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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 20-F
(MARK ONE)
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED APRIL 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 0-19696
MERANT PLC
(Exact name of Registrant as specified in its charter)
ENGLAND AND WALES
(Jurisdiction of incorporation or organization)
THE LAWN
22-30 OLD BATH ROAD
NEWBURY, BERKSHIRE
RG14 1QN, ENGLAND
(Address of principal executive offices)
SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE.
SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
ORDINARY SHARES OF 2p EACH.
SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15(d)
OF THE ACT:
NONE.
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES [X] NO [ ]
INDICATE BY CHECK MARK WHICH FINANCIAL STATEMENT ITEM THE REGISTRANT HAS
ELECTED TO FOLLOW.
ITEM 17 [ ] ITEM 18 [X]
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TABLE OF CONTENTS
PAGE
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General Introduction.................................................... 1
PART I
Item 1. Description of Business..................................... 2
Item 2. Description of Property..................................... 12
Item 3. Legal Proceedings........................................... 13
Item 4. Control of Registrant....................................... 14
Item 5. Nature of Trading Market.................................... 14
Item 6. Exchange Controls and Other Limitations Affecting Security
Holders..................................................... 15
Item 7. Taxation.................................................... 15
Item 8. Selected Financial Data..................................... 18
Item 9. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 19
Item 9A. Quantitative and Qualitative Disclosures About Market
Risk........................................................ 19
Item 10. Directors and Officers of Registrant........................ 19
Item 11. Compensation of Directors and Officers...................... 21
Item 12. Options to Purchase Securities from Registrant or
Subsidiaries................................................ 21
Item 13. Interest of Management in Certain Transactions.............. 22
PART II
Item 14. Description of Securities to be Registered.................. 22
PART III
Item 15. Defaults Upon Senior Securities............................. 32
Item 16. Changes in Securities and Changes in Security for Registered
Securities and Use of Proceeds.............................. 32
PART IV
Item 17. Financial Statements........................................ 33
Item 18. Financial Statements........................................ 33
Item 19. Financial Statements and Exhibits........................... 33
Signatures............................................................ 39
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GENERAL INTRODUCTION
MERANT plc publishes annual reports containing annual audited consolidated
financial statements and opinions on the financial statements by independent
auditors. Financial statements are prepared in accordance with U.S. GAAP,
expressed in U.S. dollars, and also in accordance with U.K. GAAP, expressed in
GB pounds. U.K. GAAP differs from U.S. GAAP in, amongst other areas, the
treatment of mergers, of goodwill and other intangibles acquired in connection
with the purchase of subsidiaries, in the methods of computing earnings per
share, and in other disclosures and presentation.
We also publish quarterly updates and semi-Annual Reports containing
unaudited financial information prepared on the same basis as the audited
consolidated financial statements.
Each of these reports is furnished to The Bank of New York as depositary
under a deposit agreement (see Item 14). The depositary generally will mail
these reports to record-holders of American depositary receipts, or ADRs. MERANT
also furnishes to the depositary all notices of shareholders' meetings and other
reports and communications that are made generally available to MERANT
shareholders. The depositary makes these communications available for inspection
by ADR record-holders and mails notices of shareholders' meetings to them.
As a foreign private issuer in the United States, we are not required to
file quarterly reports with the SEC. However, we began furnishing quarterly
reports to the SEC on Form 6-K on a voluntary basis in June 1997. These reports
include the results for the applicable fiscal quarter in a format similar to
that of a Form 10-Q. Also, we are not currently required to file electronically
with the SEC but as of March 1997, we began to do so on a voluntary basis.
This Form 20-F includes many references to the "MERANT 2000 Annual Report
Detail," meaning the Annual Report Detail that is included in MERANT's Annual
Report to Shareholders for the year ended April 30, 2000 contained in the Report
of Foreign Issuer on Form 6-K furnished to the SEC on October 11, 2000. Relevant
portions of the MERANT 2000 Annual Report Detail are also included as Exhibits
to this Form 20-F.
