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 August 22, 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.)
LONDON STOCK EXCHANGE ANNOUNCEMENT
Generic Announcement
Number of reports in announcement:
Not Applicable
Company Name:
MERANT plc
Full Issuer Name:
MERANT plc
AVS Security Number:
Unknown
Release Date:
IMMEDIATELY
Release Time:
IMMEDIATELY
Embargo Details:
Telephone Confirmation of Release Required:
Contact Name:
Philip Rosier
Tel. No:
01635 565583 or 07971 848629
Announcement Given To Third Parties:
Amendment:
Headline:
Announcement Body Information:
CONTACTS:
MERANT VMW Corporate & Investor Relations
Gary Greenfield Sylvia Dresner/Vicki Weiner
Chief Executive Officer United States
1 (301) 838 5223 1 (212) 616 6161
[email protected] [email protected]
Larry De'Ath Financial Dynamics
VP, Investor Relations Giles Sanderson/Jon Earl
1 (301) 838 5228 United Kingdom
[email protected] 44 (0) 20 7831 3113
[email protected]
MERANT Reports First Quarter Results
www.merant.com - August 22, 2000 - MERANT (London Stock Exchange (LSE): MRN;
Nasdaq National Market (NNM): MRNT), a global leader in e-business software
solutions, today reported its results for the first fiscal quarter ended July
31, 2000. A conference call has been scheduled for investors and analysts to
review results today at 4:00 pm BST (11:00 am US EDT).
MERANT announced preliminary first quarter estimates on August 7, 2000,
cautioning that revenues and earnings would be below market expectations.
Key First Quarter Points (ended July 31, 2000)
* Revenues were GBP 47.6 million under U.K. GAAP ($72.8 million U.S. GAAP).
* Egility e-business software solutions grew 7%, and now make up 62% of
business.
* Total Cobol revenue declined 24%, with Cobol license fees down 43%.
* Pre-tax losses were GBP 5.4 million ($7.6 million) before amortization of
goodwill charges, resulting from shortfall in first quarter revenue.
* Cash position remains strong, totalling GBP 79 million ($119 million) at the
end of the first fiscal quarter.
* Strategic Egility partnerships announced with IBM, Compaq, Netron and Sun.
Commenting on the results, Ken Sexton, chief financial officer at MERANT,
said:
"Operating costs in the first quarter of this fiscal year have declined by
more than GBP 8 million ($12 million), compared with the fourth quarter ended
April 30, 2000. This was the result of actions taken at the end of last year
to reduce our operating expenses in non-growth areas such as Cobol. The
revenue shortfall was the major reason for our earnings being below original
consensus estimates, as a relatively high percentage of the Company's
operating expense is fixed over the short-term. We will continue to reduce
expenses in areas where revenues are below expectations and where longer-term
growth prospects are declining. The number of employees is below that at the
end of last fiscal year and is expected to further decline. MERANT continues
to have a strong financial position with GBP 79 million ($119 million) in cash
on our balance sheet."
Gary Greenfield, MERANT president and chief executive officer, added:
"As discussed during our announcement of first quarter preliminary estimates,
we are disappointed with our revenue. We firmly believe Egility e-business is
the correct focus for the Company's future growth, but it did not grow as much
as expected in first quarter. A continuing transition to a solutions-based,
customer-centric sales model has impacted revenues. We are taking action to
improve execution, and will continue to make adjustments in sales and
marketing in order to accelerate our transition to an e-business software
solutions company and return MERANT to profitability.
Cobol revenues decreased at a faster than expected rate, and this decline
could continue. This phenomenon was experienced across the industry, as other
enterprise software companies have recently reported shortfalls associated
with mainframe revenues. We will be reducing our cost base in Cobol to ensure
future profitability for this revenue stream.
In addition, our overall European revenues were below expectations. This
geographic shortfall was caused by a combination of market and execution
issues.
The Company is considering a number of strategic alternatives to maximize
shareholder value. In accordance with authority granted to MERANT at our last
Annual General Meeting, to buy-back up to 10% of its outstanding shares, the
Company plans to initiate a buy-back program, subject to market conditions."
Financial Commentary for the First Quarter - ended July 31, 2000.
Under U.K. GAAP, revenues were GBP 47.6 million for the first fiscal quarter as
compared to GBP 54.9 million for the period ended July 31, 1999. MERANT's
Egility e-business revenue made up 62% of MERANT's total revenues for the
quarter. Total revenue from Cobol solutions declined 24%, with Cobol license
fees down 43% due to a greater than anticipated decline in demand for Cobol
and mainframe-related products. Pre-tax losses before amortization of
goodwill were GBP 5.4 million for the quarter ended July 31, 2000. The above
pre-tax losses are excluding goodwill charges of GBP 10.5 million.
