WEBTRENDS CORP
425, 2001-01-19
PREPACKAGED SOFTWARE
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                                                     Filed by NetIQ Corporation
                          Pursuant to Rule 425 Under the Securities Act of 1933
                                       And Deemed Filed Pursuant to Rule 14a-12
                                                 Under the Exchange Act of 1934

                                         Subject Company: WebTrends Corporation
                                                  Commission File No. 000-25215

PRESS RELEASE


                          NetIQ Corporation Announces

                   Record Second Quarter Revenue and Earnings

     SAN JOSE, CA -- Jan. 18, 2001 -- NetIQ(R) Corporation (Nasdaq: NTIQ), a
leading provider of e-business infrastructure management software that enables
organizations to optimize the performance and availability of their Microsoft
Windows NT- and Windows 2000-based systems and applications, today reported
record revenue and earnings for its second fiscal quarter ended December 31,
2000.

     Total revenue for the quarter ended December 31, 2000 increased to
$39,653,000, compared to $9,122,000 in the same quarter of the prior fiscal
year, representing a 335% increase. Excluding amortization of goodwill and
other intangibles and stock-based compensation, net income for the second
quarter was $8,553,000, or $0.20 per diluted share, compared to net income of
$1,608,000 or $0.09 per diluted share in the same quarter of the prior fiscal
year.

     Revenue for the six months ended December 31, 2000 increased to
$70,182,000, compared to $16,708,000 in the same six-month period in the prior


<PAGE>


fiscal year. Excluding amortization of goodwill and other intangibles and
stock-based compensation, net income for the six months was $15,063,000, or
$0.36 per diluted share, compared to net income of $2,258,000 or $0.13 per
diluted share in the same six-month period of the prior fiscal year.

     Since merging with Mission Critical Software in May 2000, the Company has
continued to meet its internal plans. On a pro-forma combined basis, revenues
in the quarter and the six months ended December 31, 1999, were $22,377,000 and
$41,692,000, respectively. On a pro-forma combined basis, excluding stock-based
compensation, net income for the quarter and six months ended December 31, 1999
was $2,455,000, or $0.06 per diluted share, and $3,323,000, or $0.08 per
diluted share, respectively.

     "We are pleased to again announce record revenue and earnings. This is the
sixth consecutive quarter of increasing revenue and profitability since
becoming a public company in July 1999", said Ching-Fa Hwang, President and
CEO. "Customer demand for our solutions is strong and NetIQ's products are
becoming more widely accepted in the marketplace as the leading Windows-based
management solution for enterprises, eBusinesses and service providers."

     Hwang added, "Our announcement yesterday to merge with WebTrends
Corporation is a strategically important and logical step in fulfilling our
goal to provide the most comprehensive infrastructure management and
intelligence solutions for all the components of eBusiness infrastructure --
from back-end servers, applications, networks and directories to front-end web
servers and applications."


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<PAGE>


         Second Quarter Operating highlights:

o        NetIQ and Microsoft announced a licensing, development and marketing
         agreement in which Microsoft was granted a perpetual non-exclusive
         license of NetIQ's Operations Manager technology for $175 million, to
         be paid over a period of three years, and agreed to other development
         and marketing programs and fees. As part of this broad agreement,
         NetIQ becomes the Premier Independent Software Vendor (ISV) partner
         for Microsoft operations management solutions--the only vendor with
         such a designation--and becomes a Microsoft Global Technology Partner;

o        Significant new products such as Security Manager, AppManager for
         Exchange 2000, AppManager for SQL Server 2000, Operations Manager 3.3,
         Directory Migration Administrator, Server Consolidator 2.0, Chariot
         4.0, ADCheck for Windows 2000 Active Directory were introduced;

o        NetIQ's Operations Manager product received Network World's
         prestigious "Best of Test" award and NetIQ's AppManager product was
         chosen by Windows 2000 Magazine for the second consecutive year as
         Application Management Software of the Year 2000;

o        The Company's headquarters moved to a newly renovated facility in San
         Jose, CA, which can accommodate more than 300 personnel;

o        NetIQ expanded its presence in Latin America. The company now has
         direct presence in Brazil and Mexico, with channel partner operations
         delivering its solutions throughout Latin America.