The Financial Statements and other financial information in this Form 20-F
do not comprise "statutory accounts" within the meaning of Section 240 of the
Companies Act 1985 of Great Britain. Statutory accounts for the year ended April
30, 2000 will be delivered to the Registrar of Companies for England and Wales
in November 2000. Statutory accounts for the financial years ended April 30,
1999 and January 31, 1998 have been delivered previously to the Registrar of
Companies for England and Wales. The auditors' reports on these accounts were
unqualified.
On November 30, 1998, MERANT changed its fiscal year end and accounting
reference date to April 30 from January 31. In this Form 20-F and the financial
statements incorporated in this Form 20-F by reference we use the terms fiscal
years 2000, 1999 and 1998 and the 1998 transition period to mean the fiscal
years ended April 30, 2000, April 30, 1999 and January 31, 1998 and the
three-month period ended April 30, 1998. MERANT submitted a Transition Report on
Form 20-F to the SEC on February 26, 1999 covering the 1998 transition period.
DataDirect, Micro Focus and PVCS are registered trademarks, and MERANT and
Egility are trademarks, of MERANT. Certain other trademarks belonging to other
companies appear in this annual report and are the property of their respective
owners.
This annual report contains translations of certain amounts from GB pounds
to U.S. dollars. These translations have been made at the noon buying rates
published by the Federal Reserve Bank of New York on the relevant dates. They
should not be construed as representations that the GB pound amounts actually
represent the U.S. dollar amounts or could be converted into U.S. dollars at the
rates indicated or at any other rate. In its consolidated financial statements
MERANT uses exchange rates which are published at the close of business in
London, and which therefore may differ from the noon buying rates. For
additional information on exchange rates, see "Management's Discussion and
Analysis of Results of Operations and Financial Condition -- Exchange Rate
Fluctuations" on pages 33 and 72 of the MERANT 2000 Annual Report Detail,
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which sections are incorporated in this Form 20-F by reference. On April 30,
2000, the noon buying rate was $1.556 per GBP 1.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
MERANT plc was incorporated in England in March 1983 as a public limited
company under the Companies Acts 1948 to 1981 of Great Britain under its
original name, Micro Focus Group plc. In May 1983, the company obtained a
quotation on the Unlisted Securities Market of the London Stock Exchange, and in
June 1984 became a fully listed company on the London Stock Exchange. In May
1992, the company became listed on the Nasdaq National Market. On February 16,
1999, the company changed its name from Micro Focus Group plc to MERANT plc.
MERANT designs and develops enterprise application development solutions
that assist companies in e-enabling their enterprise. The Company delivers open,
standards-based solutions that help organizations develop, transform, integrate
and manage applications, information and processes that run their
business -- enabling them to build a business agile enough to change with the
technology and market requirements of the e-business environment.
INDUSTRY BACKGROUND
Companies everywhere are facing their most significant challenge: getting
their business to "e." The real challenge in transforming the enterprise for
e-business is to enable existing systems and new technologies to inter-operate
in order to refine and redefine business processes and business structures to
take advantage of e-business and e-commerce opportunities. With legacy systems
and processes tightly woven into companies and new e-business technology
constantly emerging, IT organizations are faced with integrating it
all -- platforms, architectures, systems, data, standards, customers, suppliers,
employees. That is why companies require a new generation of adaptive
applications that can stay in step with the rapid, unyielding pace of
e-business.
SOLUTIONS
Through the MERANT Egility Framework, a series of solutions comprised of
MERANT products and services, customers have a foundation to accommodate change
as every new aspect of e-business development unfolds. The Egility solutions
are:
- Legacy Transformation and Integration: Provides an enterprise strength
solution that integrates and extends a company's existing business rules,
data, and processes to the new platforms of e-business.
- Enterprise Change Management: Provides the ability to effectively manage
change across the enterprise to protect software, Web content, and
ERP-packaged application assets.
- Enterprise Information Access: Accelerates the speed of business by
improving the efficiency and reliability of access to enterprise data.
- Traditional Development: Enables customers to efficiently manage and
deploy IT assets into new business applications in three key areas:
distributed computing, application transformation and mainframe
development.
