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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 May 14, 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 BST Thursday US: 2:30 am EDT Thursday
May 14, 1998 May 14, 1998
Please contact:
Richard Van Hoesen US 650-404-7019
Senior Vice President
Chief Financial Officer
Giles Sanderson/Edward Bridges UK 0171-831-3113
Financial Dynamics
Micro Focus First Quarter Earnings Increase 125% on 50% Revenue Growth
================================================================================
London, England and Mountain View, California, May 14, 1998 - Micro Focus Group
Plc (NASDAQ: MIFGY; London Stock Exchange: MICF) today announced results for the
fiscal first quarter ended April 30, 1998. Net revenue for the quarter increased
nearly 50% to USD 48.7 million, compared with USD 32.5 million in the first
quarter of fiscal 1998. Net income for the quarter grew 125% to USD 5.3 million
compared with USD 2.4 million for the first quarter of fiscal 1998 and diluted
earnings per ordinary share were USD 0.06 per share compared with USD 0.03 for
the first quarter of 1998. Diluted earnings per American Depository Share were
USD 0.32 compared with USD 0.15 for the first quarter of 1998.
"We are very pleased with our first quarter performance," said Martin Waters,
President and CEO. We believe that these growth rates confirm our strategy of
enabling our customers to continuously transform and renew their legacy
enterprise applications for use well into the next century. Our performance
reflected a balanced contribution from all product segments and territories, and
substantial year-over-year growth in both Application Transformation and
consulting. With this strong start to the year and the success of our combined
product and service offerings, we are confident about our prospects for growth
for the remainder of the fiscal year."
"We ended the quarter with a very strong balance sheet," said Richard Van
Hoesen, Senior Vice President and CFO. "We had nearly USD 93 million in cash and
sharply lower accounts receivable balances. Operationally, we are investing in
our products, distribution and the growth of our services business, while
continuing to generate significant cash. Our operating margin, at 14.4%, was
nearly double the operating margin in the first quarter a year ago."
In UK Sterling terms, net revenue for the first quarter of 1999 increased 58% to
GBP 29.4 million, from GBP 18.6 million for the first quarter of 1998. Net
income grew 149% to GBP 3.4 million versus GBP 1.4 million for the 1998 first
quarter. Diluted earnings per ordinary share were 4.2 pence per share in 1999
compared with 1.8 pence per ordinary share for the first quarter of 1998.
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Summary financial results are as follows:
U.S. Dollars U.K. Pounds
Three months ended April 30, 1998 1997 1998 1997
Net revenue 48.7m 32.5m 29.4m 18.6m
Net income 5.4m 2.4m 3.4m 1.4m
EPS - Basic per ordinary share 0.07 0.03 4.3p 1.8p
Diluted per ordinary share 0.06 0.03 4.2p 1.8p
Diluted per ADS equivalent 0.32 0.15 - -
Micro Focus also reported the resignation of Ron Forbes as a director of the
company and as vice president, international finance effective today, because of
his need to pursue family business interests. The board expresses its
appreciation for Mr. Forbes' contributions to the Group over the last 14 years
and wishes him well in the future.
Micro Focus (NASDAQ: MIFGY) provides solutions for developing and managing
enterprise applications that run on IBM (NYSE: IBM) mainframes. The
company's solutions allow enterprises to carry forward the value of the
legacy application base by transforming them for use with newer computing
technologies such as distributed computing and the Internet. The company's
products and services deliver outstanding value and shorten time-to-solution
through an analysis and understanding of legacy applications. Micro Focus
solutions include mainframe application development and maintenance
solutions, Year 2000 compliance solutions and distributed computing
solutions for UNIX, Microsoft (NASDAQ:MSFT) Windows NT and the World Wide
Web. Micro Focus solutions integrate with technology offered by Unisys
(NYSE:UIS), PeopleSoft (NASDAQ:PSFT), Mercury Interactive (NASDAQ:MERQ) and
others. The Micro Focus customer and partner base includes many global 500
companies, including Hewlett Packard Company (NASDAQ:HWP), Microsoft
Corporation (NASDAQ:MSFT), Oracle Corporation (NASDAQ:ORCL), Sun
Microsystems Incorporated (NASDAQ:SUNW), The Boeing Company (NASDAQ:BA),
Computer Sciences Corporation (NASDAQ:CSC) and Bank of America Corporation
(NASDAQ:BAC), EDS and Andersen Consulting. 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 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, 1998 are based on the audited
financial statements which are to be filed with the UK Registrar of
Companies; the auditors' reports on both the UK and US financial statements
for the year ended January 31, 1998 were unqualified. Copies of the Annual
Report for the year ended January 31, 1998 are 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. Following established
Micro Focus practice, the directors do not intend to recommend the payment
of a dividend.
