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 December 2, 2003
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
For further information please contact:
Merant (U.S. Headquarters)
Gerald Perkel
President & Chief Executive Officer
+1 (503) 617 2735
Gerry.Perkel@merant.com
Merant (U.S. Headquarters)
Scott Hildebrandt
SVP and Chief Financial Officer
+1 (503) 617 2401
Scott.Hildebrandt@merant.com
Taylor Rafferty (London office)
Paul Scott
+44 (0) 20 7936 0400
Taylor Rafferty (New York office)
Brian Rafferty
+1 (212) 889 4350
Merant Announces Second Quarter Financial Results
St. ALBANS, UK and HILLSBORO, OREGON, US - 2 December 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 second
fiscal quarter ended 31 October 2003. Financial figures and
comparisons presented below are on the basis of continuing operations.
Highlights on Second Quarter Fiscal 2004 Results:
Operating profits (EBITA) grew significantly to $2.4 million
(8 percent of sales) from the $0.4 million reported in the
second quarter of the prior year
Exceeded all independent research analysts profit expectations
for the quarter
Highest reported quarterly net profit after tax in over five
years
Revenues grew 2.6 percent to $30.0 million compared to the
second quarter of fiscal 2003
Positive operating cash flow of $3.3 million, excluding cash
restructuring costs
Licence fees included 15 transactions valued at over $100,000,
including two enterprise-wide (distributed and mainframe
environment) deals
Licence fee transactions related to the Company?s Web Content
Management product (Merant Collage) increased to 21 in the
second quarter, compared to 15 in the first quarter
Continued investments in R&D focused at driving future revenue
growth
Cash of $66.6 million, with no debt
Improved product positioning going into the Company's second
half:
New release of Merant Dimensions Enterprise Edition
in Q1, extending the Dimensions product into the
mainframe environment
New release of Merant Professional 8 in Q2, with
increased functionality and performance
US $, in millions Q2 Q2
Fiscal 2004 Fiscal 2003
Revenue 30.0 29.3
Operating Profit (EBITA) 2.4 0.4
(Earnings before interest, taxes,
amortisation and exceptional charges)
PBT (Profit before taxes including 2.6 0.8
interest income)*
EPS (Earnings per share) * 0.03 0.01
Goodwill amortisation, taxes and (1.2) (7.1)
other exceptional charges
Net Profit/(Loss) 1.4 (6.3)
*Before exceptional restructuring charges, taxes and goodwill
amortisation Financial information is reported in accordance with
UK GAAP (Revenue also in accordance with U.S. GAAP)
Gerry Perkel, President and CEO of Merant commented:
"We were very pleased to see significant improvement in our second
quarter operating profits, climbing to approximately 8 percent of
sales," commented Gerry Perkel, President and CEO. "This performance
is ahead of our schedule in achieving our longer term goal of
15 percent operating profits as a percentage of sales, and
represented the highest quarterly net profit after tax for the
Company in over five years. In addition, we continue to see
companies and organisations such as AdvancePCS, the U.S. Bureau
of Customs and Border Protection, and others experience significant
productivity and quality improvements using our products in their
respective software development processes."
Second Quarter Fiscal 2004 Results:
Operating profits before interest and taxes (excluding charges for
goodwill amortisation and restructuring) in the second quarter
increased to $2.4 million compared to the $0.4 million reported in
the second quarter of fiscal 2003. Revenue for the second quarter
increased 2.6 percent to $30.0 million compared to the $29.3
million reported in the second quarter of the previous year.
Licence fee revenue accounted for approximately 32 percent of
total revenue for the second quarter. "We were pleased to see
the volume of lower-dollar transactions increase sequentially,
driven by growth in our Professional product line sales," continued
Perkel. The Company noted that the second quarter included no
licence fee transactions valued at over $1 million, while the first
quarter of the fiscal year included one transaction valued
over $1 million. Licence fee revenue from transactions greater
than $100,000 continued to be challenging as customers continued to
heavily scrutinize larger purchases and extend buying decisions.
However, licence fee revenue from transactions less than $100,000
remained solid, increasing 10 percent sequentially, and accounted
for 74 percent of total licence fee revenue.
The Company's Web Content Management (WCM) product, Merant Collage,
showed good progress during the second quarter, with total revenue
of $1.5 million. Second quarter licence fees increased over 60 percent
sequentially to $831,000. "We continue to seek growth in WCM, while
at the same time balancing the resulting financial impacts to our
overall business," noted Perkel. The Company estimated that the
WCM business incurred an operating loss of approximately
$300,000 on an incremental basis in the second quarter.
Maintenance fee revenue grew in the second quarter, based in part
on strong renewals, and represented 56 percent of total revenue.
Consulting and training revenue represented 12 percent of total revenue
reported in the second quarter. Geographically, North American
sales for the second quarter represented 59 percent of total revenue.
