<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of January 17, 2000
MERANT plc
(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.)
<PAGE> 2
[LOGO]
MERANT (TM)
INTERIM REPORT 2000
FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED
OCTOBER 31, 1999
<PAGE> 3
CONTENTS
LETTER TO SHAREHOLDERS 3
FINANCIAL STATEMENTS - U.S.
Consolidated statements of income 5
Consolidated balance sheets 6
Consolidated statements of cash flow 7
Notes to consolidated financial statements 7
FINANCIAL STATEMENTS - U.K.
Consolidated profit and loss account 8
Statement of recognised gains and losses 8
Consolidated balance sheet 9
Consolidated cash flow statement 10
Notes to the financial statements 11
REPORT OF THE AUDITORS 12
COMPANY INFORMATION 12
________________________________________________________________________________
Securities Exchanges
As a foreign private issuer in the United States, MERANT is not required to file
quarterly reports with the U.S. Securities and Exchange Commission ("SEC").
However, beginning in 1997, MERANT commenced furnishing to the SEC on a
voluntary basis quarterly reports on Form 6-K which include MERANT's results for
the applicable quarter in a format similar to that of a Form 10-Q. These
materials are available on the SEC web site located at http://www.sec.gov.
Copies of MERANT's Annual Report to Shareholders and Annual Report on Form 20-F,
each for the period ended April 30, 1999, are available upon request to MERANT's
offices in Rockville, Maryland or Newbury, United Kingdom.
Forward-Looking Statements
The following statement is made in accordance with the U.S. Private Securities
Litigation Reform Act of 1995. This interim report contains forward-looking
statements that include statements regarding expectations for revenue and profit
growth, future demand for MERANT's Egility, enterprise extension and enterprise
application development solutions, and MERANT's e-commerce services, growth in
MERANT's e-commerce business, features and benefits of MERANT's products and
services, and expectations for MERANT's e-commerce services and enterprise
extension software business, including the integration of The Marathon Group and
EnterpriseLink Technology Corporation. These forward-looking statements involve
a number of risks and uncertainties. Actual results could differ materially from
those anticipated by the forward-looking statements made herein. Factors that
could cause actual results to differ materially include, among others, the
ability of MERANT to effectively manage its costs against uncertain revenue
expectations, the ability to manage and integrate recently acquired businesses
or other businesses that it may acquire in the future, 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 ability of MERANT to develop, release and
sell products and services to customers in the highly dynamic market for
enterprise application development, data access and e-commerce solutions, the
potential need for enterprise application development solutions to shift based
on changes in underlying technology standards coming into use, the market
acceptance of e-commerce solutions generally, and the effect of competitors'
efforts to enter MERANT's markets. Further information on potential factors
which could affect MERANT's financial results is included in MERANT's Annual
Report on Form 20-F for the period ended April 30, 1999, and MERANT's Quarterly
Reports on Form 6-K for the quarters ended July 31, 1999 and October 31, 1999,
each as submitted to the SEC and as may be updated and amended with future
filings or submissions. MERANT undertakes no obligation to release publicly any
updates or revisions to any forward-looking statements contained in this report
that may reflect events or circumstances occurring after the date of this
report.
MERANT plc - 22-30 Old Bath Road, Newbury, Berkshire, RG14 1QN, U.K.
Registered Number 1709998
2
<PAGE> 4
LETTER TO SHAREHOLDERS
Chief Executive Officer's Statement:
Introduction
I am pleased to report our financial results for the six months ended 31 October
1999, which have been an exciting time for MERANT.
Our business has shown significant progress, reflecting our continuing
commitment to provide innovative enterprise application development solutions
for Global 2000 customers. On 4 October 1999, we announced MERANT Egility, our
e-business framework to help organizations rapidly overcome the key challenges
they face as they e-enable the enterprise to remain competitive. With our
e-business position strengthening, our mission to accelerate our customers'
business through the application of innovative information technology has become
that much more strategic.