MERANT I-Solution consultants support the Egility framework. They lead
the industry in the evolution of information technology, with application
development experience in distributed computing, mainframe development,
software configuration management, and data connectivity solutions. This
experience, combined with unsurpassed expertise in MERANT and third-party
products, gives MERANT the ability to apply customer-tailored technology
to resolve urgent business issues.
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MERANT E-Solution consultants deliver complete e-business support, from
strategy through new e-commerce applications, processes and sites to
integration and leverage of core enterprise systems. MERANT consultants
also specialize in transforming existing applications to operate
seamlessly in today's state of the art technological environments.
In the year ended April 30, 2000 the basis of MERANT's internal reporting
continued to be the four business segments established in 1998. These four
segments are described below. During the year, the Company announced MERANT
Egility which span all of the four historical business segments, as do MERANT's
traditional COBOL products and services.
The Egility Framework is comprised of the E-Solutions business segment,
which represents the segment previously referred to as Enterprise Consulting
Solutions, and the I-Solutions segment, which represents the other three former
business segments.
Segmental data is reported in the financial statements for the year ended
April 30, 2000 on the basis of our four historical reporting segments:
APPLICATION CREATION AND TRANSFORMATION, OR ACT -- This includes the MERANT
Micro Focus range of products and services, which enables customers to
accelerate e-business by maintaining, transforming and extending business
applications. The products and services in this segment address:
- Legacy Transformation and Integration: designed to enable companies to
leverage existing enterprise legacy assets and put them to work in the
e-business world, ensuring a faster route to e-business, quicker
implementation of new business models and improved customer
responsiveness.
- Traditional Development: designed to enable companies to efficiently
manage and deploy IT assets into new business applications in three key
areas: distributed computing, application transformation and mainframe
development.
APPLICATION DEVELOPMENT MANAGEMENT, OR ADM -- Houses the well-known MERANT
PVCS Series, an industry leader in Software Configuration Management. The series
provides the ability to effectively manage change across the enterprise to
protect software, Web content, and ERP-packaged application assets. It provides
effective change management to contexts ranging from small development teams to
the entire enterprise and from client-server assets to Web assets to mainframe
assets.
ENTERPRISE DATA CONNECTIVITY, OR EDC -- MERANT's EDC solutions address
enterprise data access, connectivity and integration. MERANT DataDirect helps
customers integrate corporate data assets across new and existing systems, from
the mainframe to the Internet. DataDirect provides organizations with an
information platform, permitting flexible response to market dynamics and
preservation of investment in existing resources. It supports widely accepted
standards, including ODBC, JDBC and OLE DB, and major operating systems and data
sources. DataDirect offerings also include solutions to deploy cross-platform
applications accessing multiple data sources.
ENTERPRISE CONSULTING SOLUTIONS, OR ECS -- MERANT's enterprise consulting
solutions are a flexible suite of customizable solutions designed to meet the
full spectrum of an organization's transformation to e-business, remaining Year
2000 compliance requirements, validation and verification efforts, euro currency
conversion and other mass change initiatives. ECS provides support for
companies' strategic technology-related business initiatives, including
developing e-business strategies and deploying e-commerce intranet, extranet and
Internet applications, and helping development organizations improve their
processes and operations to attain software development standards.
SUPPORT AND TRAINING SERVICES
MERANT offers its customers a wide variety of support services that are
intended to help customers gain the benefits from the solutions that MERANT
delivers. Customers who purchase maintenance services benefit from MERANT
SupportNet, which provides technical support, product maintenance releases and
updates, a web-based customer community for sharing information regarding MERANT
products and other support services.
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MERANT also provides comprehensive fee-paid education and training
solutions through MERANT University. Training offerings include both on-site
training and training at a MERANT training center and are focused primarily on
the use of MERANT solutions.
SALES AND MARKETING
MERANT markets and distributes its products on a worldwide basis through
multiple channels. Sales are made directly, using a combination of telesales,
field sales, third parties distribution and the Internet. We have local sales
and marketing operations in the U.K., the U.S., Australia, Belgium, Canada,
Denmark, Finland, France, Germany, Italy, Japan, the Netherlands, Norway,
Portugal, Singapore, Spain and Sweden. Our direct sales effort is augmented with
a network of independent software vendors, dealers, distributors, original
equipment manufacturers and value added resellers in 40 countries around the
world.