European sales represented 34 percent of total revenue with Asia-Pacific
sales accounting for 7 percent.
Gross margins of 80.8 percent during the second quarter of fiscal
2004 increased approximately two percentage points compared to the 78.9
percent in the second quarter of fiscal 2003, due in part to improvement
in gross profit margins in the Company's consulting business. Total
costs associated with continuing operations, excluding goodwill
amortisation and restructuring charges, were $27.7 million, down
4 percent from the same quarter a year ago as the Company
continued to closely manage expenses. However, the Company remained
focused on maintaining research and development investments to
help drive the product innovation necessary to fuel future revenue
growth, launching two new exciting products, Merant Dimensions
for Microsoft .NET and Merant Professional 8.
The Company's second quarter ending balance sheet continued to be
very strong. Cash and marketable securities ended at $66.6 million,
while the Company continued to maintain no debt. In addition, the
Company posted positive operating cash flow (excluding cash impacts
from previous restructuring actions) of $3.3 million during the
second quarter.
The Company ended the second quarter of fiscal 2004 with 570 employees.
Business Outlook:
For the second half of fiscal 2004, the Company expects improvement
over the first half in terms of its available product offerings
as new versions of both Professional and Dimensions are now
available to the market. In addition, the pipeline for the
Company's Dimensions Enterprise Edition product is maturing,
providing additional opportunities for the Company. However, the
Company continues to feel that a conservative outlook regarding
revenue growth is prudent in the short term, given the
economic uncertainties that continue to exist. The Company
remains focused on enhancing profitability toward its
stated goals even in the face of this conservative stance
on general economic improvement. To that end, the Company
will be taking actions in its third quarter to further
improve its overall cost structure and organisational
productivity moving forward. The Company remains committed
to evolving its product line through organic investments in
research and development and by pursuing strategic acquisitions
and partnerships to drive revenue growth opportunities in
the future.
Conference Call
A conference call has been scheduled for today at 4:00 p.m.
London Time (11:00 a.m. US EDT) for investors, analysts
and press. For those wishing to participate in the call, the
telephone numbers are UK: +44 (0)208 515 2327;
US: +1 800 240 8658. The replay of the conference call
will be available for two weeks after the conference call.
The replay number is +1 303 590 3000, PIN: 560943.
A web-cast of the call will also be available. Please
visit the Company's investor site at
www.merant.com for more information.
About Merant
Merant delivers the industry's most flexible and
comprehensive enterprise change management solutions.
Thousands of organisations across the globe rely on Merant's
software and services to dramatically enhance the productivity,
quality and ROI of their technology initiatives by allowing
them to easily track, manage and control modifications in
business-critical information assets. 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," "plan", "believe",
"estimate", "intend", "expect", "goal," "realize",
"likely", "unlikely", and other similar expressions, as
they relate to Merant, its business 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.
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 inability of Merant to effectively manage its
costs against uncertain revenue expectations and
reduce costs quickly in response to a revenue shortfall,
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,
especially such delays associated with higher dollar orders,
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, Merant's ability to recruit
and retain key personnel, especially in the
sales and business units and at the management level,
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, 2003.
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 fiscal
2004 and the quarterly periods within fiscal 2003 and
fiscal 2004 are unaudited and no accounts have been
delivered to the U.K. Registrar of Companies. Statutory
accounts dealing with fiscal 2003 have been delivered
to the U.K. Registrar 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. The Company's financial
statements are reported in UK GAAP, with the
exception of Revenue which is recorded in accordance
with UK and U.S. GAAP. Fiscal 2004 interim statements
for the 6 months ending October 31, 2003 will be mailed
to shareholders by December 3, 2003.
