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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13A-16 OR 15D-15 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 4, 1998
Micro Focus Group Public Limited Company
(Translation of Registrant's Name Into English)
The Lawn, Old Bath Road, Newbury, England RG14 1QN
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.)
Form 20-F X Form 40-F
--- ---
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes X No
--- ---
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2 (b): 82-795.)
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UK: 7:30 am GMT Wednesday US: 2:30 am EST Wednesday
March 4, 1998 March 4, 1998
Please contact:
Martin C. Waters US: 650-404-7090
President
Chief Executive Officer
Loren E. Hillberg US: 650-404-7383
Vice President
Giles Sanderson UK: 0171 831 3113
Financial Dynamics
MICRO FOCUS ANNOUNCES RECORD REVENUE RESULTS
Net Income Increases 201% Over Fourth Quarter of 1997 on 39%Increase in Revenue
London, England and Mountain View, California, March 4, 1998 - Micro Focus
(NASDAQ: MIFGY) today announced record revenue for the quarter and the year
ended January 31, 1998. Net revenue for the fourth quarter 1998 increased 39% to
USD 52.0 million, from USD 37.4 million for the fourth quarter 1997. Net income
grew 201% to USD 5.3 million versus USD 1.8 million for the 1997 fourth quarter.
This represents diluted earnings per share of USD 0.32 compared with USD 0.11
for the fourth quarter of 1997. Last year's results include USD 0.5 million of
non-recurring after tax charges.
Net revenue for the year was USD 167.3 million, a 36% increase over net revenue
of USD 123.2 million for 1997. Net income grew to USD 14.6 million in 1998
versus a USD 14.7 million loss for 1997. Diluted earnings per share were USD
0.89 for 1998 compared with last year's USD 0.94 loss. Last year's results
include USD 5.8 million of non-recurring after tax charges.
Micro Focus' financial results for all periods reported in US dollars have been
restated to include the results of XDB Systems, Inc. (XDB) which was acquired on
January 20, 1998 and accounted for under US GAAP using the pooling of interest
method.
Excluding XDB, net revenue for the fourth quarter 1998 increased 44% to USD 50.2
million from USD 34.9 million for the fourth quarter 1997. Net income grew 148%
to USD 6.7 million versus USD 2.7 million for the fourth quarter 1997. This
represents diluted earnings per share of USD 0.41 compared with USD 0.18 for the
fourth quarter of 1997. Net revenue for the year was USD 158.7 million, a 37%
increase over net revenue of USD 115.4 million for 1997. Net income grew to USD
15.8 million in 1998 versus a USD 10.5 million loss for 1997. Diluted earnings
per share were USD 0.98 for 1998 compared with last year's USD 0.69 loss. Last
year's results include USD 5.3 million of non-recurring after tax charges.
"This was an outstanding year for Micro Focus, one that positions the Company
strongly for the future," said Martin Waters, President and CEO. "The growth of
revenues for the quarter and the full year, compared to prior periods was made
up of growth across all of the Company's product lines. We are particularly
pleased with the market acceptance of our Year 2000 products and services and we
are confident that we will continue to capitalize on that market opportunity
over the coming year."
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Mr. Waters continued, "We believe that our prospects for growing the business
during the coming year are excellent. The Company is well positioned for
profitable growth in its traditional markets, and with that strong platform we
believe we can move the Company into new, expanding markets that will fuel
future growth."
In UK sterling terms, revenue for the fourth quarter of 1998 increased 46% to
GBP 30.3 million, from GBP 20.8 million for the fourth quarter of 1997. Profit
after taxation grew 192% to GBP 4.3 million versus GBP 1.5 million for the 1997
fourth quarter. Diluted earnings per share were 25.8 pence per share in 1998
compared with 9.6 pence per share for the fourth quarter of 1997. Stated in
pounds, revenue for the year grew 33% to GBP 97.0 million versus GBP 73.1
million for 1997. Profit after taxation grew to GBP 10.4 million in 1998
compared with a GBP 7.3 million loss for 1997. Diluted earnings per share were
65.0 pence for 1998 compared with last year's 48.0 pence loss. The XDB
transaction has been accounted for as an acquisition under UK GAAP and the
Company results include XDB revenue of GBP 0.2 million and an insignificant net
loss for the period since acquisition on January 20, 1998.