For the first fiscal quarter, revenues were $72.8 million under U.S. GAAP.
Pre-tax losses were $7.6 million before goodwill amortization charges. The
above losses are excluding a goodwill amortization charge of $3.1 million.
Summary financial results are as follows:
G.B. pounds, U.K. GAAP (in millions, except per ordinary share amounts)
Three months ended
July 31, 2000 July 31, 1999
------------------------------------------------------------------------------
Revenue GBP 47.6 m GBP 54.9m
EBITA (GBP 6.4m) GBP 0.8m
Pre-tax (loss) earnings - excluding goodwill (GBP 5.4m) GBP 1.4m
Net (loss) earnings per share
- excluding goodwill (2.4p) 0.6p
(Loss) after goodwill & taxation (GBP 15.9m) (GBP 7.9m)
(Loss) per ordinary share (10.9p) (5.7p)
U.S. dollars, U.S. GAAP(in millions, except per ADS amounts)
Three months ended
July 31, 2000 July 31, 1999
------------------------------------------------------------------------------
Revenue $72.8m $87.6m
EBITA ($9.2m) $1.3m
Pre-tax (loss) earnings - excluding goodwill ($7.6m) $2.3m
Net (loss) earnings per ADS
- excluding goodwill ($0.17) $0.05
Net (loss) income ($10.7m) $0.9m
Net (loss) earnings per ADS - diluted ($0.36) $0.03
Notes:
* EBITA is earnings before interest, taxes and goodwill amortization.
* Net (loss) earnings excluding goodwill amortization is calculated based on
an assumed tax rate of 35%. The actual tax rate for the fiscal year could
differ depending on future operating results.
Operational Highlights
MERANT's first quarter business developments include:
* MERANT Teams with IBM to Enhance WebSphere with Market-Leading Data Access
Technology - IBM will integrate MERANT's Egility Unified Information Access
technology into IBM's WebSphere software platform for e-business.
* MERANT Joins Compaq to Deliver Mainframe-Class Speed and Scalability to
E-Business Customers - this announcement is an expanded relationship with
Compaq Computer Corporation, whereby MERANT's Egility solutions will be
optimized for Compaq's AlphaServer platform running Unix software. Under
this agreement, Compaq will also license and distribute MERANT's Server
Express.
* MERANT and Netron Partner to Deliver Legacy-To-E-Business Solutions -
announced this quarter is a strategic relationship whereby MERANT will
incorporate Netron HotRod application mining technology into MERANT's Egility
legacy extension and integration solutions.
* MERANT Accelerates Deployment of Legacy Applications for E-Business -
Egility legacy extension solution first to wrap Cobol applications into
Enterprise Java Beans.
* MERANT Enhances Middleware Technology for B2B Transactions and Information
Integration - this next generation of Egility Unified Information Access
technology introduces new comprehensive capabilities to manage and secure
data for e-business for e-business and enterprise transactions, such as Sun's
Java 2 Platform, Enterprise Edition (J2EE) and Windows DNA, through highly
interoperable standards-based middleware.
* MERANT Expands Strategic Partnership with Sun - MERANT will expand its
strategic relationship with Sun Microsystems, Inc., delivering a framework of
infrastructure solutions based on Sun's J2EE.
Conference Call Update
A conference call has been scheduled today at 4:00pm BST (11:00am EDT) for
investors and analysts to review the first quarter results. For those wishing
to participate on the conference call, the telephone numbers are 800-446-2782
(US), 847-413-3235 (International) and ++353 1 240 5490 (Dublin). For access
to our web presentation, please refer to the following web site at
http://merant.webex.com at least 10 minutes prior to the call.
About MERANT
MERANT is a leading global e-business software solutions company. Founded in
1976, MERANT has approximately $360 million in annual revenues, 2,000
employees and more than 500 technology partners. More than 5 million
professionals use MERANT technology solutions at 35,000 customer sites,
including the entire Fortune 100, the majority of the Global 500 and over 400
leading dotcoms. MERANT uses its Egility framework, a comprehensive set of
solutions combining expertise, market-leading technology, best practices and
an extensive network of partners, to deliver an e-business applications
infrastructure. Building on MERANT Egility, MERANT provides comprehensive
enterprise-strength e-business solutions for companies, including e-business
strategy, creative design, application development and legacy integration.
For additional information, visit www.merant.com. Investor inquiries can be
forwarded to [email protected].