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, 2003, 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:
Oct-31 Oct-31
2003 2002
$'000 $'000
Revenue:
Licence fees 9,533 10,765
Maintenance subscriptions 16,765 14,899
Training and consulting 3,736 3,620
Total revenue 30,034 29,284
Cost of revenue:
Cost of licence fees 727 855
Cost of maintenance
subscriptions 1,912 1,946
Cost of training and consulting 3,130 3,390
Total cost of revenue 5,769 6,191
Gross profit 24,265 23,093
Operating expenses
Research and development 7,174 6,989
Sales and marketing 11,444 11,979
General and administrative 3,273 3,709
Total operating expenses, excluding
amortisation 21,891 22,677
Operating profit before interest and
amortisation 2,374 416
Interest income, net 176 337
Profit before taxes and amortisation 2,550 753
Amortisation of goodwill (1,357) (7,066)
Profit (Loss) before taxation 1,193 (6,313)
Taxation 243 0
Profit (Loss) for the period from
continuing operations, after taxation 1,436 (6,313)
Earnings per share before taxes and
amortisation
Earnings per ordinary share: basic $0.03 $0.01
Earnings per ordinary share: diluted $0.03 $0.01
Earnings per ADR equivalent: basic $0.13 $0.04
Earnings per ADR equivalent: diluted $0.13 $0.04
Net Earnings (Loss) per share for
the period
Earnings (Loss) per ordinary
share: basic $0.01 ($0.06)
Earnings (Loss) per ordinary
share: diluted $0.01 ($0.06)
Earnings (Loss) per ADR
equivalent: basic $0.07 ($0.32)
Earnings (Loss) per ADR
equivalent: diluted $0.07 ($0.32)
Ordinary shares - basic 98,128 99,110
Ordinary shares - diluted 101,385 99,272
ADR equivalents - basic 19,626 19,822
ADR equivalents - diluted 20,277 19,854
The profit and loss was translated from GBP to USD using the
monthly average rates
Merant plc - CONSOLIDATED PROFIT & LOSS ACCOUNT
(unaudited) Three months ending:
Oct-31 Oct-31
2003 2002
$'000 $'000
Revenue:
Licence fees 9,533 10,765
Maintenance subscriptions 16,765 14,899
Training and consulting 3,736 3,620
Total revenue 30,034 29,284
Cost of revenue: continuing business
Cost of licence fees 727 855
Cost of maintenance
subscriptions 1,912 1,946
Cost of training and
consulting 3,130 3,390
Total cost of revenue 5,769 6,191
Gross profit 24,265 23,093
Operating expenses
Research and development 7,174 6,989
Sales and marketing 11,444 11,979
General and administrative 3,273 3,709
Total operating expenses,excluding amortisation 21,891 22,677
Operating profit before amortisation 2,374 416
Amortisation of goodwill (1,357) (7,066)
Operating profit (loss) 1,017 (6,650)
Interest income, net 176 337
Profit (loss) before taxation 1,193 (6,313)
Taxation 243 0
Profit (loss) for the period after taxation 1,436 (6,313)
Earnings (loss) per ordinary share: basic $0.01 ($0.06)
Earnings (loss) per ordinary share: diluted $0.01 ($0.06)
Ordinary shares - basic 98,128 99,110
Ordinary shares - diluted 101,385 99,272
The profit and loss was translated from GBP to USD using the
monthly average rates
Merant plc - CONSOLIDATED BALANCE SHEET
(unaudited) Oct-31 Apr-30
2003 2003
$000 $000
Fixed assets
Intangible fixed assets 13,233 13,754
Tangible fixed assets 4,029 3,148
Investment 16,288 11,176
Total fixed assets 33,550 28,078
Current assets:
Stock 97 144
Trade debtors 23,368 25,376
Other debtors and prepaid
expenses 3,844 5,722
Cash and bank deposits 66,566 72,779
Total current assets 93,875 104,021
Creditors: amounts falling due within one year
Trade creditors 1,608 1,977
Accrued employee compensation 7,768 8,868
Current corporation tax 10,454 9,570
Accrued expenses and other
current liabilities 8,158 9,754
Deferred revenue 37,333 41,526
Total current liabilities 65,321 71,695
Net current assets 28,554 32,326
Total assets less current liabilities 62,104 60,404
Provision for liabilities and charges 4,337 7,158
Net assets 57,767 53,246
Capital and reserves
Called up share capital 3,571 3,321
Share premium account 344,726 322,422
Capital redemption reserve 1,590 1,498
Profit and loss account (292,120) (273,995)
Total shareholders' equity 57,767 53,246
Each balance sheet account was translated from GBP to USD at the
closing rate for each period
Merant plc - CONSOLIDATED CASH FLOW STATEMENT
Oct-31
2003
$'000
(i) Reconciliation of operating(loss) to "Net cash
(outflow)/inflow from operating activities"
Operating profit/(loss) 1,017
Depreciation charges 474
Amortisation charges 1,377
EBT costs 215
Changes in operating assets and liabilities (581)
Exceptional items 0
Loss on disposal of fixed assets 0
Net cash (outflow)/inflow from operating activities 2,501
CONSOLIDATED CASH FLOW STATEMENT UK FORMAT
Net cash (outflow)/inflow from operating activities (note i) 2,501
Returns on investments and servicing of finance 176
Taxation 454
Capital expenditure and financial investment (5,495)
Acquisitions and disposals 0
Cash (outflow)/inflow before financing (2,364)
Financing 1,388
(Decrease)/increase in cash (976)
(ii) Reconciliation to net funds
(Decrease) Increase in cash during the period (976)
Translation difference 401
Movement in cash during the period (575)
Net funds, beginning of period 67,141
Net funds, end of period 66,566
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: December 2, 2003 By: /s/ Stephen M. Going
--------------------------------------
Stephen M. Going
Vice President and General Counsel