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 February
28, 2003
MERANT plc
(Translation of
Registrant's Name Into
English)
Abbey View, Everard Close,
St. Albans, Herts England
Al1 2PS (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
For further information please contact:
Merant
Gerald Perkel
Chief Executive Officer
+1 (503) 617 2735
Gerry.Perkel@merant.co
m
Merant
Scott Hildebrandt
Chief Financial Officer
+1 (503) 617 2401
Scott.Hildebrandt@merant.co
m
Financial Dynamics
Harriet Keen,
Emma Rutherford
+44 (0) 20 7831 3113
Merant Announces Third Quarter Financial
Results
Improved operating profits for fourth
consecutive
quarter
St. ALBANS, UK and HILLSBORO, OREGON, US
27 February 2003 - Merant (London Stock
Exchange
(LSE)
: MRN; Nasdaq National Market (NNM): MRNT),
a
leading
provider of software and services for
managing
code,
content
and other business-critical assets,
announces
results
for the
third quarter of fiscal year 2003
ended 31
January,
2003.
Financial figures and comparisons
presented
below are
on
the basis of continuing operations.
Key Third Quarter Results - Highlights:
*Operating profits grew to $1.4 million
*(a 5 percent operating margin)
*Positive cash flow from operations of
*$2.3 million (excluding the cash impacts
of
restructuring)
*Total revenue growth of 4 percent
sequentially
and
*1 percent year on year
*License fees grew 7 percent sequentially
and 3
percent
* year on year with 18 transactions valued
at over
$100,000
*Maintenance fee revenue accounted for 50
percent
of
* total revenue for the quarter
*Gross margins grew sequentially to 79.5
percent
(Q2 2003
* margins were 78.9 percent)
*Increased strategic investment to grow
market
share and
*extend into adjacent markets
*Sales pipeline strengthening including
initial
order from
* new US DoD agreement
*Cash of $75.2 million, with no debt at
end of
third quarter
*Separate announcement of proposed trust
repurchase
of
* 4.3 million shares
US $ (m)
Q3 2003
Q2 2003
Q3 2002
Revenue
30.3
29.3
30.1
EBITA (loss)
(Earnings (loss) before interest, taxes
and
amortization)
1.4
0.4
(6.8)
Profit (loss) before taxes including
interest income*
1.6
0.8
(6.4)
Earnings (loss) per share *
0.02
0.01
(0.05)
Goodwill amortization, taxes and
exceptional charges
(1.3)
(7.1)
(20.3)
Net Income
0.3
(6.3)
(26.7)
* Before exceptional restructuring
charges, taxes
and goodwill amortization
Gerry Perkel, President and CEO of
Merant
commented:
We are very pleased to report that
we have
seen our
operating profit
performance improve for the fourth
consecutive
quarter
in spite of very
challenging market conditions,
said Gerry
Perkel,
President and CEO.
Our new management team, most of
whom joined
the
company within
the last year, is committed to
continuing the
improvement
in profits
through focused cost management
and by driving
revenue
growth.
I am especially pleased that we
have been able
to engineer
this
improvement while simultaneously
increasing
investments
in new
growth opportunities. We are
increasing our
investments
in our
existing technology base with the
goal of both
improving
market
share in our current markets and
extending our
technology
to
adjacent markets.
As we look forward we are pleased
to see that our
sales
pipeline
looks even stronger going into the
company's fourth
quarter
than
it did going into the third quarter,
Perkel
continued.
While we
continue to focus on improving results,
our strategic
investments
should begin to drive additional growth
in our next
fiscal
year.
We look to leverage that growth to drive
improved
profitability
with a multi-year goal of creating
sustainable
15
percent
operating
margins. While we still have a great deal
of work
to do,
I am very
pleased with the progress we have made to
date and
am
excited
about the opportunities we see for
the
future.
Third Quarter Results:
Operating earnings before interest
and taxes
(excluding
charges
for
goodwill amortization and restructuring)
in the third
quarter
increased
to a profit of $1.4 million compared to
the $0.4
million
profit
reported
in the second quarter, and the ($6.8)
million loss
reported
in the
previous
year's third quarter. Revenue for the
third quarter
increased
4% sequentially
to $30.3 million from the $29.3 million
reported for
the second
quarter
and increased 1% compared to the $30.1
million reported
in the
third
quarter of the previous year.