Recent examples of this fundamental shift to e-business have been reinforced
with MERANT's recent acquisitions of The Marathon Group and EnterpriseLink
Technology Corporation. With the launch of the MERANT Egility framework and
solutions to allow our customers to create the new, transform the existing,
integrate the enterprise and manage the application environment, this shift is
accelerating. Customer acceptance of MERANT Egility e-business solutions is
evident by both customer success and the Company's revenue growth in the second
fiscal quarter of this year.
Financial and Operational Review
Total net revenue for the first six months ended 31 October 1999 under U.S.
generally accepted accounting principles (GAAP) was $179.8 million, down 1%
compared to the comparable prior year period. Total net revenue not relating to
Year 2000 (Y2K) products or services increased 7% in the first half of this
fiscal year. Net revenue relating to Y2K products and services represented only
9% of total net revenue, down from 17% for the first half of fiscal year 1999.
Net income per American Depository Share (ADS) was $0.17 in the first half of
this fiscal year, as compared to $0.28 per ADS, excluding one time charges, for
the first half of last fiscal year. Pre-tax operating earnings excluding
goodwill amortization for the first half were $10.7 million, or $0.26 per ADS on
an after-tax basis. Amortization of goodwill relating to acquisitions totaled
$2.7 million in the first half of this fiscal year, compared to $1.5 million for
the first six months of last fiscal year.
Under U.K. GAAP, total net revenue for the six months ended 31 October 1999 was
GBP 111.9 million, compared to GBP 69.4 million for the six months ended 31
October 1998. This increase in the first half reflects the full inclusion of
revenue earned by the INTERSOLV business. Earnings for the first six months of
this fiscal year before interest, taxes, goodwill amortization and exceptional
items (EBITA) were GBP 5.5 million, compared to GBP 8.3 million in the same
period last year. Earnings per ordinary share before amortization of goodwill
and exceptional items were 3.1 pence compared to 7.3 pence per ordinary share
for the corresponding prior year period. Amortization of goodwill relating to
acquisitions totaled GBP 18.4 million in the first half of this fiscal year,
compared to GBP 4.0 million in the corresponding period last year.
E-Business
During the first half of fiscal year 2000 we announced a number of important
initiatives to help expand our position in delivering enterprise e-business
solutions. A critical element of our e-business strategy was implemented with
the launch of MERANT Egility, a new framework that provides rapid delivery of
e-enabling technology and expertise, a priority for development teams worldwide.
With MERANT Egility, we are leveraging our existing e-business core strengths so
customers can unite the best of both worlds and move to the forefront of
e-business - combining a highly creative, compelling new electronic customer
experience while leveraging the existing application assets. We continue to roll
out solutions and announce customer successes that enhance our core strengths
and e-business leadership.
3
<PAGE> 5
To thrive in today's business environment, our customers and MERANT must
continually update their business model and e-enable their enterprise. United
around the Company's core values, the MERANT team is committed to making our
customers successful.
Acquisitions
MERANT has recently completed two acquisitions that complement the MERANT
Egility e-business framework and significantly enhance our ability to deliver
enterprise e-business solutions. On 3 August 1999, MERANT completed the
acquisition of The Marathon Group, a premier Internet services firm, in order to
address a fundamental part of our long-term strategy to better support
customers' increasing requirements to e-enable their enterprise.
On 23 November 1999, we completed the acquisition of EnterpriseLink Technology
Corporation, an innovative supplier of enterprise extension software, which
should help to propel our capability to integrate and extend existing
applications to quickly e-enable businesses. Both transactions will be accounted
for as purchases for U.S. and U.K. accounting purposes.
Outlook
As our transition into e-business accelerates, the outlook is favorable for all
solutions making up the MERANT Egility framework. We are well positioned to take
advantage of this global industry transformation, as we help our customers
deploy information technology and grow their business. The second half of the
year has started, and your management team is committed to driving further
progress in our business and financial performance. I shall continue to
communicate our vision, strategy and progress, and I am confident that the full
year will be a period of significant achievement for MERANT.