Summary financial results are as follows (in USD'000, except EPS):
Year Ended
Fourth Quarter January 31
1998 1997 1998 1997
----------------- -----------------
Net Revenue 51986 37428 167309 123227
Net Income / (Loss) 5339 1773 14633 -14690
EPS - Diluted (USD) 0.32 0.11 0.89 (0.94)
Summary financial results excluding XDB are as follows (in USD'000, except EPS):
Year Ended
Fourth Quarter January 31
1998 1997 1998 1997
----------------- -----------------
Net Revenue 50227 34867 158659 115409
Net Income / (Loss) 6735 2714 15828 -10508
EPS - Diluted (USD) 0.41 0.18 0.98 (0.69)
Summary financial results are as follows (in GBP'000, except EPS):
Year Ended
Fourth Quarter January 31
1998 1997 1998 1997
----------------- -----------------
Revenue 30,300 20,818 97,015 73,089
Profit /(loss) after taxation 4253 1456 10426 -7281
EPS - Diluted 25.8p 9.6p 65.0p (48.0p)
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Micro Focus provides tools and technology for managing enterprise computing
assets. The Company's state-of-the-art programming solutions allow application
developers to
-- manage and extend their enterprise applications for
developing and deploying production systems in distributed
environments;
-- move application development and maintenance off of the
mainframe; and
-- reengineer systems to handle the millennium date change and the change to
Euro currency.
Micro Focus is located in the US at 701 East Middlefield Road, Mountain View,
California 94043 - telephone 650-938-3700 and in the UK at The Lawn, 22-30 Old
Bath Road, Newbury, Berkshire, RG14 1QN telephone 01635 32646. For additional
information on Micro Focus and its products, visit the Micro Focus Web site at
http://www.microfocus.com.
The following statement is made in accordance with the U.S. Private
Securities Litigation Reform Act 1995: This announcement contains
forward-looking statements that involve a number of risks and uncertainties.
There are certain important factors that could cause results to differ
materially from those anticipated by the statements made herein. Factors
that could cause actual results to differ materially include, among others,
the ability of Micro Focus to develop and release to the market products and
services that meet the needs of the Company's customers in the highly
dynamic market for application development tools, the potential need for
development tools to shift based on changes in underlying technology
standards coming into use, the potential for a decrease in net revenue which
may be caused by delays in the timing of the delivery of products or
services, the effect of competitors' efforts to enter the Company's markets,
and the ability of the Company to effectively manage its costs against
uncertain revenue expectations. Further information on potential factors
which could affect the Company's financial results are included on the
Company's Form 20-F for the fiscal year ended January 31, 1997 and the
Company's Form 6-K reports for the quarters ended April 30, July 31 and
October 31, all as filed with the SEC, as they may be updated or amended
with future filings.
The financial information contained in this report does not constitute
statutory accounts as defined in section 240 of the UK Companies Act 1985.
The figures for the year ended January 31, 1997 are based on the audited
financial statements which have been filed with the UK Registrar of
Companies; the auditors' reports on both the UK and US financial statements
for the year ended January 31, 1997 were unqualified. Copies of the Annual
Report for the year ended January 31, 1998 will be mailed to shareholders
and will not be published in newspapers. Copies of the Report will be
available upon request to the Company Secretary of Micro Focus at the
Registered Office, The Lawn, 22-30 Old Bath Road, Newbury, Berkshire,
England, RG14 1QN, or on the Securities and Exchange Commission Internet web
site www.sec.gov. Following established Micro Focus practice, the directors
do not intend to recommend the payment of a dividend.