During the last fiscal year, sales by geographic region were distributed as
follows: 58% in the U.S., 18% in the U.K., 9% in Germany, 10% in the rest of
Europe (excluding the U.K. and Germany), 1% in Canada, 2% in Japan and about 2%
in the rest of the world. As of April 30, 2000, MERANT's sales and sales support
organization consisted of 244 people in the U.S., 209 people in Europe and 76
people located in other countries. MERANT has distributors representing its
products throughout the world.
Our end-user customers consist of corporate data processing centers,
independent software vendors, individual software developers, value-added
resellers and computer equipment manufacturers worldwide. The customer base is
broad, and no individual customer accounted for more than 10% of total revenue
in fiscal years 2000, 1999 or 1998. Additionally, MERANT's business does not
concentrate on any specific industry.
MERANT has signed license and distribution arrangements that enable it to
sell products developed by third parties. We pay license fees to these third
parties, which typically have a continuing obligation to improve and maintain
the products supplied to us.
The products that we ship are comprised primarily of software programs
copied onto diskettes, tape media or CD-ROM. These raw materials are widely
available.
TELESALES
Telesales representatives concentrate on sales at the project level and to
smaller accounts, selling to individual developers and project managers. They
concentrate their efforts on one solution area. Telesales are supported by
mailings to lists of prospective customers and advertising in selected trade
magazines. MERANT also offers special promotions and incentives from time to
time aimed at introducing MERANT's products to new users.
FIELD SALES
Our field sales personnel are located in several major cities in the U.S.
and throughout the world, offering local sales and technical support to
customers and prospects. They represent all solution areas of MERANT within a
defined geographical region. Field sales personnel assist prospective and
current customers in evaluating needs and solutions and guide them in the
evaluation and use of MERANT products. They focus their efforts on building
long-term relationships primarily with large corporate prospects and customers.
THIRD PARTIES
In addition to our own field sales and telesales organizations, we market
our technologies and products through a global network of third parties,
including:
- independent software vendors, or ISVs
- value-added resellers, or VARs
- original equipment manufacturers, or OEMs
- other dealers and distributors.
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Through third party alliances, MERANT enables selected ISVs and OEMs to
embed and sell MERANT technologies in their own products. Alliances with other
ISVs include joint development and marketing arrangements. We also have
arrangements with VARs, dealers and distributors to resell our products in
markets which we cannot cost effectively serve on a direct basis.
INTERNET
We also use the Internet as a marketing and sales channel. We promote our
products and services and offer demonstration and evaluation versions of
products on a trial basis. We also conduct prospect identification and lead
generation programs over the Internet. We intend to continue to embrace Internet
technology to develop and deliver new products and to provide better and faster
service to customers.
RESEARCH AND DEVELOPMENT
MERANT has a policy of consistently updating its software products for the
various operating systems to meet customer demand. Each new release adds greater
functionality and more features to the products. Research and development
expenditures in fiscal 2000, fiscal 1999, the three-month 1998 transition
period, and fiscal 1998, represented 15%, 14%, 12% and 15% of MERANT's revenue.
Those expenditures are quantified in the following table, which also discloses
the costs capitalized and the amounts of amortization of capitalized costs for
each period.
THREE MONTHS
YEAR ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, APRIL 30, APRIL 30, JANUARY 31,
2000 1999 1998 1998
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(IN MILLIONS OF U.S. DOLLARS)
R&D expenditures, before capitalization......... $55.3 $53.6 $13.7 $ 56.2
Costs capitalized as software product assets.... (3.7) (8.5) (2.5) (10.3)
Amortization of previously capitalized
software...................................... 7.6 14.8 3.3 14.9
R&D charge...................................... $59.2 $59.9 $14.5 $ 60.8
EMPLOYEES
As of April 30, 2000, MERANT had 1,993 employees, of whom 470 were located
in the U.K., 1,095 were in the U.S. and 428 in other countries. None of our
employees is represented by a labor union. MERANT has experienced no work
stoppages and believes its relations with its employees are good.