/s/Gary G. Greenfield
Gary G. Greenfield
Chief Executive Officer
January 12, 2000
4
<PAGE> 6
CONSOLIDATED STATEMENTS OF INCOME - IN U.S. FORMAT
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
(in thousands, except share, per share and ADS data) Three months Three months Six months Six months
(unaudited) ended ended ended ended
October 31, October 31, October 31, October 31,
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------------
Net revenue
License fees $46,542 $42,878 $89,068 $93,604
Maintenance subscriptions 26,639 25,203 52,019 49,711
Training and consulting 18,986 19,078 38,675 39,119
- ----------------------------------------------------------------------------------------------------------------------------------
Total net revenue 92,167 87,159 179,762 182,434
- ----------------------------------------------------------------------------------------------------------------------------------
Cost of revenue
Cost of license fees 2,273 2,942 4,828 5,704
Cost of maintenance subscriptions 6,010 6,427 11,704 12,630
Cost of training and consulting 14,731 16,517 29,647 33,833
- ----------------------------------------------------------------------------------------------------------------------------------
Total cost of revenue 23,014 25,886 46,179 52,167
- ----------------------------------------------------------------------------------------------------------------------------------
Gross profit 69,153 61,273 133,583 130,267
- ----------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Research and development 15,417 15,249 29,909 30,729
Sales and marketing 39,268 37,722 80,098 73,798
General and administrative 6,807 7,398 14,619 14,476
One time charges - 49,662 - 49,662
- ----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 61,492 110,031 124,626 168,665
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before goodwill amortization 7,661 (48,758) 8,957 (38,398)
Goodwill amortization 1,746 739 2,724 1,508
- ----------------------------------------------------------------------------------------------------------------------------------
Income from operations 5,915 (49,497) 6,233 (39,906)
Interest income, net 778 1,619 1,791 3,029
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 6,693 (47,878) 8,024 (36,877)
Income taxes (2,410) 5,574 (2,889) 1,802
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $4,283 ($42,304) $5,135 ($35,075)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share: basic $0.03 ($0.29) $0.04 ($0.25)
Net income (loss) per ADS: basic $0.15 ($1.47) $0.18 ($1.23)
- ----------------------------------------------------------------------------------------------------------------------------------
Shares used in computing basic net income (loss) per share 144,220 143,642 144,006 143,130
ADSs used in computing basic net income (loss) per ADS 28,844 28,728 28,801 28,626
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per share: diluted $0.03 ($0.29) $0.03 ($0.25)
Net income (loss) per ADS: diluted $0.14 ($1.47) $0.17 ($1.23)
- ----------------------------------------------------------------------------------------------------------------------------------
Shares used in computing diluted net income (loss) per share 150,554 143,642 149,580 143,130
ADSs used in computing diluted net income (loss) per ADS 30,111 28,728 29,916 28,626
- ----------------------------------------------------------------------------------------------------------------------------------
Excluding one time charges:
Income before income taxes 6,693 1,784 8,024 12,785
Net income 4,283 1,123 5,135 8,352
Net income per ADS: diluted $0.14 $0.04 $0.17 $0.29
- ----------------------------------------------------------------------------------------------------------------------------------
Note: Each American depositary share, or ADS, represents five ordinary shares.
</TABLE>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - IN U.S. FORMAT
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
(in thousands) Three months Three months Six months Six months
(unaudited) ended ended ended ended
October 31, October 31, October 31, October 31,
1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
Net income (loss) $4,283 ($42,304) $5,135 ($35,075)
Currency translation adjustment 3,915 6,380 3,957 4,582
Unrealised (gain) loss on available-for-sale securities, net of tax 229 (23) 229 (28)
- ---------------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss) $8,427 ($35,947) $9,321 ($30,521)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 7
CONSOLIDATED BALANCE SHEETS - IN U.S. FORMAT
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
(in thousands) October 31, April 30,
1999 1999
(Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $86,666 $86,580
Short-term investments 24,949 34,804
Accounts receivable,net 98,784 111,317
Prepaid expenses and other assets 11,549 13,485
- ---------------------------------------------------------------------------------------------------------------------------
Total current assets 221,948 246,186
- ---------------------------------------------------------------------------------------------------------------------------
Fixed assets:
Property, plant and equipment, net 48,726 46,090
Goodwill, net 23,945 10,239
Software product assets, net 14,979 17,007
Other assets 3,134 3,560
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $312,732 $323,082
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities and shareholders' equity
