Merant Announces Third Quarter Financial Results; Serena Software to Offer Cash and Stock for Entire Share Capital of Merant.Business Editors/High-Tech Writers ST. ALBANS, United Kingdom & HILLSBORO Hillsboro, city (1990 pop. 37,520), seat of Washington co., NW Oreg., in the Tualatin valley; inc. 1876. Integrated circuits, other high-tech products, furniture, plastics, and medical equipment are manufactured in this growing city in Oregon's "Sunset Corridor. , Ore.--(BUSINESS WIRE)--March 3, 2004--Merant (Nasdaq:MRNT)(LSE LSE - Language Sensitive Editor :MRN MRN Motor Racing Network MRN Medical Record Number MRN Magnetic Resonance Neurography MRN Medicare Remittance Notice MRN Matières Radioactives Naturelles MRN Meteorological Rocket Network MRN Manufacturers Resource Network ), a leading provider of software and services for managing code, content and other business-critical assets, announces results for the third fiscal quarter ended 31 January January: see month. 2004. Financial figures and comparisons presented below are on the basis of continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the . In addition, earlier today, the Boards of Directors of Merant (MERANT plc, St. Albans, England, www.merant.com) Originally founded as Micro Focus Group in 1976 in the U.K., MERANT is a software and services company focusing on enterprise change management, Web content management and its PVCS products. and Serena Software have announced that they have reached agreement on the terms of a recommended cash and share offer to be made by Serena and by Lehman Brothers Lehman Brothers Holdings Inc. (NYSE: LEH), founded in 1850, is a diversified, global financial services firm. It is a participant in investment banking, equity and fixed income sales, research and trading, investment management, private equity, and private banking. on its behalf (outside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ) for the entire issued and to be issued share capital of Merant. Highlights on Third Quarter Fiscal 2004 Financial Results: -- Operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. (EBITA EBITA Earnings Before Interest Taxes Amortization ), excluding exceptional charges, grew to $3.6 million (11.3 percent of sales) from $1.4 million reported in the third quarter of the prior year -- Licence fees included 21 transactions valued at over $100,000 -- Positive operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. of $5.3 million, excluding cash restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and exceptional costs -- Ending cash of $70.7 million, with no debt -- Deferred revenues grew 19 percent sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen to $44.5 million
US $, in millions Q3 Q3
Fiscal 2004 Fiscal 2003
---------------------------------------------- ----------- -----------
Revenue 31.8 30.3
Operating Profit (EBITA) 3.6 1.4
(Earnings before interest, taxes, amortisation
and exceptional charges)
PBT (Profit before taxes including interest
income)(a) 3.8 1.6
EPS (Earnings per share) (a) 0.04 0.02
Goodwill amortisation, taxes and exceptional
charges (2.8) (1.3)
Net Profit/(Loss) 1.0 0.3
---------------------------------------------- ----------- -----------
(a) Before exceptional and restructuring charges,
taxes and goodwill amortisation
Financial information is reported in accordance with UK GAAP
(Revenue also in accordance with U.S. GAAP)
Gerry Ger·ry , Elbridge 1744-1814. American politician. A signer of the Declaration of Independence (1776) and a delegate to the Continental Congress (1787), he served as governor of Massachusetts (1810-1811) and as Vice President of the United States Perkel, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Merant, commented on the Third Quarter Results: "The third quarter financial performance continued our trend of delivering results ahead of expectations," commented Perkel. "We were very pleased to see our operating profits increase to over eleven percent of sales." Third Quarter Fiscal 2004 Results: Operating profits before interest and taxes (excluding charges for goodwill amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of years amortization reduction, step-down, diminution, decrease - the act of decreasing or reducing something 2. and exceptional and restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. ) in the third quarter increased to $3.6 million compared to the $1.4 million reported in the third quarter of fiscal 2003. Revenue for the third quarter increased 5 percent to $31.8 million compared to the $30.3 million reported in the third quarter of the previous year. Licence fee revenue accounted for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 36 percent of total revenue for the third quarter. Maintenance fee revenue grew 11 percent compared to the third quarter of 2003 and represented 53 percent of total revenue. Consulting and training revenue represented 11 percent of total revenue reported in the third quarter. Geographically ge·o·graph·ic also ge·o·graph·i·cal adj. 1. Of or relating to geography. 2. Concerning the topography of a specific region. ge , North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. sales for the third quarter represented 59 percent of total revenue. European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. sales represented 35 percent of total revenue with Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). sales accounting for 6 percent. Gross margins of 81.2 percent during the third quarter of fiscal 2004 increased approximately two percentage points compared to the 79.5 percent in the third quarter of fiscal 2003, due in part to improvement in gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. in the Company's consulting business. Total costs associated with continuing operations, excluding goodwill amortisation and exceptional charges, were $28.2 million, down 2.4 percent from the same quarter a year ago as the Company continued to closely manage expenses. As previously announced, additional action was taken in the third quarter to reduce expenses to be in line with anticipated future revenues and a $1.4 million exceptional charge associated with these actions was