. Software Configuration Management (SCM) products represented
95 percent of total licence fee revenue in the first quarter, of which
55 percent was from Dimensions product sales. First quarter average
licence fee transaction size (excluding maintenance and consulting
deal value) was $71,000 for Dimensions products.
The Company launched a key new offering in the quarter, Dimensions
Enterprise Edition which combines two new products, Dimensions for
z/OS and Merant Build, with Merant Dimensions 8. Merant Dimensions 8
delivers dramatically improved usability and administration and a
next-generation, automated build solution. One of the Company's key
strategic growth initiatives, Dimensions Enterprise Edition is the
industry's first solution capable of supporting mainframe and
distributed platforms with a single, enterprise-wide repository with
database independence. These new product offerings strengthen the
Company's market address beyond the client server space of the SCM
market. The Company saw an increasing pipeline of deals for its
Dimensions z/OS products during the first quarter.
North American sales for the first quarter represented 58 percent of
total revenue. European sales represented 37 percent of total revenue
with Asia-Pacific sales accounting for 5 percent.
Gross margins of 80.8 percent during the first quarter of fiscal 2004
increased over one percentage point compared to the 79.6 percent in
the first quarter of fiscal 2003. Total costs associated with
continuing operations, excluding goodwill amortisation and
restructuring charges, were $28.8 million, down 2 percent from the
same quarter a year ago. The Company ended the first quarter of fiscal
2004 with 574 employees around the world with R&D development
resources located in the UK, U.S. (Oregon and California), Denmark,
and in India. Merant's corporate headquarters and executive management
team are located on the west coast of the United States in Hillsboro,
Oregon.
Progress on Strategic Growth Initiatives:
The Company continues to make good progress driving a number of
initiatives focused on revenue and profit growth over time:
-- First, the launch of the Company's new "Enterprise Edition"
software during the past quarter extended the reach of our Dimensions
product into the mainframe environment. In doing so, the Company is
now able to address an additional 10 to 15 percent of the total SCM
market (mainframe environments). This new offering focuses on many of
the issues facing customers today including the high costs of
administration and maintenance associated with point solutions, as
well as the inherent issues with reporting, auditing, referencing and
sharing baseline assets across different platforms across the
enterprise. The Company's goal with this new capability is to drive
enterprise-wide solutions where customers can use this new product
with a single repository across Unix, Microsoft and mainframe
development environments.
-- Second, the Company made good progress in its objective to drive
more revenue from web content products during the quarter. The Company
completed the process of adding a dedicated, focused sales team to
sell these solutions and revenues from Merant Collage, with average
transaction sizes of close to $40,000, more than doubled from the
first quarter of fiscal year 2003 and included sales to 14 new
customers. Based in part on the strength of this product, and our new
dedicated sales team approach, the sales funnel for the Collage
product looks relatively strong going into the second quarter and
second half of the fiscal year.
-- Third, the Company is looking at leveraging its core competencies
in configuration management outside of software development. The
Company is exploring opportunities in various industries where
well-defined business processes are required for regulatory
compliance. In addition, during the past quarter the Company launched
a new product, Merant Mover, which enables the automation of the
process of moving code from the development infrastructure to the
production environment. Further, the Company made a relatively small
strategic technology acquisition shortly after the quarter ended that
will support its product development goal of leveraging the data and
information that exist within the Dimensions data structures. This
supports the Company's longer term goal of being a more strategic sale
to the IT department over time.
Business Outlook:
The Company maintains a cautious outlook regarding revenue and
earnings performance as global economic pressures continue to limit
information technology and software development spending. Even though
the Company exceeded its objectives for sales of enterprise wide
Dimensions licences during the quarter, the longer selling cycles that
exist in the current economy, especially related to increased customer
scrutiny of larger transactions, make it difficult to predict and
forecast overall revenues in the short term. Over the longer term,
once the economic conditions begin to improve and key additional
product revenues emerge from its growth initiatives, the Company's
goal continues to be the generation of sustainable 15 percent annual
operating margins on sales.