Current liabilities:
Borrowings $1,520 $2,716
Accounts payable 8,942 12,150
Accrued employee compensation 19,536 24,352
Income taxes payable 18,369 18,325
Deferred revenue 59,710 69,155
Other current liabilities 24,166 29,869
- ---------------------------------------------------------------------------------------------------------------------------
Total current liabilities 132,243 156,567
Deferred income taxes 16,625 14,304
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities $148,868 $170,871
- ---------------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Ordinary shares 4,715 4,691
Additional paid-in capital and other reserves 157,017 154,868
Treasury stock (7,393) (7,552)
Retained earnings 13,985 8,850
Accumulated other comprehensive loss (4,460) (8,646)
- ---------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity $163,864 $152,211
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $312,732 $323,082
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 8
CONSOLIDATED STATEMENTS OF CASH FLOW - IN U.S. FORMAT
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
(in thousands) Six months Six months
(unaudited) ended ended
October 31, October 31,
1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
Operating activities
Net income (loss) $5,135 ($35,075)
Adjustments to reconcile net income (loss) to cash provided by operations:
Depreciation of fixed assets 5,000 5,084
Amortisation of software product assets and other intangibles 8,796 8,657
Changes in operating assets and liabilities (7,329) 30,601
Other items 3,129 6,047
- -----------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 14,731 15,314
- -----------------------------------------------------------------------------------------------------------------------------
Investing activities
Purchases of property, plant & equipment (7,636) (4,803)
Software product assets and other intangibles (4,044) (4,799)
Acquisition of subsidiaries, net of cash balances acquired (14,978) (7,082)
Available-for-sale securities 9,855 (5,461)
Disposals of property, plant & equipment - (13)
Other items 426 -
- -----------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (16,377) (22,158)
- -----------------------------------------------------------------------------------------------------------------------------
Financing activities
Issuance of ordinary shares, net of expenses 2,173 4,824
Own shares 159 335
Repayment of borrowings (1,196) (1,417)
Repayment of capital leases - (19)
- -----------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,136 3,723
- -----------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 596 (82)
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash 86 (3,203)
Cash at beginning of period 86,580 86,459
- -----------------------------------------------------------------------------------------------------------------------------
Cash at end of period $86,666 $83,256
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - U.S. FORMAT
1. Basis of preparation
The interim financial information in these U.S. financial statements has been
prepared on the bases set out on page 12.
2. Business combinations
On August 3, 1999, MERANT completed the acquisition of The Marathon Group
(Marathon), an Internet professional services company based in Raleigh, North
Carolina. The consideration for the transaction was approximately $15 million,
payable in cash. The transaction has been accounted for using the purchase
method, and, accordingly, the acquisition costs have been allocated between the
identifiable net assets of Marathon, based on their respective fair values, and
the excess allocated to goodwill. The operating results of Marathon, which have
been included in MERANT's results from the date of the acquisition, were not
material during the current period.
In the previous fiscal year, ended April 30,1999, MERANT reported three business
combinations.
On May 15, 1998 MERANT acquired its Italian distributor, Micro Focus Italia,
s.r.l., for total consideration of $4.6 million. On August 13, 1998, MERANT
acquired its Australian distributor, Advanced Software Engineering Pty, Ltd.,
for total consideration of $2.5 million. Both transactions were accounted for
using the purchase method.
On September 24, 1998 MERANT acquired INTERSOLV, Inc., a Rockville,
Maryland-based corporation, in a transaction valued at $272 million. This
transaction was accounted for using the pooling-of-interests method, and,
accordingly, all financial data presented in these U.S. consolidated financial
statements reflects the combined results of MERANT and INTERSOLV, Inc. In the
second quarter of fiscal 1999, ended October 31, 1998, MERANT recorded pre-tax
charges of approximately $25.6 million in connection with activities to complete
the transaction and approximately $24.1 million in other one time charges
related to the transaction.
3. Dividends
Following established MERANT policy, the directors do not intend to recommend
payment of a dividend.
4. Subsequent event
On November 23, 1999 MERANT acquired EnterpriseLink Technology Corporation, a
privately-held supplier of enterprise extension software based in Campbell,
California. The consideration for this transaction is approximately $22 million,
payable in cash. MERANT also assumed EnterpriseLink's stock options outstanding
as of the closing which converted into share options to acquire up to
approximately 516,500 MERANT ordinary shares.