recorded. Cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has ended at $70.7 million, while the Company continued to maintain no debt. Deferred revenue increased 19 percent sequentially to $44.5 million due, in part, to strong maintenance renewal rates. In addition, the Company posted positive operating cash flow (excluding cash impacts from previous restructuring actions and exceptional charges) of $5.3 million during the third quarter. The Company ended the third quarter of fiscal 2004 with 535 employees. Business Outlook: The Company maintains a cautious outlook regarding revenue and growth performance as global economic pressures continue to limit information technology and software development spending, especially related to new licence fees. Even though the Company exceeded its profit and revenue objectives in the third quarter, longer selling cycles that exist in the current economy, especially related to increased customer scrutiny Scrutiny (Fr. scrutin, Late Lat. scrutinium, from scrutari, to search or examine thoroughly) is a careful examination or inquiry (as though there was a mistake). of larger transactions, make it difficult to predict and forecast overall revenues. 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 operating profits in excess of 15 percent on sales. Recommended Cash and Share Offer for Entire Share Capital of Merant: The Boards of Directors of Merant and Serena Software have announced that they have reached agreement on the terms of a recommended cash and share offer to be made by Serena and by Lehman Brothers on its behalf (outside the United States) for the entire issued and to be issued share capital of Merant, including all Merant shares represented by Merant ADR's. Details of the terms and conditions of the Offer and the Board's reasons for recommending acceptance are set out in the announcement of the Offer (see separate press release). Under the terms of the Offer, Merant Shareholders will receive 136.5 pence pence n. Chiefly British A plural of penny. pence Noun a plural of penny USAGE: Since the decimalization of British currency and the introduction of the abbreviation p, in cash and 0.05 new Serena shares for every Merant ordinary share held (directly or through ADR's). Each ADR ADR - Astra Digital Radio represents 5 Merant ordinary shares. Merant intends to file a solicitation/recommendation statement with the SEC on the date Serena's offer document is mailed to Merant shareholders. Merant shareholders are advised to read these documents when they become available because they will contain important information. Investors will be able to get these documents for free at the SEC's website and can get a free copy of the solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual recommendation statement from us at 3445 NW 211th Terrace terrace, a level field built on top of a hillslope into the floor of a deep valley to improve cultivation of crops. Terracing uses the runoff from the hill to increase soil retentiveness and arability and is often part of a larger irrigation system that includes , Hillsboro, Oregon Hillsboro is a city in and county seat of Washington County, Oregon, United States.GR6 The community began in 1842 and was named Hillsborough in 1850, before incorporation in 1876 as Hillsboro. , 97124 Attention Investor Relations Investor relations The process by which the corporation communicates with its investors. . Conference Call A conference call has been scheduled at 8:00 a.m. London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. Time (3:00 a.m. US Eastern) on 4 March 2004 for investors, analysts and press. For those wishing to participate in the call, the telephone numbers are UK: +44 (0)208 515 2315; US: +1 800 240 8621. The replay of the conference call will be available for two weeks after the conference call. The replay numbers are UK: +44 (0)208 797 2499, PIN: 974693; US: +1 303 590 3000, PIN: 572160. A web-cast 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 organisations across the globe rely on Merant's software and services to dramatically enhance the productivity, quality and ROI (Return On Investment) The monetary benefits derived from having spent money on developing or revising a system. In the IT world, there are more ways to compute ROI than Carter has liver pills (and for those of you who never heard of that expression, it means a lot). 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. The following statement is made in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. 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. 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 Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. , the potential for a decrease in revenue or a slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. 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 COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. in those markets, Merant's ability to recruit RECRUIT. A newly made soldier. and retain key personnel, especially in the sales and business units and at the management level, 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, 2003. Merant undertakes no obligation to release publicly any updates or revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to any forward-looking statements contained in this release that may reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc 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 The introduction to this article provides insufficient context for those unfamiliar with the subject matter. Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. . Statutory accounts dealing with fiscal 2003 have been delivered to the U.K. Registrar of Companies and the Company's auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together 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 UK GAAP United Kingdom Generally Accepted Accounting Principles , with the exception of Revenue which is recorded in accordance with UK and U.S. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (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, 2003, 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 See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. .