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MICRO FOCUS GROUP PLC - FOURTH QUARTER ENDED JANUARY 31, 1998
CONSOLIDATED STATEMENTS OF INCOME - IN US FORMAT
- ----------------------------------------------------------------------
(Unaudited) Three months ended Year ended
in thousands of US dollars January 31 January 31
(except per share data) 1998 1997 1998 1997
- ----------------------------------------------------------------------
Net revenue
Product revenue 34,247 22,727 104,041 71,115
Service revenue 17,739 14,701 63,268 52,112
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Total net revenue 51,986 37,428 167,309 123,227
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Cost of revenue
Cost of product revenue 3,351 2,161 10,309 8,075
Cost of service revenue 7,865 4,681 26,593 19,586
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Total cost of revenue 11,216 6,842 36,902 27,661
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Gross profit 40,770 30,586 130,407 95,566
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Operating expenses
Research and development 9,248 9,705 35,040 38,556
Sales and marketing 18,412 14,795 62,214 53,519
General and administrative 6,157 3,256 15,559 11,814
Non-recurring charges - 670 - 8,670
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Total operating expenses 33,817 28,426 112,813 112,559
- ----------------------------------------------------------------------
Income (loss) from operations 6,953 2,160 17,594 (16,993)
Interest income 1,204 825 4,370 3,094
Interest expense (42) (21) (123) (73)
- ----------------------------------------------------------------------
Income (loss) before taxes 8,115 2,964 21,841 (13,972)
Income taxes (2,776) (1,191) (7,208) (718)
- ----------------------------------------------------------------------
Net income (loss) 5,339 1,773 14,633 (14,690)
- ----------------------------------------------------------------------
Net income (loss) per share:
basic (in US dollars) 0.34 0.11 0.93 (0.95)
Weighted average number of shares
outstanding (thousands):basic 15,865 15,544 15,747 15,535
- ----------------------------------------------------------------------
Net income (loss) per share:
diluted(in US dollars) 0.32 0.11 0.89 (0.94)
Weighted average number of shares
outstanding (thousands):diluted 16,670 15,856 16,527 15,612
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MICRO FOCUS GROUP PLC - FOURTH QUARTER ENDED JANUARY 31, 1998
CONSOLIDATED BALANCE SHEETS - IN US FORMAT
- ----------------------------------------------------------------------
in thousands of US dollars January 31 January 31
1998 1997
(unaudited)
- ----------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents 48,174 73,119
Short-term investments 36,316 2,577
Accounts receivable, net 47,798 22,390
Inventories 519 774
Prepaid expenses and other assets 2,833 5,870
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Total current assets 135,640 104,730
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Fixed assets:
Property, plant and equipment, net 39,083 33,796
Goodwill, net 5,346 -
Software product assets, net 20,328 23,344
- ----------------------------------------------------------------------
Total assets 200,397 161,870
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Liabilities and shareholders' equity
Current liabilities:
Bank loans 1,652 1,500
Accounts payable 6,957 5,732
Accrued employee compensation
and commissions 12,383 5,811
Income taxes payable 10,459 4,142
Deferred revenue 32,848 31,155
Other current liabilities 12,085 12,016
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Total current liabilities 76,384 60,356
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Long-term debt and other liabilities 20 24
Deferred income taxes 9,159 8,746
Shareholders' equity:
Ordinary shares 2,546 2,427
Additional paid-in capital 33,362 27,468
Unrealized gain on available-for-sale
securities, net of tax 44 (90)
Treasury stock (7,769) (8,959)
Cumulative exchange (loss) (2,368) (2,487)
Retained earnings 89,019 74,385
- ----------------------------------------------------------------------
Total shareholders' equity 114,834 92,744
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Total liabilities and
shareholders' equity 200,397 161,870
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MICRO FOCUS GROUP PLC - FOURTH QUARTER ENDED JANUARY 31, 1998