7
<PAGE> 9
CONSOLIDATED PROFIT AND LOSS ACCOUNT - IN U.K. FORMAT
<TABLE>
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Three Three Six Six Fifteen
months months months months months
ended ended ended ended ended
October 31, October 31, October 31, October 31, April 30,
1999 1998 1999 1998 1999
(unaudited) (unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
- ---------------------------------------------------------------------------------------------------------------------------
Revenue
Licence fees 28,687 21,735 55,436 39,807 118,245
Maintenance subscriptions 16,590 10,871 32,405 18,712 56,454
Training and consulting 11,753 7,532 24,084 10,892 40,774
- ---------------------------------------------------------------------------------------------------------------------------
Total revenue 57,030 40,138 111,925 69,411 215,473
- ---------------------------------------------------------------------------------------------------------------------------
Cost of revenue
Cost of licence fees 1,415 1,665 3,012 2,801 9,365
Cost of maintenance subscriptions 3,725 5,328 7,293 7,731 16,998
Cost of training and consulting 9,180 2,992 18,455 5,869 29,247
- ---------------------------------------------------------------------------------------------------------------------------
Total cost of revenue 14,320 9,985 28,760 16,401 55,610
- ---------------------------------------------------------------------------------------------------------------------------
Gross profit 42,710 30,153 83,165 53,010 159,863
- ---------------------------------------------------------------------------------------------------------------------------
Operating expenses
Research and development 9,504 6,405 18,573 11,547 34,319
Sales and marketing 24,422 16,620 49,886 27,648 89,161
General and administrative 4,069 3,259 9,205 5,548 18,497
- ---------------------------------------------------------------------------------------------------------------------------
Total operating expenses 37,995 26,284 77,664 44,743 141,977
- ---------------------------------------------------------------------------------------------------------------------------
Operating profit before amortisation of goodwill 4,715 3,869 5,501 8,267 17,886
Amortisation of goodwill 9,660 3,862 18,414 3,998 21,915
- ---------------------------------------------------------------------------------------------------------------------------
Operating (loss)/profit (4,945) 7 (12,913) 4,269 (4,029)
Exceptional item - fundamental restructuring - (11,831) - (11,831) (11,831)
- ---------------------------------------------------------------------------------------------------------------------------
(Loss) before interest and taxation (4,945) (11,824) (12,913) (7,562) (15,860)
Interest income, net 682 972 1,320 1,684 4,288
- ---------------------------------------------------------------------------------------------------------------------------
(Loss) before taxation (4,263) (10,852) (11,593) (5,878) (11,572)
Taxation (1,864) 2,025 (2,456) 408 (3,707)
- ---------------------------------------------------------------------------------------------------------------------------
(Loss) for the period after taxation (6,127) (8,827) (14,049) (5,470) (15,279)
- ---------------------------------------------------------------------------------------------------------------------------
(Loss) per share: basic (4.4p) (8.6p) (10.0p) (6.0p) (14.3p)
(Loss) per share: diluted (4.4p) (8.6p) (10.0p) (6.0p) (14.3p)
- ---------------------------------------------------------------------------------------------------------------------------
Earnings per share before amortisation of goodwill
and exceptional items: basic 2.5p 3.1p 3.1p 7.3p 13.8p
diluted 2.5p 3.1p 3.1p 7.3p 13.5p
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF RECOGNISED GAINS AND LOSSES - IN U.K. FORMAT
<TABLE>
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Three Three Six Six Fifteen
months months months months months
ended ended ended ended ended
October 31, October 31, October 31, October 31, April 30,
1999 1998 1999 1998 1999
(unaudited) (unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
- ---------------------------------------------------------------------------------------------------------------------------
(Loss) after taxation (6,127) (8,827) (14,049) (5,470) (15,279)
Foreign exchange gains/(losses) 4,791 (205) 4,859 202 1,146
- ---------------------------------------------------------------------------------------------------------------------------
Total recognised gains and losses (1,336) (9,032) (9,191) (5,268) (14,133)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 10
CONSOLIDATED BALANCE SHEET - IN U.K. FORMAT
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
October 31, April 30,
1999 1999
(unaudited)
GBP'000 GBP'000
- ---------------------------------------------------------------------------------------------------------------------------
Fixed assets:
Intangible fixed assets 124,092 133,976