License fee revenue accounted for
approximately
38 percent
of total
revenue for the third quarter, and
increased 7
percent
compared to
the second quarter. The company
recorded 18
license
fee
transactions
during the quarter valued at over
$100,000
leaving
67
percent of total
license fees made up of deals valued at
less
than
$100,000.
Software
configuration management products (SCM)
represented
95
percent of
total license fee revenue in the third
quarter,
of
which
41 percent was
PVCS Dimensions (the industry's highest
rated
SCM
suite)
and 59
percent was PVCS Professional (the
industry's
most
popular
SCM tool set). Third quarter average
license
fee
transaction
size
(excluding maintenance and consulting deal
value)
was $50,000
for PVCS Dimensions products.
Maintenance fee revenue accounted for 50
percent
of
total
revenue
for the quarter. The remaining 12 percent
of
third
quarter
revenue
consisted of consulting and training fees.
North
American
sales
for the third quarter represented 62
percent of
total
revenue.
European sales represented 32 percent
of total
revenue
with
Asia-Pacific sales accounting for 6
percent.
The company continues to see robust
spending
in the
U.S.
government sector. During the third
quarter
the
company
secured a Blanket Purchase Agreement
with the
U.S.
Departmen
of Defense (DoD) for the DoDs Enterprise
Software
Initiative
(ESI). The ESI is a joint project designed
to
implement
a true
software enterprise management process within
the
entire
Department of Defense. Merant received an
initial
order
with
the U.S. Navy under this new federal program
during the
third quarter.
Gross margins were 79.5 percent during the
third quarter,
compared
to 78.9 percent in the second quarter. Total
costs
associated
with
continuing operations, excluding goodwill
amortization
and
restructuring charges, were $28.9 million,
down
substantially
from $36.9 million reported in the third
quarter
last year.
The company ended the third quarter with 585
employees.
The company ended the quarter with $75.2
million in
cash
and marketable securities and no debt.
Operating cash
flow
(excluding restructuring) was $2.3 million
during the
quarter
with depreciation of $0.8 million and positive
working
capital
change of $0.1 million.
Third quarter deferred revenue of $39.9 million
grew $5.9
million
compared to the second quarter as the company
recorded a
significant
amount of maintenance contract renewals during
the quarter.
Days
sales outstanding (DSO) improved to 77 days in
the third
quarter
compared to 112 days in the third quarter of
fiscal 2002,
but
increased
compared to the second quarter due to the
growth
in
renewals
of
maintenance contracts. Maintenance contracts
are booked
as
deferred
revenue when the contract is renewed and are
paid up
front,
with
normal payment terms. Deferred maintenance
revenue
is
ratably
recognized as revenue over the term of the
maintenance
contract.
During the third quarter the company purchased
an
additional
0.2
million shares for cancellation as part of the
company's
buy back
program approved by shareholders on 6 June, 2002.
The company
has now completed its return of capital through
share
buybacks
originally announced in December of 2001, with
a total
share re
- -purchase of approximately 35 million or 32.2
million
shares,
representing 24% of the then outstanding stock.
The
company
committed in December of 2001 to repurchase 35
million
of
company stock.
Separately, the company announces today that,based
on
the
approval
of the Merant Board of Directors, it is directing
Merant
Trustees
Limited, the trustee of Merant's 1994 Employee
Benefit
Trust and
2003 Employee Benefit Trust, to commence the
purchase of
up to
approximately 4.3 million ordinary shares
(equating to
approximately
4.2 percent of the Company's currently issued
share
capital)
for use
under Merant's 1999 Employee Share Purchase Plan
and
2003
Share
Incentive Plan administered through such trusts.
The
specific
periodic
amounts purchased, timing, price to be paid and
method
of
purchase
shall be at the discretion of the trustee,
subject to
certain
restrictions
and price conditions imposed by Merant.
These periodic
purchases
are expected to be funded out of the existing
cash
resources
of
Merant
group companies. The company is directing
the trustee
to
initiate
purchases
beginning 4 March 2003.