Merant plc
Management Trading Statement using UK GAAP results in USD
----------------------------------------------------------------------
Three months ending:
Jan-31 Jan-31 Jan-31 Jan-31
2004 2004 2004 2003
$'000 $'000 $'000 $'000
Exceptional Total
Charges
-------------------------------- -------- ----------- -------- -------
Revenue:
Licence fees 11,318 11,318 11,514
Maintenance
subscriptions 16,867 16,867 15,172
Training and consulting 3,634 3,634 3,627
-------------------------------- -------- ----------- -------- -------
Total revenue 31,819 0 31,819 30,313
-------------------------------- -------- ----------- -------- -------
Cost of revenue:
Cost of licence fees 772 772 824
Cost of maintenance
subscriptions 2,006 2,006 1,959
Cost of training and
consulting 3,189 3,189 3,439
-------------------------------- -------- ----------- -------- -------
Total cost of revenue 5,967 0 5,967 6,222
-------------------------------- -------- ----------- -------- -------
Gross profit 25,852 0 25,852 24,091
-------------------------------- -------- ----------- -------- -------
Operating expenses
Research and development 7,088 418 7,506 6,802
Sales and marketing 11,805 386 12,191 12,449
General and
administrative 3,369 554 3,923 3,456
-------------------------------- -------- ----------- -------- -------
Total operating expenses,
excluding amortisation 22,262 1,358 23,620 22,707
-------------------------------- -------- ----------- -------- -------
Operating profit before interest
and amortisation 3,590 (1,358) 2,232 1,384
Interest income, net 174 174 245
-------------------------------- -------- ----------- -------- -------
Profit before taxes and
amortisation 3,764 (1,358) 2,406 1,629
Amortisation of
goodwill (1,456) (1,456) (1,321)
-------------------------------- -------- ----------- -------- -------
Profit before taxation 2,308 (1,358) 950 308
Taxation 0 0 0
-------------------------------- -------- ----------- -------- -------
Profit for the period from
continuing operations, after
taxation 2,308 (1,358) 950 308
Earnings per share before taxes,
amortisation and exceptional
items
Earnings per ordinary share:
basic $0.04 $0.02
Earnings per ordinary share:
diluted $0.04 $0.02
Earnings per ADR equivalent:
basic $0.19 $0.08
Earnings per ADR equivalent:
diluted $0.19 $0.08
-------------------------------- -------- ----------- -------- -------
Net Earnings per share for the
period
Earnings per ordinary share:
basic $0.01 $0.00
Earnings per ordinary share:
diluted $0.01 $0.00
Earnings per ADR equivalent:
basic $0.05 $0.02
Earnings per ADR equivalent:
diluted $0.05 $0.02
-------------------------------- -------- ----------- -------- -------
Ordinary shares - basic 97,659 97,659 98,645
Ordinary shares - diluted 100,548 100,548 98,805
ADR equivalents - basic 19,532 19,532 19,729
ADR equivalents - diluted 20,110 20,110 19,761
-------------------------------- -------- ----------- -------- -------
The profit and loss was translated from GBP to USD using the
monthly average rates
Merant plc - CONSOLIDATED PROFIT & LOSS ACCOUNT
----------------------------------------------------------------------
Three months ending:
Jan-31 Jan-31 Jan-31 Jan-31
2004 2004 2004 2003
$'000 $'000 $'000 $'000
Exceptional Total
Charges
--------------------------------- ------- ----------- -------- -------
Revenue:
Licence fees 11,318 11,318 11,514
Maintenance subscriptions 16,867 16,867 15,172
Training and consulting 3,634 3,634 3,627
--------------------------------- ------- ----------- -------- -------
Total revenue 31,819 0 31,819 30,313
--------------------------------- ------- ----------- -------- -------
Cost of revenue: continuing
business
Cost of licence fees 772 772 824
Cost of maintenance
subscriptions 2,006 2,006 1,959
Cost of training and
consulting 3,189 3,189 3,439
--------------------------------- ------- ----------- -------- -------
Total cost of revenue 5,967 0 5,967 6,222
--------------------------------- ------- ----------- -------- -------
Gross profit 25,852 0 25,852 24,091
--------------------------------- ------- ----------- -------- -------
Operating expenses
Research and development 7,088 418 7,506 6,802
Sales and marketing 11,805 386 12,191 12,449
General and
administrative 3,369 554 3,923 3,456
--------------------------------- ------- ----------- -------- -------
Total operating expenses,
excluding amortisation 22,262 1,358 23,620 22,707
--------------------------------- ------- ----------- -------- -------
Operating profit before
amortisation 3,590 (1,358) 2,232 1,384
Amortisation of goodwill (1,456) (1,456) (1,321)