Conference Call
A conference call has been scheduled for today at 4:00 p.m. London
Time (11:00 a.m. US EDT) for investors, analysts and press. For those
wishing to participate in the call, the telephone numbers are UK: +44
(0)208 515 2327; US: 800-240-8658. The replay of the conference call
will be available for two weeks after the conference call. The replay
number is 303-590-3000, PIN: 549512. A webcast of the call will also
be available. Please visit the Company's investor site at
www.merant.com for more information.
About Merant
Merant delivers the industry's most flexible and comprehensive
enterprise change management solutions. Thousands of organizations
across the globe rely on Merant's software and services to
dramatically enhance the productivity, quality and ROI of their
technology initiatives by allowing them to easily track, manage and
control modifications in business-critical information assets. For
more information, please visit www.merant.com.
Forward-Looking Statements
The following statement is made in accordance with the U.S. Private
Securities Litigation Reform Act of 1995: This release contains
forward-looking statements that include statements regarding
expectations for future financial results and results of operations,
business strategy, and prospects, including the growth and/or
performance of our software configuration management and other
businesses and related revenues. When used in this release, the words
'anticipate,' 'plan', 'believe', 'estimate', 'intend', 'expect',
'goal', 'realize', 'likely', 'unlikely', and other similar
expressions, as they relate to Merant, its business or its management,
are intended to identify these forward-looking statements. These
forward-looking statements involve a number of risks and
uncertainties. Actual results could differ materially from those
anticipated by these forward-looking statements. Future results will
be difficult to predict as Merant continues to transform its business
strategy to focus on its software configuration management and web
content management products and services. Merant's ability to recruit
and retain key personnel, especially in the sales and business units
and at the management level, could materially alter financial results
and plans for the sales and business units. Other factors that could
cause actual results to differ materially include, among others, the
extent to which the current weakness and uncertainty in the economic
climate generally and in IT spending in particular continues, the
inability of Merant to effectively manage its costs against uncertain
revenue expectations and reduce costs quickly in response to a revenue
shortfall, the potential for a decrease in revenue or a slowdown in
revenue growth which may be caused by delays in the timing of sales
and the delivery of products or services, especially such delays
associated with higher dollar orders, the ability of Merant to
develop, release, market and sell products and services to customers
in the highly dynamic market for the Company's products, the potential
need for software configuration management and web content management
products to shift based on changes in technology and customer needs,
the effect of competitors' efforts to enter Merant's markets and the
possible success of new and existing competitors in those markets, and
Merant's ability to manage and integrate acquired businesses or other
businesses that it may acquire in the future.
Further information on potential factors which could affect Merant's
financial results and operations are found in filings or submissions
on Form 6-K as periodically submitted to the SEC, and in Merant's
Annual report on Form 20-F for the year ended April 30, 2002. Merant
undertakes no obligation to release publicly any updates or revisions
to any forward-looking statements contained in this release that may
reflect events or circumstances occurring after the date of this
release.
Financial Statement Information
The financial information contained in this report does not represent
the Company's full statutory accounts. The financial information
relating to fiscal 2004 and the quarterly periods within fiscal 2003
and fiscal 2004 are unaudited and no accounts have been delivered to
the U.K. Registrar of Companies. Statutory accounts dealing with
fiscal 2002 have been delivered to the U.K. Registrar of Companies and
the Company's auditors made a report under section 235 on these
accounts which was unqualified and did not contain a statement under
section 237(2) or section 237(3) of the Companies Act 1985. The
Company's financial statements are reported in UK GAAP, with the
exception of Revenue which is recorded in accordance with UK and U.S.
GAAP.
U.S. Securities Filings
Copies of Merant's Annual Report to Shareholders and Annual Report on
Form 20-F for the year ended April 30, 2002, as well as its periodic
reports on Form 6-K, are available upon request to Merant's offices in
Hillsboro, OR or St. Albans, United Kingdom and are also available on
the SEC website located at http://www.sec.gov.