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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 is included in 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.
Micro Focus is a registered trademark of Micro Focus. All other companies
and products as they appear in this release are trademarks or registered
trademarks of their respective owners.
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MICRO FOCUS GROUP PLC - FIRST QUARTER ENDED APRIL 30, 1998
CONSOLIDATED STATEMENTS OF INCOME - IN US FORMAT
- -------------------------------------------------------------------
(Unaudited) Three month ended
in thousands of US dollars April 30
(except per share and ADS data) 1998 1997
- -------------------------------------------------------------------
Net revenue
Product revenue 29,542 17,892
Maintenance revenue 13,015 12,683
Service revenue 6,093 1,958
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Total net revenue 48,650 32,533
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Cost of revenue
Cost of product revenue 2,116 2,177
Cost of maintenance revenue 3,438 2,823
Cost of service revenue 4,243 2,310
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Total cost of revenue 9,797 7,310
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Gross profit 38,853 25,223
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Operating expenses
Research and development 8,378 8,527
Sales and marketing 19,217 11,987
General and administrative 4,267 2,178
- -------------------------------------------------------------------
Total operating expenses 31,862 22,692
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Income from operations 6,991 2,531
Interest income, net 1,096 983
- -------------------------------------------------------------------
Income before income taxes 8,087 3,514
Income taxes (2,750) (1,139)
- -------------------------------------------------------------------
Net income 5,337 2,375
- -------------------------------------------------------------------
Net income per share: basic $0.07 $0.03
Net income per ADS: basic $0.34 $0.15
Weighted average number of shares
outstanding (thousands): basic 79,483 77,767
Shares converted to ADS equivalent
(thousands) 15,897 15,553
- -------------------------------------------------------------------
Net income per share: diluted $0.06 $0.03
Net income per ADS: diluted $0.32 $0.15
Weighted average number of shares
outstanding (thousands): diluted 84,191 80,755
Shares converted to ADS equivalent
(thousands) 16,838 16,151
===================================================================
Note:
Shares and per-share data for all periods presented above reflect
the 5-for-1 stock split of the Company's ordinary shares, which
was effective as of the close of business on March 13, 1998. The
Company's American Depositary Shares ("ADSs") did not split, although
the conversion rights of such ADSs have been adjusted such that each
ADS represents five ordinary shares. Per share earnings are also shown
on an ADS equivalent basis.
