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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: March 20, 2000 Commission File No. 0-24435
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(Date of earliest event reported)
MICROSTRATEGY INCORPORATED
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(Exact name of registrant as specified in its Charter)
Delaware 51-0323571
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
8000 Towers Crescent Drive, Vienna, VA 22182
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(Address of principal executive offices) (Zip Code)
(703) 848-8600
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On March 20, 2000, MicroStrategy Incorporated (the "Company") issued a
press release announcing that the Company is revising its 1999 and 1998 revenues
and operating results. The Company, with the concurrence of
PricewaterhouseCoopers LLP, its auditors, will reduce its 1999 reported revenue
from $205.3 million to between approximately $150.0 million and $155.0 million,
and its results of operations from diluted net income per share of $0.15 to a
diluted loss per share of between approximately $(0.43) and $(0.51).
Correspondingly, deferred revenue at December 31, 1999 will increase from $16.8
million to between approximately $66.5 million and $76.5 million. The Company
will also reduce its reported revenues for 1998 from $106.4 million to between
approximately $95.9 million and $100.9 million, and its results of operations
from diluted net income per share of $0.08 to diluted net income per share of
between approximately $0.04 and $0.01.
On March 21, 2000, the Company issued a clarification of its March 20, 1999
public statements. This clarification indicated that the principal reason for
the Company's decision to revise its 1998 and 1999 reported revenues and
operating results was the need to do so under existing accounting principles
articulated in Statement of Position 97-2 and that the Company's previously
reported revenues and operating results were not revised principally to conform
with Staff Accounting Bulletin 101 in advance of its required implementation by
March 31, 2000.
On March 21, 2000, the Company also announced that a number of lawsuits
purporting to be class actions had been filed naming the Company and certain of
its officers and directors as defendants alleging violations of various
securities laws in connection with the Company's previously announced revision
of its 1999 and 1998 revenues and operating results.
On March 21, 2000, the Company filed an Application for Withdrawal of
Registration Statement relating to the Company's Registration Statement on Form
S-3 (File No. 333-31042) with the Securities and Exchange Commission.
Copies of the press releases have been filed with this Current Report on Form
8-K as Exhibits 99.1, 99.2 and 99.3 and are incorporated herein by reference.
ITEM 7. EXHIBITS
99.1 Press release dated March 20, 2000.
99.2 Press release dated March 21, 2000.
99.3 Press release dated March 21, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: March 22, 2000 MICROSTRATEGY INCORPORATED
/s/ Michael J. Saylor
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Michael J. Saylor
Chief Executive Officer and
Chairman of the Board of Directors
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INDEX TO EXHIBITS
Exhibit
No. Description
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99.1 Press release dated March 20, 2000.
99.2 Press release dated March 21, 2000.
99.3 Press release dated March 21, 2000.
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contact:
Mark Lynch
MicroStrategy Incorporated
(703) 394-8402
[email protected]
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MicroStrategy Revises Timing of Revenue Recognition
Net Cash Flow Remains Unchanged
Vienna, Va., March 20, 2000 - MicroStrategy Incorporated (NASDAQ: MSTR)
today announced that, due to its evolving business model, it is revising its
1999 and 1998 revenues and operating results to conform to the most recent
statements of the Securities and Exchange Commission and the accounting
profession regarding revenue recognition in the software industry, and to
Statement of Position 97-2. These revisions relate to the timing of revenue
recognition and have no material impact on MicroStrategy's net cash flow or the
amount of revenue that the Company ultimately expects to recognize.
The Company has concluded that certain of its software sales that include
service relationships will be accounted for using contract accounting, which
spreads the recognition of revenues over the entire contract period as opposed
to separating it between the software and services components. The effect of
these revisions is to defer the time when revenue is recognized for large,
complex contracts that combine both products and services.
The Company, with the concurrence of PricewaterhouseCoopers LLP, its
auditors, will reduce its 1999 reported revenue from $205.3 million to between
approximately $150.0 million and $155.0 million, and its results of operations
from diluted net income per share of $0.15 to a diluted loss per share of
between approximately $(0.43) and $(0.51). Correspondingly, deferred revenue at
December 31, 1999 will increase from $16.8 million to between approximately
$66.5 million and $76.5 million. The Company will also reduce its reported
revenues for 1998 from $106.4 million to between approximately $95.9 million and
$100.9 million, and its results of operations from diluted net income per share
of $0.08 to diluted net income per share of between approximately $0.04 and
$0.01.
Michael J. Saylor, president and CEO of MicroStrategy Incorporated, said,
"Over the last eighteen months, as MicroStrategy has entered new markets, our
business model has evolved very rapidly. As a result, the business relationships
we have entered into have become more financially complex and include both
licenses and interrelated services. We want to assure investors, customers and
partners that we are working proactively with our auditors to comply with the
evolving accounting practices for the software industry. There is no material
change in our net cash flow and the amount of revenue we expect to recognize,
and we continue to be well positioned to take advantage of opportunities in the
e-business software and personalized wireless content markets."
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The revisions announced today were the product of a recent detailed review
of MicroStrategy's significant contracts and future business strategy and the
related accounting under the revenue recognition rules, including the recently
issued SEC Staff Accounting Bulletin 101. This review was completed with the
assistance of PricewaterhouseCoopers LLP. PricewaterhouseCoopers worked with
the Company throughout 1998 and 1999 on the reporting of its quarterly results
of operations. PricewaterhouseCoopers said: "We have closely reviewed the work
of the MicroStrategy management team in analyzing the changes in their business
and determining these revisions. The accounting rules governing the software
industry, and in particular software revenue recognition, are complicated. This
is particularly true in an evolving business like MicroStrategy's. In light of
these facts, we agree with the Company's decision to take the action announced
today."