Business Outlook and Strategic Direction
The company remains cautious regarding
revenue and
earnings
performance over the next several quarters
as global
recessionary
pressures continue to limit information
technology
and
software
development spending. However, the company
has
resized
the
business to allow for these economic realities
and has
returned to
profitability while providing for increased
expenses
relating to
new product introductions. This commitment
to fund
future growth
while at the same time increasing profitability
is at
the core of the
company's strategy looking forward. The company
continues
to
be committed to increasing its already strong
market
share in the
SCM space, and will continue to invest to deliver
the
best customer
solutions with its Professional and Dimensions
SCM
tools.
In addition,
current initiatives aimed at driving incremental
revenue
beyond the
company's current core client server SCM market
are:
*Growing market share in the SCM market
though
the extension
* of our current product capability to
the
mainframe environment
* in addition to the current offerings
in
client server
environment.
*Continued focus on web content management
initiatives,
including
* enhancements to Merant Collage, an open,
standards-based,
J2EE
* content management solution that offers
enterprise-class
capability
* and seamless integration with SCM
solutions
for a fraction
of the
* price of competitive offerings. While
this
is a new product
and
* growth opportunity for the company (only 3% of
total
revenues
* represent web content management products) the
company
has
* closed over 30 deals in the current fiscal
year.
*Enriching our strong PVCS Dimensions product
feature
set to
* focus on the life sciences market, and other
process
management
* market opportunities. The company is increasing
its
focus on
*several market segments, including regulated
industries
*such as life sciences where it can provide
solutions
to
* help reduce compliance risks and software
validations
costs,
* as well as improve quality, repeatability
and
accountability.
While we are realizing revenues today from
Merant
Collage,
the majority of these initiatives will not
add
incrementa
revenue to the company until the beginning of
fiscal
2004.
Over the longer term, once the economic conditions
begin
to improve and key products emerge from our
increased
growth investments, the company's goal is to
generate
a
sustainable 15 percent operating margin on sales.
Conference Call
A conference call has been scheduled for today
at
4:00 p.m. GMT (11:00 a.m. US EST) for
investors,
analysts and press. For those wishing to
participate
in the call, the telephone numbers are UK:
+44 (0)
20 7162 0125; US: 1 800 513 7968. The
replay
of
the conference call will be available for
two
weeks
after the conference call. Replay numbers
are
UK:
+44 (0) 20 8288 4459; US: 1 800 495 0250,
passcode
737722.
About Merant
Merant's software and services give companies
the
most flexible control of code, content and
workflow,
enabling them to better view, track, protect
and
re-use
these business-critical assets. More than 90
of the
Fortune
100 rely on Merant's cost-effective solutions
to
automate
business processes, significantly boosting
productivity,
visibility and overall ROI. For more
information,
please
visit www.merant.com.
Forward-Looking Statements
The following statement is made in accordance
with the
U.S. Private Securities Litigation Reform Act
of 1995:
This release contains forward-looking statements
that
include statements regarding expectations for
future
financial results and results of operations,
business
strategy,
and prospects, including the growth and/or
performance
of our software configuration management and
other
businesses and related revenues. When used in
this release
the words "anticipate", "believe", "estimate",
"intend",
"expect", "goal," "realize", "likely",, "unlikely", and
other
similar
expressions, as they relate to Merant or its
management,
are intended to identify these forward-looking
statements.
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
continues
to transform
its business strategy to focus on its software
configuration
management and web content management products
and services.
Merant's ability to recruit and retain key
personnel,
especially
in the sales and business units and at the
management
level,
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
extent
to
which
the current weakness and uncertainty in the
economic
climate
generally and in IT spending in particular
continues,
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 the company's products, the
potential
need for software configuration management and
web
content
management products to shift based on changes in
technology
and customer needs, the effect of competitors
efforts
to enter
Merant's markets and the possible success of new
and
existing
competitors in those markets, and Merant's ability
to
manage and
integrate acquired businesses or other businesses
that
it may
acquire in the future.