MERANT has adopted policies with regard to issuance of share options to its
employees. We have an ongoing policy of paying cash bonuses based upon our
financial performance relative to plan. These policies, together with our sales,
marketing and financial practices, are designed to encourage employee
performance and minimize employee turnover, although there can be no assurance
that these policies and practices will be successful.
RECENT ACQUISITIONS OR DISPOSITIONS
During fiscal 2000, MERANT completed four acquisitions.
On August 3, 1999, we acquired all of the outstanding stock of Essential
Software, Inc (trading as The Marathon Group), a privately-held Internet
professional services firm based in Raleigh, North Carolina. The total
consideration for the transaction was approximately $15.8 million, the whole of
which was paid in cash.
On November 23, 1999, we acquired all of the outstanding stock of
EnterpriseLink Technology Corporation, a privately held supplier of enterprise
extension software based in Campbell, California. The total consideration for
the transaction is up to approximately $22 million, payable as a combination of
cash and assumption of debt, of which approximately $14.1 million was paid prior
to April 30, 2000. We also assumed EnterpriseLink stock options outstanding as
of the closing which converted into options to acquire up to 511,904 MERANT
ordinary shares.
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On December 6, 1999, we acquired all of the outstanding stock of Trillium
Software Corporation, a privately held supplier of change management software
based in Eden Prairie, Minnesota. The total consideration for the transaction is
up to approximately $7 million, payable in cash, of which approximately $4.1
million was paid prior to April 30, 2000.
On January 8, 2000, we acquired the remaining 79.9% of the outstanding
stock of Northern Software Partners AS, our distributor for the Nordic region,
based in Oslo, Norway. The total consideration for the transaction is up to
approximately $4 million, payable in cash, of which approximately $3.2 million
was paid prior to April 30, 2000. Northern Software Partners AS changed its name
to MERANT Nordic AS on January 21, 2000.
These transactions have been accounted for using the purchase accounting
method. Accordingly, we have allocated to goodwill the excess of the estimated
purchase price over the respective estimated fair value of each company's net
tangible assets. We will amortize this amount, which totaled $46.1 million in
the aggregate, over its estimated economic life of five years.
SUBSEQUENT EVENT
On August 24, 2000, MERANT purchased for cancellation 14,408,798 ordinary
shares at 95 pence (sterling) per share for an aggregate consideration of
L13,688,000 ($20,258,000 based on the exchange rate on August 24, 2000).
Authority to make this purchase was granted by shareholders at the annual
general meeting held on September 16, 1999. The purchase represented 9.7% of the
issued share capital as of the date of the transaction. The shares were
purchased on the London Stock Exchange and were cancelled effective September 1,
2000.
FACTORS THAT MAY INFLUENCE FUTURE OPERATING RESULTS
MERANT operates in a rapidly changing environment that involves a number of
risks, some of which are beyond our control. This section of the discussion
highlights some of these risks and their possible impact on future results of
operations.
The factors discussed below as well as statements made elsewhere in this
annual report contain forward-looking statements that are based on the beliefs
of MERANT's management, as well as assumptions made by, and information
currently available to it. Our actual results, performance or achievements in
fiscal 2001 and beyond could differ materially from those expressed in, or
implied by, these forward-looking statements. Factors that could cause or
contribute to material differences include, but are not limited to, those
discussed in this section and elsewhere in this annual report. MERANT undertakes
no obligation to release publicly any updates or revisions to any
forward-looking statements contained in this annual report that may reflect
events or circumstances occurring after the date of this annual report. For more
information on forward-looking statements, see "Forward Looking Statements"
below in this Part I, Item 1.