--------------------------------- ------- ----------- -------- -------
Operating profit 2,134 (1,358) 776 63
Interest income, net 174 174 245
--------------------------------- ------- ----------- -------- -------
Profit before taxation 2,308 (1,358) 950 308
Taxation 0 0
--------------------------------- ------- ----------- -------- -------
Profit for the period after
taxation 2,308 (1,358) 950 308
--------------------------------- ------- ----------- -------- -------
Earnings per ordinary share:
basic $0.01 $0.00
Earnings per ordinary share:
diluted $0.01 $0.00
Ordinary shares - basic 97,659 98,645
Ordinary shares - diluted 100,548 98,805
--------------------------------- ------- ----------- -------- -------
The profit and loss was translated from GBP to USD using the monthly
average rates
Merant plc - CONSOLIDATED BALANCE SHEET
----------------------------------------------------------------------
(unaudited) Jan-31 Apr-30
2004 2003
$000 $000
-------------------------------------------------- --------- ---------
Fixed assets
Intangible fixed assets 12,636 13,754
Tangible fixed assets 3,719 3,148
Investment 17,699 11,176
-------------------------------------------------- --------- ---------
Total fixed assets 34,054 28,078
-------------------------------------------------- --------- ---------
Current assets:
Stock 106 144
Trade debtors 29,451 25,376
Other debtors and prepaid expenses 3,441 5,722
Cash and bank deposits 70,715 72,779
-------------------------------------------------- --------- ---------
Total current assets 103,713 104,021
-------------------------------------------------- --------- ---------
Creditors: amounts falling due within one year
Trade creditors 2,178 1,977
Accrued employee compensation 6,989 8,868
Current corporation tax 11,019 9,570
Accrued expenses and other current
liabilities 8,807 9,754
Deferred revenue 44,529 41,526
-------------------------------------------------- --------- ---------
Total current liabilities 73,522 71,695
-------------------------------------------------- --------- ---------
Net current assets 30,191 32,326
-------------------------------------------------- --------- ---------
Total assets less current liabilities 64,246 60,404
Provision for liabilities and charges 3,817 7,158
-------------------------------------------------- --------- ---------
Net assets 60,428 53,246
-------------------------------------------------- --------- ---------
Capital and reserves
Called up share capital 3,837 3,321
Share premium account 369,961 322,422
Capital redemption reserve 1,706 1,498
Profit and loss account (315,076) (273,995)
-------------------------------------------------- --------- ---------
Total shareholders' equity 60,428 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
----------------------------------------------------------------------
Jan-31
2004
$'000
-------------------------------------------------------------- -------
(i) Reconciliation of operating profit to "Net cash inflow
from operating activities"
Operating profit 2,134
Depreciation charges 428
Amortisation charges 1,456
EBT costs 78
Changes in operating assets and liabilities 826
Exceptional items (1,358)
-------------------------------------------------------------- -------
Net cash inflow from operating activities 3,564
-------------------------------------------------------------- -------
CONSOLIDATED CASH FLOW STATEMENT UK FORMAT
Net cash inflow from operating activities (note i) 3,564
Returns on investments and servicing of finance 174
Taxation 0
Capital expenditure and financial investment (599)
Acquisitions and disposals 0
-------------------------------------------------------------- -------
Cash inflow before financing 3,140
-------------------------------------------------------------- -------
Financing 213
-------------------------------------------------------------- -------
Increase in cash 3,352
-------------------------------------------------------------- -------
(ii) Reconciliation to net funds
-------------------------------------------------------------- -------
Increase in cash during the period 3,352
-------------------------------------------------------------- -------
Translation difference 797
-------------------------------------------------------------- -------
Movement in cash during the period 4,149
-------------------------------------------------------------- -------
Net funds, beginning of period 66,566
-------------------------------------------------------------- -------
Net funds, end of period 70,715
-------------------------------------------------------------- -------
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