                     NetIQ Analyst/Investor Conference Call

     NetIQ will conduct a conference call at 1:30 p.m. PST today to discuss
results in more detail and to provide guidance for the remainder of the fiscal
year.

  Conference numbers:    Domestic: 800-562-8369      International: 913 981-5581

  Conference ID:         514117

  Replay:                Domestic: 888-203-1112      International: 719-457-0820

  Conference ID:         514117


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<PAGE>


About NetIQ

     NetIQ (Nasdaq:NTIQ) is a leading provider of e-business infrastructure
management software encompassing application, directory, server and network
performance management. The company is headquartered in San Jose, Calif., with
development and operational personnel in Houston, TX; Raleigh, NC; and
Bellevue, WA. For more information, please visit NetIQ's Web site at
http://www.netiq.com/ or call 408-856-3000.

                                     # # #

All referenced product names are trademarks of their respective companies.

Shareholders of WebTrends and NetIQ are urged to read the joint proxy
statement-prospectus included in the registration statement on Form S-4 to be
filed by NetIQ with the Securities and Exchange Commission because it contains
important information. Upon filing with the SEC, this document will be
available free of charge on the SEC Website at http://www.sec.gov/ and from
WebTrends Corporation and NetIQ Corporation.

Safe Harbor Statement

Statements in this press release other than statements of historical fact are
"forward-looking" statements within the meaning of the Private Securities
Litigation Reform Act of 1995. The companies' actual future results could
differ materially from the results discussed herein. Factors that could cause
or contribute to such differences include the risks inherent in acquisitions of
technology businesses including the successful consummation of the merger and
integration of the companies, the timing and successful development of
technology; the ability to retain key management and hire technical personnel
and other employees; changing relationships with customers, suppliers and
strategic partners; unanticipated costs associated with development and
marketing activities; customer acceptance of new product offerings; pricing of
new products, and competition in our various product lines. For a more complete
discussion of risks and uncertainties for each company see the section entitled
"Factors That May Affect Future Results" in the NetIQ annual report on Form
10-K, and "Risk Factors" in the WebTrends annual report on Form 10-K as filed
with the Securities and Exchange Commission.


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<PAGE>


                               NetIQ Corporation
                     Condensed Consolidated Balance Sheets
                                 (In thousands)

                                                 December 31,
                                                     2000             June 30,
                                                  (Unaudited)           2000
                                                 -----------          --------
 ASSETS

 Current assets:
  Cash and cash equivalents                      $   97,844         $  187,610
  Short-term investments                            250,570            145,916
  Accounts receivable, net                           26,399             10,744
  Prepaid expenses                                      953              3,478
                                                 ----------         ----------
      Total current assets                          375,766            347,748
                                                 ----------         ----------
 Property and equipment, net                         40,030              7,181
 Goodwill and other intangibles, net              1,121,437          1,365,891
 Other assets                                           903                941
                                                 ----------         ----------
      Total assets                               $1,538,136         $1,721,761
                                                 ==========         ==========


 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
  Accounts payable                               $    4,522         $    2,044
  Accrued compensation and related benefits          11,034              5,023
  Other liabilities                                   9,513             11,285
  Deferred revenue                                   21,988             17,687
                                                 ----------         ----------
      Total current liabilities                      47,057             36,039
                                                 ----------         ----------
 Stockholders' equity:
  Common stock                                    1,785,797          1,760,396
  Deferred stock-based compensation                    (937)            (1,286)
  Accumulated deficit                              (294,371)           (73,271)
  Accumulated other comprehensive loss                  590               (117)
                                                 ----------         ----------
      Total stockholders' equity                  1,491,079          1,685,722
                                                 ----------         ----------
      Total liabilities and stockholders' equity $1,538,136         $1,721,761
                                                 ==========         ==========


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<PAGE>


                               NetIQ Corporation
                Condensed Consolidated Statements of Operations
                    (In thousands, except per share amounts)