MERANT'S OPERATING RESULTS MAY FLUCTUATE, AND ANY FLUCTUATIONS COULD ADVERSELY
AFFECT THE PRICE OF MERANT SECURITIES
Our future operating results are subject to quarterly and annual
fluctuations. If we fail to meet the expectations of securities analysts and
investors as a result of any future fluctuations in our quarterly operating
results, the market price of MERANT securities would likely decrease. We expect
that our results may fluctuate in the future due to a variety of factors,
including:
- demand for our products,
- the size and timing of customer orders and the lengthy sales cycle,
- product life cycles,
- our ability to introduce and market new and enhanced versions of our
products on a timely basis,
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- the introduction and acceptance of new products and product enhancements
by us or by our competitors,
- customer order deferrals in anticipation of new or enhanced products or
technologies,
- the timing of product introductions or enhancements by us or by our
competitors,
- technological changes in the software industry,
- changes in the mix of distribution channels through which our products
are offered,
- purchasing patterns of distributors and retailers, including customer
budgeting cycles,
- the quality of products sold,
- price and other competitive conditions in the industry,
- changes in our level of operating expenses,
- changes in our sales incentive plans,
- our ability to acquire and effectively integrate companies and solutions,
- the cancellation of licenses during the warranty period,
- non-renewal of maintenance agreements,
- the effects of extended payment terms (particularly for international
customers),
- economic conditions generally or in various geographic areas, and
- other factors discussed in this section.
MERANT'S INSIGNIFICANT BACKLOG AND LONG SALES CYCLE COMBINED WITH COSTS THAT ARE
FIXED, MAKE IT DIFFICULT FOR US TO PREDICT FUTURE REVENUE AND COMPENSATE FOR A
REVENUE SHORTFALL
Historically, we have operated with little product backlog, because we
generally ship our products when we receive an order. As a result, our product
revenue in any quarter will depend on the volume and timing of orders received
in that quarter, and our ability to fill those orders. In addition, the purchase
process of our customers typically ranges from a few weeks to several months or
longer from initial inquiry to order, which makes it difficult to predict the
timing of sales and license fees. Our staffing and operating expenses are based
on anticipated revenue levels, and a high percentage of our costs is fixed in
the short term and does not vary with revenue. Because of these factors, small
variations between anticipated orders and actual orders, as well as
non-recurring or large orders, can cause disproportionate variations in our
operating results from quarter to quarter. As a result, and due to the typical
size of customers' orders, our quarterly operating results and cash flow would
suffer from a lost or delayed sale. Moreover, if significant sales occur earlier
than expected, operating results for later quarters may suffer.
SEASONALITY CAN CAUSE MERANT'S OPERATING RESULTS TO FLUCTUATE
Our revenue also is affected by seasonal fluctuations resulting from lower
sales that typically occur during the summer months in Europe and other parts of
the world. In addition, we have historically experienced lower revenue for the
first quarter of a fiscal year than in the fourth quarter of the prior fiscal
year. We typically recognize a high proportion of quarterly revenue during the
last month of a fiscal quarter and significant fluctuations in new order revenue
can occur due to the timing of customer orders. Quarterly results therefore can
vary to the extent that sales for a quarter are delayed, particularly since a
relatively high proportion of our expenses do not vary with revenue.
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MERANT'S REVENUE COULD DECLINE IF THERE IS A DECLINE IN THE DEMAND FOR OR USE OF
THE COBOL LANGUAGE OR MAINFRAME COMPUTERS OR A DECLINE IN THE DEMAND FOR
MERANT'S COBOL OFFERINGS
A substantial portion of our revenue is derived from products and related
services for mainframe application development in the COBOL language and for
COBOL compilers running on workstations and personal computers. We expect that a
substantial portion of our revenue will continue to be derived from these
products and services in the future. As a result, our future operating results
depend upon continued demand for, and market acceptance and use of, the COBOL
language. Any decline in that market as a result of competition, technological
change or other factors could cause our revenues to decline. Recently, our COBOL
revenues have decreased at a faster than expected rate, reflecting an
industry-wide phenomenon, and this decline could continue. MERANT plans to
reduce operating expenses in the COBOL area, which could negatively impact our
COBOL revenues in the future.