Further information on potential factors which
could
affect
Merant's financial results and operations are found
in
filings
or submissions on Form 6-K as periodically
submitted
to the
SEC, and in Merant's Annual report on Form 20-F
for
the year
ended April 30, 2002. Merant undertakes no
obligation
to
release
publicly any updates or revisions to any
forward-looking
statements
contained in this release that may reflect
events or
circumstances
occurring after the date of this release.
Financial Statement Information
The financial information contained in this report
does
not
represent the Company's full statutory accounts.
The
financial
information relating to the first and second
quarters
of fiscal
2003 and fiscal 2002 is unaudited and no accounts
have been
delivered to the U.K. Registrar of Companies.
Statutory
accounts
dealing with fiscal 2002 have been delivered to
the U.K.
Registra
of Companies and the Company's auditors made a
report
under
section 235 on these accounts which was
unqualified
and did
not contain a statement under section 237(2)
or section
237(3)
of the Companies Act 1985.
U.S. Securities Filings
Copies of Merant's Annual Report to Shareholders
and
Annual
Report on Form 20-F for the year ended April 30,
2002,
as well
as its periodic reports on Form 6-K, are available
upon request
to Merant's offices in Hillsboro, OR or St. Albans,
United Kingdom
and are also available on the SEC website located
at http://www.sec.gov.
Merant plc
Management Trading Statement using UK GAAP results
in USD
(unaudited)
Three months ending:
Nine months ending
Jan-31
Jan-31
Jan-31
Jan-31
2003
2002
2003
2002
$'000
$'000
$'000
$'000
Revenue: continuing business
Licence fees
11,514
11,175
33,417
35,370
Maintenance subscriptions
15,172
14,170
44,398
43,119
Training and consulting
3,627
4,786
11,236
15,796
Total revenue
30,313
30,131
89,051
94,285
Cost of revenue: continuing business
Cost of licence fees
824
623
1,943
1,518
Cost of maintenance subscriptions
1,959
2,101
6,002
6,202
Cost of training and consulting
3,439
5,251
10,463
14,962
Total cost of revenue
6,222
7,975
18,408
22,682
Gross profit
24,091
22,156
70,643
71,603
Operating expenses
Research and development
6,802
6,271
20,256
19,116
Sales and marketing
12,449
17,437
36,952
50,729
General and administrative
3,456
5,252
11,495
14,868
Total operating expenses, excluding
amortisation
22,707
28,960
68,703
84,713
Operating profit (loss) before amortisation
1,384
(6,804)
1,940
(13,110)
Interest income, net
245
437
1,003
1,872
Profit (loss) before taxes, amortisation and
exceptional
items
1,629
(6,367)
2,943
(11,238)
Amortisation of goodwill
(1,321)
(10,616)
(18,983)
(31,759)
Profit (loss) before taxes and exceptional
items
308
(16,983)
(16,040)
(42,997)
Exceptional items:
Cost of fundamental restructuring
0
(6,664)
(3,603)
(9,913)
Gain on disposal of business division
0
(3,064)
0
1,771
Provision for loss on disposal of fixed assets
0
0
0
(2,525)
Profit (loss) before taxation
308
(26,711)
(19,643)
(53,664)
Taxation
0
0
(0)
0
Profit (loss) for the period from continuing
operations,
after
taxation
308
(26,711)
(19,643)
(53,664)
Profit (loss) from discontinued operations
0
0
0
(3,013)
308
(26,711)
(19,643)
(56,677)
Profit (loss) per share before taxes,
amortisation
and
exceptional items
Profit (loss) per ordinary share: basic &
diluted
$0.02
($0.05)
$0.03
($0.09)
Profit (loss) per ADR equivalent: basic &
diluted
$0.08
($0.25)
$0.14
($0.44)
Net Profit (loss) per share for the period
Profit (loss) per ordinary share: basic &
diluted
$0.00
($0.21)
($0.19)
($0.44)
Profit (loss) per ADR equivalent: basic &
diluted
$0.02
($1.04)
($0.97)