Merant plc
Management Trading Statement using UK GAAP results in USD
------------------
(unaudited) Three months
ending:
Jul-31 Jul-31
2003 2002
$'000 $'000
----------------------------------------------------------------------
Revenue: continuing business
Licence fees 10,333 11,139
Maintenance subscriptions 15,997 14,326
Training and consulting 3,490 3,989
----------------------------------------------------------------------
Total revenue 29,820 29,454
----------------------------------------------------------------------
Cost of revenue: continuing business
Cost of licence fees 511 264
Cost of maintenance subscriptions 1,940 2,097
Cost of training and consulting 3,267 3,634
----------------------------------------------------------------------
Total cost of revenue 5,718 5,995
----------------------------------------------------------------------
Gross profit 24,102 23,459
----------------------------------------------------------------------
Operating expenses
Research and development 7,184 6,465
Sales and marketing 12,503 12,523
General and administrative 3,385 4,330
----------------------------------------------------------------------
Total operating expenses, excluding amortisation 23,072 23,318
----------------------------------------------------------------------
Operating profit before amortisation 1,030 141
Interest income, net 212 421
----------------------------------------------------------------------
Profit before taxes, amortisation and exceptional
items 1,242 562
Amortisation of goodwill (1,367) (10,597)
----------------------------------------------------------------------
(Loss) before taxes and exceptional items (125) (10,035)
Exceptional items:
Cost of fundamental restructuring 0 (3,603)
Loss on termination of a business
operation 0 0
Provision for loss on disposal of fixed
assets 0 0
----------------------------------------------------------------------
(Loss) before taxation (125) (13,638)
Taxation 0 0
----------------------------------------------------------------------
(Loss) for the period from continuing operations,
after taxation (125) (13,638)
Profit (loss) from discontinued operations 0 0
----------------------------------------------------------------------
(125) (13,638)
----------------------------------------------------------------------
Profit per share before taxes, amortisation and
exceptional items
Profit per ordinary share: basic & diluted $0.01 $0.01
Profit per ADR equivalent: basic & diluted $0.06 $0.03
----------------------------------------------------------------------
Net Profit (loss) per share for the period
Profit (loss) per ordinary share: basic & diluted ($0.00) ($0.13)
(Loss) per ADR equivalent: basic & diluted ($0.01) ($0.64)
----------------------------------------------------------------------
Ordinary shares - basic & diluted 97,772 106,683
ADR equivalents - basic & diluted 19,554 21,337
----------------------------------------------------------------------
The profit and loss was translated from GBP to USD using the
monthly average rates.
Merant plc - CONSOLIDATED PROFIT & LOSS ACCOUNT
------------------
(unaudited) Three months
ending:
Jul-31 Jul-31
2003 2002
$'000 $'000
----------------------------------------------------------------------
Revenue: continuing business
Licence fees 10,333 11,139
Maintenance subscriptions 15,997 14,326
Training and consulting 3,490 3,989
----------------------------------------------------------------------
29,820 29,454
Revenue: discontinued business 0 0
----------------------------------------------------------------------
Total revenue 29,820 29,454
----------------------------------------------------------------------
Cost of revenue: continuing business
Cost of licence fees 511 264
Cost of maintenance subscriptions 1,940 2,097
Cost of training and consulting 3,267 3,634
----------------------------------------------------------------------
5,718 5,995
Cost of revenue: discontinued business 0 0
----------------------------------------------------------------------
Total cost of revenue 5,718 5,995
----------------------------------------------------------------------
Gross profit 24,102 23,459
----------------------------------------------------------------------
Operating expenses
Research and development 7,184 6,465
Sales and marketing 12,503 12,523
General and administrative 3,385 4,330
----------------------------------------------------------------------
Total operating expenses, excluding amortisation 23,072 23,318
----------------------------------------------------------------------
Operating profit (loss) before amortisation 1,030 141
Amortisation of goodwill (1,367) (10,597)
----------------------------------------------------------------------
Operating profit (loss):
Continuing business (337) (10,456)
Discontinued business 0 0
----------------------------------------------------------------------
Total operating profit (loss) (337) (10,456)
Exceptional items:
Cost of fundamental restructuring 0 (3,603)
Loss on termination of a business
operation 0 0
Provision for loss on disposal of fixed
assets 0 0
----------------------------------------------------------------------
Operating profit (loss), before interest income (337) (14,059)
Interest income, net 212 421
----------------------------------------------------------------------
Profit (loss) before taxation (125) (13,638)
Taxation 0 0
----------------------------------------------------------------------
Profit (loss) for the period after taxation (125) (13,638)
----------------------------------------------------------------------
Profit (loss) per ordinary share: basic & diluted ($0.00) ($0.13)
Ordinary shares - basic & diluted 97,772 106,683
----------------------------------------------------------------------
The profit and loss was translated from GBP to USD using the
monthly average rates.