Tangible fixed assets 29,711 28,633
Investment 4,508 4,691
- ---------------------------------------------------------------------------------------------------------------------------
Total fixed assets 158,311 167,300
- ---------------------------------------------------------------------------------------------------------------------------
Current assets:
Stock 1,285 1,780
Trade debtors 60,234 70,682
Other debtors and prepaid expenses 7,709 7,205
Cash and bank deposits 68,058 75,394
- ---------------------------------------------------------------------------------------------------------------------------
Total current assets 137,286 155,061
- ---------------------------------------------------------------------------------------------------------------------------
Creditors: amounts falling due within one year
Bank loans and overdrafts 927 1,696
Trade creditors 5,453 7,546
Accrued employee compensation 11,912 15,126
Current corporation tax 6,775 11,534
Accrued expenses and other current liabilities 12,166 13,835
Deferred revenue 36,408 42,954
- ---------------------------------------------------------------------------------------------------------------------------
Total current liabilities 73,641 92,691
- ---------------------------------------------------------------------------------------------------------------------------
Net current assets 63,645 62,370
- ---------------------------------------------------------------------------------------------------------------------------
Total assets less current liabilities 221,956 229,670
Creditors: amounts falling due after more than one year - 6
Provision for liabilities and charges 12,706 12,555
- ---------------------------------------------------------------------------------------------------------------------------
Net assets 209,250 217,109
- ---------------------------------------------------------------------------------------------------------------------------
Capital and reserves
Called up share capital 2,888 2,873
Share premium account and other reserves 190,577 189,261
Profit and loss account 15,785 24,975
- ---------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 209,250 217,109
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 11
CONSOLIDATED CASH FLOW STATEMENT - IN U.K. FORMAT
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Six Six Fifteen
months months months
ended ended ended
October 31, October 31, April 30,
1999 1998 1999
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
- ---------------------------------------------------------------------------------------------------------------------------
Operating profit (12,913) 4,269 (4,029)
Depreciation of fixed assets 3,115 2,554 8,512
Amortisation of software product assets and other intangibles 21,316 10,233 30,390
Changes in operating assets and liabilities 1,920 (2,768) 2,877
Other items (1,102) 0 (3,886)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash inflow from operating activities 12,336 14,288 33,864
Returns on investments and servicing of finance 1,320 1,630 4,288
Taxation (5,962) 677 715
Capital expenditure and financial investment (5,483) (17,712) (14,564)
Acquisitions and disposals (9,303) 17,230 (1,880)
- ---------------------------------------------------------------------------------------------------------------------------
Cash (outflow) inflow before financing (7,092) 16,113 22,423
Financing 579 2,080 165
- ----------------------------------------------------------------------------------------------------------------------------
(Decrease) increase in cash (6,513) 18,193 22,588
- ----------------------------------------------------------------------------------------------------------------------------
Reconciliation of net cash flow to movements in net funds
- ---------------------------------------------------------------------------------------------------------------------------
(Decrease)/increase in cash (6,513) 18,193 22,588
Cash inflow/(outflow) from increase in loans 752 (18) (680)
Cash inflow from increases in liquid resources - 2 -
- ---------------------------------------------------------------------------------------------------------------------------
Change in cash resulting from cash flows (5,761) 18,177 21,908
Currency translation difference (797) 407 1,288
- ---------------------------------------------------------------------------------------------------------------------------
Movement in cash during the period (6,558) 18,584 23,196
Net funds at beginning of period 73,689 54,577 50,493
- ---------------------------------------------------------------------------------------------------------------------------
Net funds at end of period 67,131 73,161 73,689
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 12
NOTES TO THE FINANCIAL STATEMENTS - U.K. FORMAT
1. Basis of preparation
The interim financial information in these U.K. financial statements has been
prepared on the bases set out on page 12.