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MICRO FOCUS GROUP PLC - FIRST QUARTER ENDED APRIL 30, 1998
CONSOLIDATED BALANCE SHEETS - IN US FORMAT
- -------------------------------------------------------------------
in thousands of US dollars April 30 January 31
1998 1998
(unaudited)
- -------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents 52,377 48,174
Short-term investments 40,448 36,316
Accounts receivable, net 39,074 47,798
Inventories 421 519
Prepaid expenses and other assets 3,787 2,833
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Total current assets 136,107 135,640
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Fixed assets:
Property, plant and equipment, net 40,224 39,083
Goodwill, net 4,883 5,346
Software product assets, net 19,824 20,328
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Total assets 201,038 200,397
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Liabilities and shareholders' equity
Current liabilities:
Bank loans 1,663 1,652
Accounts payable 6,346 6,957
Accrued employee compensation 7,568 12,383
Income taxes payable 12,926 10,459
Deferred revenue 29,208 32,848
Other current liabilities 11,643 12,085
- -------------------------------------------------------------------
Total current liabilities 69,354 76,384
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Long-term debt and other liabilities 18 20
Deferred income taxes 9,463 9,159
- -------------------------------------------------------------------
Total liabilities 78,835 85,563
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Shareholders' equity:
Ordinary shares 2,547 2,546
Additional paid-in capital 34,731 33,362
Unrealized gain on available-for-sale
securities, net of tax (28) 44
Treasury stock (7,769) (7,769)
Retained earnings 94,356 89,019
Currency translation adjustment (1,634) (2,368)
- -------------------------------------------------------------------
Total shareholders' equity 122,203 114,834
- -------------------------------------------------------------------
Total liabilities and
shareholders' equity 201,038 200,397
===================================================================
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MICRO FOCUS GROUP PLC - FIRST QUARTER ENDED APRIL 30, 1998
CONSOLIDATED PROFIT AND LOSS ACCOUNT - IN UK FORMAT
- -------------------------------------------------------------------
(Unaudited) Three months ended
in thousands of GB pounds April 30
(except per share data) 1998 1997
- -------------------------------------------------------------------
Revenue
Product revenue 17,814 10,099
Maintenance revenue 7,870 7,293
Service revenue 3,685 1,183
- -------------------------------------------------------------------
Total revenue 29,369 18,575
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Cost of revenue
Cost of product revenue 1,278 1,484
Cost of maintenance revenue 2,077 1,289
Cost of service revenue 2,563 1,760
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Total cost of revenue 5,918 4,533
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Gross profit 23,451 14,042
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Operating expenses
Research and development 5,065 4,737
Sales and marketing 11,604 6,606
General and administrative 2,300 1,142
- -------------------------------------------------------------------
Total operating expenses 18,969 12,485
- -------------------------------------------------------------------
Operating profit 4,482 1,557
Interest income, net 601 498
- -------------------------------------------------------------------
Profit before taxation 5,083 2,055
Taxation (1,652) (678)
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Profit after taxation 3,431 1,377
- -------------------------------------------------------------------
Earnings per share: basic 4.3p 1.8p
Earnings per share: diluted 4.2p 1.8p
===================================================================
Note:
Earnings per share for all periods presented above reflect
the 5-for-1 sub-division of the Company's ordinary shares, which
took place as at the close of business on March 13, 1998.
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MICRO FOCUS GROUP PLC - FIRST QUARTER ENDED APRIL 30, 1998
CONSOLIDATED BALANCE SHEET - IN UK FORMAT
- -------------------------------------------------------------------
in thousands of GB pounds April 30 January 31
1998 1998
(unaudited)
- -------------------------------------------------------------------
Fixed assets
Intangible fixed assets 11,871 12,394
Tangible fixed assets 24,091 23,836
Investment 4,886 4,886
- -------------------------------------------------------------------
Total fixed assets 40,848 41,116
- -------------------------------------------------------------------
Current assets
Stock 252 317
Trade debtors 23,397 29,145
Other debtors and prepaid expenses 2,226 1,728
Cash and bank deposits 55,584 51,518
- -------------------------------------------------------------------
Total current assets 81,459 82,708
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Creditors: amounts falling due within one year:
Bank loans and overdrafts 996 1,007
Trade creditors 3,800 4,241
Accrued employee compensation 4,532 7,481
Current corporation tax 7,739 6,428
Accrued expenses and
other current liabilities 7,141 7,326
Deferred revenue 17,315 20,030
- -------------------------------------------------------------------
Total current liabilities 41,523 46,513
- -------------------------------------------------------------------
Net current assets 39,936 36,195
- -------------------------------------------------------------------
Total assets less current liabilities 80,784 77,311
Creditors: amounts falling due
after more than one year 11 12
Provision for liabilities and charges:
Deferred taxation 6,406 6,407
- -------------------------------------------------------------------
Net assets 74,367 70,892
- -------------------------------------------------------------------
Capital and reserves
Called up share capital 1,612 1,588
Share premium account 31,022 30,196
Profit and loss account 41,733 39,108
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Total shareholders' funds 74,367 70,892
===================================================================
*** 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: May 14, 1998 By: /s/ Richard Van Hoesen
----------------------------------
Richard Van Hoesen, Sr. Vice President
and Chief Financial Officer