($2.20)
Ordinary shares - basic & diluted
98,645
128,872
101,618
128,577
ADR equivalents - basic & diluted
19,729
25,774
20,324
25,715
Merant plc - CONSOLIDATED PROFIT & LOSS
ACCOUNT
(unaudited)
Three months ending:
Nine months ending
Jan-31
Jan-31
Jan-31
Jan-31
2003
2002
2003
2002
$'000
$'000
$'000
$'000
Revenue: continuing business
Licence fees
11,514
11,175
33,417
35,370
Maintenance subscriptions
15,172
14,170
44,398
43,119
Training and consulting
3,627
4,786
11,236
15,796
30,313
30,131
89,051
94,285
Revenue: discontinued business
0
0
0
44,589
Total revenue
30,313
30,131
89,051
138,874
Cost of revenue: continuing business
Cost of licence fees
824
623
1,943
1,518
Cost of maintenance subscriptions
1,959
2,101
6,002
6,202
Cost of training and consulting
3,439
5,251
10,463
14,962
6,222
7,975
18,408
22,682
Cost of revenue: discontinued business
0
0
0
7,212
Total cost of revenue
6,222
7,975
18,408
29,894
Gross profit
24,091
22,156
70,643
108,980
Operating expenses
Research and development
6,802
6,271
20,256
28,108
Sales and marketing
12,449
17,437
36,952
68,584
General and administrative
3,456
5,252
11,495
19,923
Total operating expenses, excluding amortisation
22,707
28,960
68,704
116,615
Operating profit (loss) before amortisation
1,384
(6,804)
1,939
(7,635)
Amortisation of goodwill
(1,321)
(10,616)
(18,983)
(40,248)
Operating profit (loss):
Continuing business
63
(17,420)
(17,044)
(44,870)
Discontinued business
0
0
0
(3,013)
Total operating profit (loss)
63
(17,420)
(17,044)
(47,883)
Exceptional items:
Cost of fundamental restructuring
0
(6,664)
(3,603)
(9,913)
Gain on disposal of business division
0
(3,064)
0
1,771
Provision for loss on disposal of fixed
assets
0
0
0
(2,524)
Amounts written off investments
0
0
0
0
Operating profit (loss), before interest income
63
(27,148)
(20,647)
(58,549)
Interest income, net
245
437
1,003
1,872
Profit (loss) before taxation
308
(26,711)
(19,644)
(56,677)
Taxation
0
0
(0)
0
Profit (loss) for the period after taxation
308
(26,711)
(19,644)
(56,677)
Profit (loss) per ordinary share: basic & diluted
$0.00
($0.21)
($0.19)
($0.44)
Ordinary shares - basic & diluted
98,645
128,872
101,618
128,577
Merant plc - CONSOLIDATED BALANCE SHEET
(unaudited)
Jan-31
Oct-31
Apr-30
2003
2002
2002
$000
$000
$000
Fixed assets
Intangible fixed assets
15,694
15,693
31,802
Tangible fixed assets
3,101
6,948
9,174
Investment
7,909
8,201
8,553
Total fixed assets
26,704
30,842
49,529
Current assets:
Stock
120
130
137
Trade debtors
25,677
20,893
32,226
Other debtors and prepaid expenses
5,167
7,934
4,460
Cash and bank deposits
75,235
76,510
104,565
Total current assets
106,199
105,467
141,388
Creditors: amounts falling due within
one year
Trade creditors
2,774
2,896
3,814
Accrued employee compensation
8,347
9,599
7,621
Current corporation tax
13,607
13,882
14,499
Accrued expenses and other current
liabilities
9,743
12,198
18,247
Deferred revenue
39,871
33,927
40,754
Total current liabilities
74,342
72,502
84,935
Net current assets
31,857
32,965
56,453
Total assets less current liabilities
58,561
63,807
105,982
Provision for liabilities and charges
7,927
13,765
19,421
Net assets
50,634
50,042
86,561
Capital and reserves
Called up share capital
3,456
3,289
3,358
Share premium account
330,874
314,264
293,262
Capital redemption reserve
1,482
1,400
1,018
Profit and loss account
- -285,178
- -268,911
- -211,077
Total shareholders' equity
50,634
50,042
86,561
Additional Information:
NONE
END
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: February 28, 2003
By: /s/ Stephen Going
- --------------------------
- ------------
Stephen Going
Vice
President & General
Counsel