Forward-Looking Statements
The following statement is made in accordance with the U.S. Private Securities
Litigation Reform Act of 1995: This announcement contains forward-looking
statements that include statements regarding expectations for MERANT's
business strategy, its operating expenses and number of employees, its sales
and marketing organization, and future prospects and growth, including the
growth of MERANT's e-business solutions business and related revenues. These
forward-looking statements involve a number of risks and uncertainties.
Actual results could differ materially from those anticipated by these
forward-looking statements. Future results will be difficult to predict as
MERANT transforms its business strategy to provide e-business solutions and
away from certain of its past primary markets, including the market for Year
2000 products and services. MERANT's ability to recruit and retain key
personnel, especially in the sales and business units, could materially alter
financial results and plans for the sales and business units. Other 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 potential for a decrease in revenue or a slowdown in
revenue growth which may be caused by delays in the timing of sales and the
delivery of products or services, the ability of MERANT to develop, release,
market and sell products and services to customers in the highly dynamic
market for enterprise application development and e-business solutions, the
potential need for enterprise application development solutions and e-business
solutions to shift based on changes in technology and customer needs, the
market acceptance of MERANT's e-business solutions and e-business solutions
generally, the effect of competitors' efforts to enter MERANT's markets and
the possible success of existing competitors in those markets, and MERANT's
ability to manage and integrate recently acquired businesses or other
businesses that it may acquire in the future. 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 year ended April 30, 1999, and
Quarterly Reports on Form 6-K for the quarters ended July 31, 1999, October
31, 1999, and January 31, 2000, each as submitted to the SEC and as may be
updated and amended with future filings or submissions, including MERANT's
Form 20-F for the year ended April 30, 2000. MERANT undertakes no obligation
to release publicly any updates or revisions to any forward-looking statements
contained in this announcement that may reflect events or circumstances
occurring after the date of this announcement.
Financial Statement Information
The financial information contained in this report does not constitute
statutory accounts as defined in section 240 of the U.K. Companies Act 1985.
Prior year figures are based on the financial statements of the Company for
the year ended April 30, 2000, which will be filed with the U.K. Registrar of
Companies.
U.S. Securities Filings
As a foreign private issuer in the United States, MERANT is not required to
file quarterly reports with the SEC. However, starting in 1997 MERANT began
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 year ended April 30,
1999, are available upon request to MERANT's offices in Rockville, Maryland or
Newbury, United Kingdom.
Trademark Notice
MERANT and Egility are trademarks of MERANT. All other trademarks as they
appear in this announcement are the property of their respective owners.
(Tables and Supplemental Analysis Follow)
MERANT plc - QUARTER ENDED JULY 31, 2000
CONSOLIDATED STATEMENTS OF INCOME - IN U.S. FORMAT
(in thousands - except per share and ADS data)
(unaudited)
Three months ended
July 31, 2000 July 31, 1999
------------------------------------------------------------------------------
Net revenue
License fees $30,611 $42,526
Maintenance subscriptions 27,954 25,380
Training and consulting 14,251 19,689
-----------------------------------------------------------------------------
Total net revenue 72,816 87,595
-----------------------------------------------------------------------------
Cost of revenue
Cost of license fees 2,375 2,555
Cost of maintenance subscriptions 5,390 5,694
Cost of training and consulting 15,095 14,916
-----------------------------------------------------------------------------
Total cost of revenue 22,860 23,165
-----------------------------------------------------------------------------
Gross profit 49,956 64,430
-----------------------------------------------------------------------------
Operating expenses
Research and development 14,770 14,492
Sales and marketing 38,112 40,830
General and administrative 6,249 7,812
Goodwill amortization 3,121 978
-----------------------------------------------------------------------------
Total operating expenses 62,252 64,112
-----------------------------------------------------------------------------
(Loss) income from operations (12,296) 318
Interest income, net 1,583 1,013
-----------------------------------------------------------------------------
(Loss) income before income taxes (10,713) 1,331
Income taxes - 479
-----------------------------------------------------------------------------
Net (loss) income ($10,713) $ 852
-----------------------------------------------------------------------------
Net (loss) income per share: basic ($0.07) $0.01
Net (loss) income per ADS: basic ($0.36) $0.03
Shares used in computing basic
net (loss)income per share 149,355 143,792
ADSs used in computing basic
net (loss) income per ADS 29,871 28,758
-----------------------------------------------------------------------------
Net (loss) income per share: diluted ($0.07) $0.01
Net (loss) income per ADS: diluted ($0.36) $0.03
Shares used in computing diluted
net (loss) income per share 149,355 148,606
ADSs used in computing diluted
net (loss) income per ADS 29,871 29,721
-----------------------------------------------------------------------------
Note: Each American depositary share ("ADS") represents five ordinary shares.