<TABLE>
                                                 Three Months                 Six Months
                                              Ended December 31,          Ended December 31,
                                              ------------------          ------------------
                                                 (Unaudited)                 (Unaudited)
                                              2000          1999          2000          1999
                                              ----          ----          ----          ----
<S>                                       <C>            <C>           <C>             <C>
 Software license revenue                 $  30,527     $    7,379     $  53,593       $ 13,600
 Service revenue                              9,126          1,743        16,589          3,108
                                          ---------     ----------     ---------       --------
      Total revenue                          39,653          9,122        70,182         16,708
                                          ---------     ----------     ---------       --------
 Cost of software license revenue               511            173           856            329
 Cost of service revenue                      1,972            397         3,318            816
                                          ---------     ----------     ---------       --------
      Total cost of revenue                   2,483            570         4,174          1,145
                                          ---------     ----------     ---------       --------
 Gross profit                                37,170          8,552        66,008         15,563
                                          ---------     ----------     ---------       --------
 Operating expenses:
  Sales and marketing                        17,902          4,851        33,058          8,975
  Research and development                    7,441          1,879        14,050          3,588
  General and administration                  2,675            754         4,887          1,507
  Stock-based compensation                      170            174           340            352
  Amortization of goodwill and other
    intangibles                             118,819              -       238,213
                                          ---------     ----------     ---------       --------
      Total operating expenses              147,007          7,658       290,548         14,422
                                          ---------     ----------     ---------       --------
 Income (loss) from operations             (109,837)           894      (224,540)         1,141
                                          ---------     ----------     ---------       --------
 Interest income, net                         4,861            918        10,680          1,265
                                          ---------     ----------     ---------       --------
 Income (loss) before income taxes         (104,976)         1,812      (213,860)         2,406

 Income taxes                                 4,340            379         7,240            501
                                          ---------     ----------     ---------       --------
 Net income (loss)                         (109,316)    $    1,433      (221,100)       $ 1,905
                                          =========     ==========     =========       ========

 Basic net income (loss) per share        $   (2.83)    $     0.09     $   (5.83)       $  0.14

 Shares used to compute basic
   net income (loss) per share               38,596         15,709        37,942        $13,832

 Diluted net income (loss) per share      $   (2.83)    $     0.08     $   (5.83)       $  0.11

 Shares used to compute diluted
   net income (loss) per share               38,596         17,556        37,942         16,868


<PAGE>


 SUPPLEMENTAL INFORMATION:

 Net income excluding stock-based
   compensation, amortization of
   goodwill and other intangilbes,
   and related income tax effects         $   8,553     $    1,608     $  15,063       $  2,258
                                          =========     ==========     =========       ========

 Diluted net income per share             $    0.20     $     0.09     $    0.36       $   0.13

 Shares used to compute diluted
   net income per share                      43,014         17,556        42,293         16,868
</TABLE>


-------------------------------------------------------------------------------


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<PAGE>


Contacts:
For NetIQ:

Susan Torrey, Press Relations, 713-548-1863, [email protected]
Jim Barth, Chief Financial Officer, 408-856-3000, [email protected]


-------------------------------------------------------------------------------


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<PAGE>


     NetIQ Corporation, its officers and directors may be deemed to be
participants in the solicitation of proxies from NetIQ's shareholders with
respect to the transactions contemplated by the merger agreement. Information
regarding such officers and directors is included in NetIQ's proxy statement
filed with the SEC on October 6, 2000. This document is available free of
charge at the SEC website at www.sec.gov and from the NetIQ Corporation contact
listed below.

SHAREHOLDERS OF WEBTRENDS AND NETIQ ARE URGED TO READ THE JOINT PROXY
STATEMENT-PROSPECTUS TO BE INCLUDED IN THE REGISTRATION STATEMENT ON FORM S-4
TO BE FILED BY NETIQ WITH THE SECURITIES AND EXCHANGE COMMISION BECAUSE IT WILL
CONTAIN IMPORTANT INFORMATION. UPON FILING WITH THE SEC, THIS DOCUMENT WILL BE
AVAILABLE FREE OF CHARGE ON THE SEC WEBSIDE AT WWW.SEC.GOV AND FROM WEBTRENDS
CORPORATION AND NETIQ CORPORATION THROUGH THE CONTACTS LISTED BELOW.

Contacts:

NetIQ Corporation

Susan Torrey, Press Relations
(713) 548-1863
[email protected]


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