CONSOLIDATED PROFIT AND LOSS ACCOUNT - IN UK FORMAT
- ----------------------------------------------------------------------
(Unaudited) Three months ended Year ended
in thousands of GB pounds January 31 January 31
(except per share data) 1998 1997 1998 1997
- ----------------------------------------------------------------------
Revenue
Product revenue 20,174 12,409 60,480 42,020
Service revenue 10,126 8,409 36,535 31,069
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Total revenue 30,300 20,818 97,015 73,089
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Cost of revenue
Cost of product revenue 2,253 1,762 6,990 6,406
Cost of service revenue 4,658 2,662 15,845 11,892
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Total cost of revenue 6,911 4,424 22,835 18,298
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Gross profit 23,389 16,394 74,180 54,791
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Operating expenses
Research and development 5,182 5,086 19,679 24,299
Sales and marketing 10,508 7,608 35,289 30,146
General and administrative 2,162 1,577 6,476 7,854
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Total operating expenses 17,852 14,271 61,444 62,299
- ----------------------------------------------------------------------
Operating profit / (loss) 5,537 2,123 12,736 (7,508)
Interest income 694 435 2,551 1,720
Interest expense (25) (2) (70) (21)
- ----------------------------------------------------------------------
Profit/(loss) before taxation 6,206 2,556 15,217 (5,809)
Taxation (1,953) (1,100) (4,791) (1,472)
- ----------------------------------------------------------------------
Profit/(loss) after taxation 4,253 1,456 10,426 (7,281)
- ----------------------------------------------------------------------
Earnings(loss) per share:basic 27.7p 9.6p 67.8p (48.0p)
Earnings(loss) per share:diluted 25.8p 9.6p 65.0p (48.0p)
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MICRO FOCUS GROUP PLC - FOURTH QUARTER ENDED JANUARY 31, 1998
CONSOLIDATED BALANCE SHEET - IN UK FORMAT
- ----------------------------------------------------------------------
in thousands of GB pounds January 31 January 31
1998 1997
(unaudited)
- ----------------------------------------------------------------------
Fixed assets
Intangible fixed assets 12,394 14,590
Tangible fixed assets 23,173 20,543
Investment 4,886 5,634
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Total fixed assets 40,453 40,767
- ----------------------------------------------------------------------
Current assets
Stock 317 484
Trade debtors 29,808 12,672
Other debtors and prepaid expenses 1,728 1,556
Cash and bank deposits 51,518 44,725
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Total current assets 83,371 59,437
- ----------------------------------------------------------------------
Creditors: amounts falling due within one year:
Bank loans and overdrafts 1,007 -
Trade creditors 4,241 3,054
Accrued employee compensation
and commissions 7,481 3,632
Current corporation tax 6,428 2,590
Accrued expenses and
other current liabilities 7,326 6,904
Deferred revenue 20,030 16,646
- ----------------------------------------------------------------------
Total current liabilities 46,513 32,826
- ----------------------------------------------------------------------
Net current assets 36,858 26,611
- ----------------------------------------------------------------------
Total assets less current liabilities 77,311 67,378
Creditors: amounts falling due
after more than one year 12 15
Provision for liabilities and charges:
Deferred taxation 5,653 6,239
- ----------------------------------------------------------------------
Net assets 71,646 61,124
- ----------------------------------------------------------------------
Capital and reserves
Called up share capital 1,626 1,517
Share premium and other reserves 26,085 18,071
Profit and loss account 43,935 41,536
- ----------------------------------------------------------------------
Total shareholders' funds 71,646 61,124
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*** ENDS ***
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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, thereunto duly authorized.
Micro Focus Group Public Limited Company
----------------------------------------
(Registrant)
Date: March 4, 1998 By: /s/ Loren E. Hilllberg
----------------------------------
Loren E. Hillberg, Secretary