MicroStrategy will report the details of the revisions to its 1999 year-end
results in its annual report on Form 10-K, to be filed with the Securities and
Exchange Commission on or before March 30, 2000. The Company will also amend
other Securities and Exchange Commission filings to reflect the revisions to its
1998 and 1999 quarterly and year-end results. The Company will postpone its
plans for a proposed follow-on public offering of securities at this time. In
addition, the Company indicated that in light of its revised method of
recognizing revenue from large, complex contracts, it believes its operating
results for the first quarter of 2000 will be below the consensus First Call
estimates.
MicroStrategy will hold a conference call chaired by Michael Saylor today
at 8:30 a.m. (EST). Investors can access the call by dialing (877) 314-4016.
International callers can dial (706) 634-2406.
About MicroStrategy Incorporated
MicroStrategy is a leading worldwide provider of Intelligent E-Business(TM)
software and related services. MicroStrategy's technology platform is creating a
new generation of one-to-one e-business solutions that enable global 2000
organizations to build personal relationships with their partners, supply-
chains, and customers. MicroStrategy delivers these solutions via web, wireless,
and voice. MicroStrategy also offers a comprehensive set of consulting, training
and support services for its customers and partners.
MicroStrategy has approximately 900 customers across such diverse
industries as retail, finance, telecommunications, dot-com, insurance,
healthcare, pharmaceuticals and consumer packaged goods. MicroStrategy also has
entered into relationships with more than 225 systems integrators, application
development and platform partners.
For more information, please visit MicroStrategy's Web site:
http://www.microstrategy.com.
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# # #
This press release may include statements that may constitute "forward-looking
statements," including its estimates of future business prospects or financial
results and statements containing the words "believe," "estimate," "project,"
"expect" or similar expressions. Forward-looking statements inherently involve
risks and uncertainties that could cause actual results to differ materially
from the forward-looking statements. Factors that could contribute to such
differences include: the Company's ability to secure financing for its current
operations and long-term plans on acceptable terms; the ability of the Company
to implement and achieve widespread customer acceptance of its Strategy.com
network on a timely basis; adverse reaction by the Company's employees,
investors, customers,
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vendors and lenders to the restatement of the Company's 1999 results or its
future prospects; the Company's ability to recognize deferred revenue through
delivery of products or satisfactory performance of services; continued
acceptance of the Company's products in the marketplace; the timing of
significant orders; delays in the Company's ability to develop or ship new
products; market acceptance of new products; competitive factors; general
economic conditions; currency fluctuations and other risks detailed in the
Company's registration statements and periodic reports filed with the Securities
and Exchange Commission. By making these forward-looking statements, the Company
undertakes no obligation to update these statements for revisions or changes
after the date of this release.
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FOR IMMEDIATE RELEASE
Contact:
Mark Lynch
MicroStrategy Incorporated
(703) 394-8402
[email protected]
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MicroStrategy Issues Clarifying Statement
VIENNA, VA, March 21 - MicroStrategy Incorporated (Nasdaq: MSTR) today
announced a clarification of its March 20, 2000, public statements respecting
the revision of its 1998 and 1999 reported revenues and operating results. In
its March 20 press release, MicroStrategy indicated that the revisions were made
"to conform to the most recent statements of the Securities and Exchange
Commission and the accounting profession regarding revenue recognition in the
software industry, and to Statement of Position 97-2." The Company also
indicated in its press release that the revisions were "the product of a recent
detailed review of MicroStrategy's significant contracts and future business
strategy and the related accounting under the revenue recognition rules,
including the recently issued SEC Staff Accounting Bulletin 101." These
statements were subsequently repeated by MicroStrategy in responding to
questions raised by the media concerning its press release.
MicroStrategy today clarifies these statements as follows: The principal
reason for the Company's decision to revise its 1998 and 1999 reported revenues
and operating results was the need to do so under existing accounting principles
articulated in Statement of Position 97-2. The Company's previously reported
revenues and operating results were not revised principally to conform with
Staff Accounting Bulletin 101 in advance of its required implementation by March
31, 2000.
# # #
This press release may include statements that may constitute "forward-looking
statements," including its estimates of future business prospects or financial
results and statements containing the words "believe," "estimate," "project,"
"expect" or similar expressions. Forward-looking statements inherently involve
risks and uncertainties that could cause actual results to differ materially
from the forward-looking statements. Factors that could contribute to such
differences include: the Company's ability to secure financing for its current
operations and long-term plans on acceptable terms; the ability of the Company
to implement and achieve widespread customer acceptance of its Strategy.com
network on a timely basis; adverse reaction by the Company's employees,
investors, customers, vendors and lenders to the restatement of the Company's
1999 results or its future prospects; the Company's ability to recognize
deferred revenue through delivery of products or satisfactory performance of
services; continued acceptance of the Company's products in the marketplace; the
timing of significant orders; delays in the Company's ability to develop or ship
new products; market acceptance of new products; competitive factors; general
economic conditions; currency fluctuations and other risks detailed in the
Company's registration statements and periodic reports filed with the Securities
and Exchange Commission. By making these forward-looking statements, the
Company undertakes no obligation to update these statements for revisions or
changes after the date of this release.
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FOR IMMEDIATE RELEASE
Contact:
MicroStrategy Incorporated
[email protected]
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MicroStrategy Announces Filing Of Lawsuits
Vienna, Va., March 21, 2000 - MicroStrategy Incorporated (NASDAQ:
MSTR) today announced that a number of lawsuits purporting to be class actions
had been filed naming the Company and certain of its officers and directors as
defendants alleging violations of various securities laws in connection with the
Company's previously announced revision of its 1999 and 1998 revenues and
operating results. The Company has not yet had the opportunity to review the
complaints.