2. Change of accounting year-end
In 1998 the Company elected to change its accounting year-end from January 31 to
April 30 and consequently reported results for the fifteen-month period ended
April 30, 1999. This Interim Report for the six months ended October 31, 1999
discloses comparative results for the six months ended October 31, 1998, which
represented the second and third quarters of the previous financial year.
3. New accounting standard
In February 1999 the Accounting Standards Board issued Financial Reporting
Standard 15 "Tangible fixed assets", which sets out the principles of accounting
for the measurement, valuation and depreciation of tangible fixed assets and
codifies disclosure requirements. The Company is required to adopt this standard
in the current year, and these financial statements have been prepared in
accordance with FRS 15. Adoption of this standard has not had a material impact
on the results of operations of the Company.
4. Acquisitions
On August 3, 1999, the Company completed the acquisition of The Marathon Group
("Marathon"), an Internet professional services company based in Raleigh, North
Carolina, U.S.A. The consideration for the transaction was approximately U.S.
$15 million (GBP 9.3 million), payable in cash. The transaction has been
accounted for as an acquisition and, accordingly, the acquisition costs have
been allocated between the identifiable net assets of Marathon, based on their
respective fair values, and the excess allocated to goodwill. The operating
results and cash flows of Marathon, which have been included with those of
MERANT from the date of acquisition, are not material and have not been
separately disclosed in these financial statements.
During the financial period ended April 30, 1999, the Company reported three
acquisitions.
On May 15, 1998 the Company acquired its Italian distributor, Micro Focus
Italia, s.r.l., for total consideration of GBP 2.6 million. On August 13, 1998,
the Company acquired its Australian distributor, Advanced Software Engineering
Pty, Ltd., for total consideration of GBP 1.5 million. On September 24, 1998 the
Company acquired INTERSOLV, Inc., a Maryland, U.S.A.- based company, in exchange
for 63 million ordinary shares in the Company, which represented a value of GBP
160.9 million on the date the acquisition was completed. Each transaction was
accounted for as an acquisition and, accordingly, the results of operations and
cash flows of the acquired companies have been included with those of MERANT
from the dates of acquisition. The acquisition costs were allocated between the
identifiable net assets of the acquired companies, based on their respective
fair values, with the excess allocated to goodwill.
Amortisation of goodwill arising on acquisitions is disclosed separately in the
profit and loss account.
5. Exceptional item
Provision was made in the six months ended October 31, 1998 for costs amounting
to GBP 11.8 million in connection with a fundamental reorganisation of the
combined businesses of the Company and INTERSOLV, Inc.
6. Taxation
The charge/(credit) for taxation includes the following:
- --------------------------------------------------------------------------------
Six months Six months Fifteen months
ended ended ended
October 31, October 31, April 30,
1999 1998 1999
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
- --------------------------------------------------------------------------------
U.K. taxation 1,154 (2,020) 385
Overseas taxation 1,302 1,612 3,322
- --------------------------------------------------------------------------------
2,456 (408) 3,707
- --------------------------------------------------------------------------------
7. Dividends
Following established Company policy, the directors do not intend to recommend
payment of a dividend.
8. Earnings per share
Earnings per share excluding the charge for amortisation of goodwill and the
exceptional charge recorded in October 1998 have also been disclosed, since the
directors believe that this measure of earnings per share is a useful guide to
shareholders and other users of our financial statements. A reconciliation
between the two sets of earnings per share figures is set out below:
<TABLE>
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
(unaudited) Three months Three months Six months Six months Fifteen months
ended ended ended ended ended
October 31, October 31, October 31, October 31, April 30,
1999 1998 1999 1998 1999
- -----------------------------------------------------------------------------------------------------------
(Loss) per share basic (4.4p) (8.6p) (10.0p) (6.0p) (14.3p)
Add back: amortisation of goodwill 6.9p 3.8p 13.1p 4.4p 20.5p
exceptional items - 7.9p 8.9p 7.6p
- -----------------------------------------------------------------------------------------------------------
Earnings per share, excluding amortisation
of goodwill and exceptional items 2.5p 3.1p 3.1p 7.3p 13.8p
- ----------------------------------------------------------------------------------------------------------
</TABLE>
9. Subsequent event
On November 23, 1999 MERANT acquired EnterpriseLink Technology Corporation, a
privately-held supplier of enterprise extension software based in Campbell,
California, U.S.A. The consideration for this transaction is approximately U.S.