MERANT plc - QUARTER ENDED JULY 31, 2000
CONSOLIDATED BALANCE SHEET - IN U.S. FORMAT
(in thousands)
(unaudited)
July 31, 2000 April 30, 2000
-----------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $101,556 $106,140
Short-term investments 17,162 19,538
Accounts receivable, net 73,680 92,840
Prepaid expenses and other assets 11,980 10,127
-----------------------------------------------------------------------------
Total current assets 204,378 228,645
-----------------------------------------------------------------------------
Long-term assets:
Property, plant and equipment, net 45,436 47,518
Goodwill, net 41,746 44,297
Software product assets, net 4,883 5,569
Other assets 3,255 2,987
-----------------------------------------------------------------------------
Total assets $299,698 $329,016
-----------------------------------------------------------------------------
Liabilities and shareholders' equity
Current liabilities:
Borrowings $2,644 $2,785
Accounts payable 10,525 12,208
Accrued employee compensation 14,358 20,088
Income taxes payable 8,334 7,601
Deferred revenue 64,288 69,830
Other current liabilities 35,174 41,945
-----------------------------------------------------------------------------
Total current liabilities 135,323 154,457
-----------------------------------------------------------------------------
Deferred income taxes 14,724 13,157
-----------------------------------------------------------------------------
Total liabilities 150,047 167,614
-----------------------------------------------------------------------------
Shareholders' equity:
Ordinary shares 4,878 4,876
Additional paid-in capital
and other reserves 172,924 172,892
Treasury stock (9,646) (11,742)
Retained earnings (4,271) 6,442
Accumulated other comprehensive loss (14,234) (11,066)
-----------------------------------------------------------------------------
Total shareholders' equity 149,651 161,402
-----------------------------------------------------------------------------
Total liabilities and shareholders' equity $299,698 $329,016
-----------------------------------------------------------------------------
MERANT plc - QUARTER ENDED JULY 31, 2000
CONSOLIDATED STATEMENTS OF CASH FLOW - IN U.S. FORMAT
(in thousands)
(unaudited)
Three months ended
July 31, 2000 July 31, 1999
-----------------------------------------------------------------------------
Operating activities:
Net (loss) income ($10,713) $852
Adjustments to reconcile net (loss) income
to cash (used)provided by operations:
Depreciation of fixed assets 3,470 3,251
Amortisation of software product assets
and other intangibles 3,617 3,481
Changes in operating assets and liabilities (2,412) (4,330)
Deferred taxation - 1,398
-----------------------------------------------------------------------------
Net cash (used) provided by operating activities
(6,038) 4,652
-----------------------------------------------------------------------------
Investing activities:
Purchases of property, plant and equipment (2,665) (3,303)
Software product assets and other intangibles (98) (1,517)
Available-for-sale securities 2,376 13,809
-----------------------------------------------------------------------------
Net cash (used) provided by investing activities (387) 8,989
-----------------------------------------------------------------------------
Financing activities:
Issuance of ordinary shares, net of expenses 2,377 1,139
Own shares (847) -
Repayment of borrowings - 1,644
-----------------------------------------------------------------------------
Net cash provided by financing activities 1,530 2,783
-----------------------------------------------------------------------------
Effect of exchange rates on cash 311 141
-----------------------------------------------------------------------------
(Decrease) increase in cash (4,584) 16,565
-----------------------------------------------------------------------------
Cash at beginning of period 106,140 86,580
-----------------------------------------------------------------------------
Cash at end of period $101,556 $103,145
-----------------------------------------------------------------------------
MERANT plc - QUARTER ENDED JULY 31, 2000
CONSOLIDATED PROFIT AND LOSS ACCOUNT - IN U.K. FORMAT
(in thousands - except share, per share data)
(unaudited)
Three months ended
July 31, 2000 July 31, 1999
GBP 000 GBP 000
-----------------------------------------------------------------------------
Revenue
Licence fees 20,035 26,749
Maintenance subscriptions 18,248 15,815
Training and consulting 9,300 12,331
-----------------------------------------------------------------------------
Total revenue 47,583 54,895
-----------------------------------------------------------------------------
Cost of revenue
Cost of licence fees 1,553 1,597
Cost of maintenance subscriptions 3,514 3,568
Cost of training and consulting 9,842 9,275
-----------------------------------------------------------------------------
Total cost of revenue 14,909 14,440
-----------------------------------------------------------------------------
Gross profit 32,674 40,455
-----------------------------------------------------------------------------