Merant plc - CONSOLIDATED BALANCE SHEET
----------------------------------------------------------------------
(unaudited) Jul-31 Apr-30
2003 2003
$000 $000
----------------------------------------------------------------------
Fixed assets
Intangible fixed assets 12,519 13,828
Tangible fixed assets 4,184 3,149
Investment 12,529 10,868
----------------------------------------------------------------------
Total fixed assets 29,232 27,845
----------------------------------------------------------------------
Current assets:
Stock 121 144
Trade debtors 22,849 25,374
Other debtors and prepaid expenses 4,243 5,651
Cash and bank deposits 67,141 72,778
----------------------------------------------------------------------
Total current assets 94,354 103,947
----------------------------------------------------------------------
Creditors: amounts falling due within one year
Trade creditors 1,585 1,977
Accrued employee compensation 6,102 8,869
Current corporation tax 9,336 9,261
Accrued expenses and other current
liabilities 7,096 9,756
Deferred revenue 40,057 41,524
----------------------------------------------------------------------
Total current liabilities 64,176 71,387
----------------------------------------------------------------------
Net current assets 31,178 32,560
----------------------------------------------------------------------
Total assets less current liabilities 59,410 60,405
Provision for liabilities and charges 5,201 7,159
----------------------------------------------------------------------
Net assets 54,209 53,246
----------------------------------------------------------------------
Capital and reserves
Called up share capital 3,358 3,321
Share premium account 325,236 322,422
Capital redemption reserve 1,506 1,498
Profit and loss account (275,891)(273,995)
----------------------------------------------------------------------
Total shareholders' equity 54,209 53,246
----------------------------------------------------------------------
Each balance sheet account was translated from GBP to USD at the
closing rate for each period.
Merant plc - CONSOLIDATED CASH FLOW STATEMENT
----------------------------------------------------------------------
Jul-31
2003
$'000
----------------------------------------------------------------------
(i) Reconciliation of operating(loss) to "Net cash
(outflow)/inflow from operating activities"
Operating profit/(loss) (337)
Depreciation charges 535
Amortisation charges 1,407
EBT costs 235
Changes in operating assets and liabilities (7,631)
Exceptional items 0
Loss on disposal of fixed assets 190
----------------------------------------------------------------------
Net cash (outflow)/inflow from operating activities (5,601)
----------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT UK FORMAT
Net cash (outflow)/inflow from operating activities
(note i) (5,601)
Returns on investments and servicing of finance 212
Taxation 513
Capital expenditure and financial investment (1,682)
Acquisitions and disposals 0
----------------------------------------------------------------------
Cash (outflow)/inflow before financing (6,558)
----------------------------------------------------------------------
Financing 991
----------------------------------------------------------------------
(Decrease)/increase in cash (5,567)
======================================================================
(ii) Reconciliation to net funds
(Decrease) Increase in cash during the period (5,567)
Translation difference (70)
----------------------------------------------------------------------
Movement in cash during the period (5,637)
Net funds, beginning of period 72,778
----------------------------------------------------------------------
Net funds, end of period 67,141
----------------------------------------------------------------------
Short Name: MERANT PLC
Category Code: QRF
Sequence Number: 00008975
Time of Receipt (offset from UTC): 20030828T002315+0100
--30--BRM/se* DB/ny
CONTACT: Merant (U.S. Headquarters)
Gerald Perkel, 503-617-2735
Gerry.Perkel@merant.com
or
Scott Hildebrandt, 503-617-2401
Scott.Hildebrandt@merant.com
or
Taylor Rafferty (London office)
Paul Scott, +44 (0) 20 7936 0400
or
Taylor Rafferty (New York office)
Brian Rafferty, 212-889-4350
KEYWORD: OREGON UNITED KINGDOM INTERNATIONAL EUROPE
INDUSTRY KEYWORD: SOFTWARE NETWORKING E-COMMERCE INTERNET HARDWARE
CONFERENCE CALLS EARNINGS
SOURCE: Merant PLC
Today's News On The Net - Business Wire's full file on the Internet
with Hyperlinks to your home page.
URL: http://www.businesswire.com