$22 million (GBP 13.4 million), payable in cash. MERANT also assumed
EnterpriseLink's stock options outstanding which converted into share options to
acquire up to approximately 516,500 MERANT ordinary shares.
11
<PAGE> 13
BASIS OF PREPARATION
The U.S. and U.K. formatted financial statements have been prepared in
accordance with U.S. and U.K. generally accepted accounting principles (GAAP),
respectively, on the basis of the accounting policies set out in the 1999 Annual
Report, except - in the case of the U.K. format statements - for the changes in
accounting policy resulting from the implementation of FRS 15 "Tangible Fixed
Assets" and should be read in conjunction with the financial statements
contained therein. The taxation charge is calculated by applying the directors'
best estimate of the annual tax rate to the results for the period. Other
expenses are accrued in accordance with the same principles used in the
preparation of the annual financial statements.
Revenue is analysed between licence fees, maintenance subscriptions, and
training and consulting. These new descriptions replace the previous
descriptions of product revenue, maintenance revenue and service revenue,
respectively, and do not represent any changes to the actual numbers presented.
The financial information contained in this report does not constitute statutory
accounts as defined in section 240 of the U.K. Companies Act 1985. The financial
information for the full preceding year is based on the statutory financial
statements for the accounting period ended April 30, 1999. Those financial
statements, upon which the auditors issued an unqualified opinion, have been
delivered to the U.K. Registrar of Companies.
________________________________________________________________________________
REPORT OF THE AUDITORS TO MERANT plc
We have reviewed the interim financial information set out on pages 8 to 11 in
respect of the six months ended October 31, 1999, which is the responsibility
of, and has been approved by, the directors. Our responsibility is to report on
the results of our review.
Our review was carried out having regard to the Bulletin "Review of Interim
Financial Information" issued by the Auditing Practices Board. This review
consisted principally of obtaining an understanding of the process for the
preparation of the interim financial information, applying analytical procedures
to the underlying financial data, assessing whether accounting policies have
been consistently applied, and making enquiries of the group's management
responsible for financial and accounting matters. The review excluded audit
procedures such as tests of controls and verification of assets and liabilities
and was therefore substantially less in scope than an audit performed in
accordance with Auditing Standards. Accordingly we do not express an audit
opinion on the interim financial information.
On the basis of our review:
* We are not aware of any material modifications that should be made to the
interim financial information as presented, and
* In our opinion the interim financial information has been prepared using
accounting policies consistent with those adopted by MERANT plc in its
financial statements for the accounting year ended April 30, 1999, except
for the changes in accounting policy and presentation following adoption of
FRS 15, as disclosed above.
Ernst & Young
Reading, England
January 12, 2000
________________________________________________________________________________
COMPANY INFORMATION
<TABLE>
<S> <C> <C>
Registered Office Stock Market Symbols Registrars and Transfer Office
- ----------------- -------------------- ------------------------------
MERANT plc, MRN (London Stock Exchange) Lloyds TSB Registrars
The Lawn, 22-30 Old Bath Road MRNT (Nasdaq National Market) The Causeway, Worthing,
Newbury, Berkshire, RG14 1QN West Sussex BN99 6DA, U.K.
Telephone: 01635 32646
Facsimile: 01635 33966
Investor Relations Stockbrokers ADS Depositary
- ------------------ ------------ --------------
MERANT Inc., Warburg Dillon Read Bank of New York
9420 Key West Avenue 1 Finsbury Square 101 Barclay Street, 22nd Floor
Rockville, MD 20850, U.S.A. London EC2M 2PA, U.K. New York, NY 10286, U.S.A.
E-mail: [email protected]
www.merant.com
Worldwide and regional sales office information is available at www.merant.com/worldwide
</TABLE>
12
<PAGE> 14
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.
MERANT plc
(Registrant)
Date: January 19, 2000 By: /s/ Kenneth A. Sexton
---------------------------------------
Kenneth A. Sexton
Chief Financial Officer