Operating expenses
Research and development 9,630 9,069
Sales and marketing 24,851 25,464
General and administrative 4,630 5,136
Goodwill amortisation 10,510 8,754
-----------------------------------------------------------------------------
Total operating expenses 49,621 48,423
-----------------------------------------------------------------------------
Operating (loss) before interest and taxation (16,947) (7,968)
Interest income, net 1,082 638
-----------------------------------------------------------------------------
(Loss) before taxation (15,865) (7,330)
Taxation -- (592)
-----------------------------------------------------------------------------
(Loss) for the period after taxation (15,865) (7,922)
-----------------------------------------------------------------------------
(Loss) per share: basic (10.9p) (5.7p)
(Loss) per share: diluted (10.9p) (5.7p)
-----------------------------------------------------------------------------
Number of shares: basic 145,323 139,982
Number of shares: diluted 145,323 139,982
MERANT plc - QUARTER ENDED JULY 31, 2000
CONSOLIDATED BALANCE SHEET - IN U.K. FORMAT
(unaudited)
July 31, 2000 April 30, 2000
GBP 000 GBP 000
-----------------------------------------------------------------------------
Fixed assets:
Intangible fixed assets 109,186 120,205
Tangible fixed assets 30,290 30,075
Investment 6,011 7,431
-----------------------------------------------------------------------------
Total fixed assets 145,487 157,711
-----------------------------------------------------------------------------
Current assets:
Stock 1,440 1,444
Trade debtors 49,120 58,760
Other debtors and prepaid expenses 9,802 7,101
Cash and bank deposits 79,145 79,543
-----------------------------------------------------------------------------
Total current assets 139,507 146,848
-----------------------------------------------------------------------------
Creditors: amounts falling due within one year
Bank loans and overdrafts 1,763 1,763
Trade creditors 7,017 7,726
Accrued employee compensation 9,572 12,714
Current corporation tax 5,403 4,801
Accrued expenses and
other current liabilities 15,180 15,429
Deferred revenue 42,859 44,196
-----------------------------------------------------------------------------
Total current liabilities 81,794 86,629
-----------------------------------------------------------------------------
Net current assets 57,713 60,219
-----------------------------------------------------------------------------
Total assets less current liabilities 203,200 217,930
Provisions for liabilities and charges 20,273 19,446
-----------------------------------------------------------------------------
Net assets 182,927 198,484
-----------------------------------------------------------------------------
Capital and reserves
Called up share capital 2,989 2,988
Share premium account and other reserves 200,442 200,421
Profit and loss account (20,504) (4,925)
-----------------------------------------------------------------------------
Total shareholders' equity 182,927 198,484
-----------------------------------------------------------------------------
MERANT plc - QUARTER ENDED JULY 31, 2000
CONSOLIDATED CASH FLOW STATEMENT - IN U.K. FORMAT
(unaudited)
Three months ended
July 31 2000 July 31 1999
GBP 000 GBP 000
-----------------------------------------------------------------------------
Operating (loss): (16,947) (7,968)
Depreciation of fixed assets 2,268 1,557
Amortisation of software product
assets and other intangibles 11,082 11,110
Changes in operating assets and liabilities 3,624 2,213
Restructuring charges (637) -
Deferred taxation - (3,113)
-----------------------------------------------------------------------------
Net cash (outflow)/ inflow
from operating activities (610) 3,799
Returns on investments and servicing of finance 1,082 638
Taxation (48) 1,204
Capital expenditure and financial investment (3,106) (5,774)
-----------------------------------------------------------------------------
Cash (outflow) before financing (2,682) (133)
Financing 2,002 1,778
-----------------------------------------------------------------------------
(Decrease)/increase in cash (680) 1,645
-----------------------------------------------------------------------------
Reconciliation of net cash flow to movements in net funds
(Decrease)/increase in cash (680) 1,645
Cash outflow from increase in loans - (1,012)
Cash outflow from increases in liquid resources - (7)
-----------------------------------------------------------------------------
Change in cash resulting from cash flows (680) 626
Currency translation difference 282 67
-----------------------------------------------------------------------------
Movement in cash during the period (398) 693
Net funds at beginning of period 77,780 73,692
-----------------------------------------------------------------------------
Net funds at end of period 77,382 74,385
-----------------------------------------------------------------------------
NNNN
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: August 22, 2000 By: /s/ Kenneth A. Sexton
--------------------------------------
Kenneth A. Sexton
Chief Financial Officer