IF OUR NEW PRODUCTS OR PRODUCT ENHANCEMENTS FAIL TO ACHIEVE CUSTOMER ACCEPTANCE,
OR IF WE FAIL TO MANAGE PRODUCT TRANSITIONS, OUR BUSINESS REPUTATION AND
FINANCIAL PERFORMANCE WOULD SUFFER
MERANT is in a market that is subject to rapid technological change. We
must continually adapt to that change by improving our products and introducing
new products, technologies and services, such as the Egility e-business software
solutions. Our growth and financial performance will depend in part on our
ability to develop and introduce enhancements of existing products and new
products that accommodate the latest technological advances and standards,
customer requirements and market conditions on a timely and cost-effective
basis. This depends in part on our ability to attract and retain qualified
employees. In the past, we have experienced delays and increased expenses in
developing new products. We may not be successful in marketing, on a timely
basis or at all, competitive products, product enhancements and new products
that respond to technological change, changes in customer requirements and
emerging industry standards.
PRODUCT DEFECTS CAN BE EXPENSIVE TO FIX AND CAN CAUSE MERANT TO LOSE CUSTOMERS
Software products as complex as those we offer may contain undetected
errors or failures when first introduced or as new versions are released.
Despite our testing, as well as testing and use by current and potential
customers, errors might be found in new products after commencement of
commercial shipments. The occurrence of errors could result in loss of or delay
in market acceptance of our products.
PROTECTION OF OUR INTELLECTUAL PROPERTY IS LIMITED, WHICH MAY AFFECT MERANT'S
COMPETITIVE POSITION
Our success depends upon our proprietary software technology. Despite the
precautions we take to protect our proprietary rights, it may be possible for a
third party to copy or otherwise obtain and use our products or technology
without authorization, or to develop similar technology independently. Policing
unauthorized use of our products is difficult, and while we are unable to
determine the extent to which software piracy of our products exists, software
piracy can be expected to be a persistent problem. In addition, effective
protection of intellectual property rights may be unavailable or limited in some
foreign countries. Patents have been granted on fundamental technologies in
software, and patents may issue that relate to fundamental technologies
incorporated into our products.
OUR PRODUCTS MAY INFRINGE THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES,
WHICH MAY RESULT IN LAWSUITS AND PREVENT MERANT FROM SELLING OUR PRODUCTS
Except for a trademark infringement claim against our distributor in
Brazil, which local counsel advises is unlikely to succeed, there are currently
no material notices or pending claims that our products, trademarks or other
proprietary rights infringe the proprietary rights of third parties. However,
third parties could assert infringement claims against us in the future. If it
is necessary or desirable, we may seek licenses under disputed third party
intellectual property rights. However, these licenses may not be available on
reasonable commercial terms, if at all. The failure to obtain a license from a
third party for technology that we use could cause us to incur substantial
liabilities and to suspend the production and sale of certain products. With
regard to those technologies that we license from third parties, we must rely
upon those third parties for information
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on the ownership of the licensed technologies. As a result, our exposure to
infringement claims may increase. We generally obtain representations as to the
ownership of licensed technology and indemnification to cover any breach of
these representations. However, representations may not be accurate and
indemnification may not provide adequate compensation or protection for breach
of the representations.
In addition, we may initiate claims or litigation against third parties for
infringement of our proprietary rights or to establish their validity.
Litigation to determine the validity of any claims could result in significant
expense and divert the efforts of our technical and management personnel from
operating activities, whether or not the litigation is determined in our favor.
In the event of an adverse ruling in any litigation, we may be required to pay
substantial damages, to discontinue the use and sale of infringing products, to
expend significant resources to develop non-infringing technology or to obtain
licenses to the infringed technology. Our failure to develop or license a
substitute technology could prevent us from selling our products. As the number
of software products in the industry increases and the functionality of these
products further overlaps, we believe that software developers may become
increasingly subject to infringement claims. Any claims against us, with or
without merit, as well as claims we initiate against third parties, can be time
consuming and expensive to defend or prosecute and to resolve.
COMPETITION CAN LEAD TO PRICING PRESSURES AND LOSS OF MARKET SHARE
Rapid technological change and aggressive competition characterize the
markets in which we compete. We expect competition to increase in the future
from existing competitors and from other companies that may enter our existing
or future markets with similar or substitute solutions that may be less costly
or provide better performance or functionality than our products. Some of our
current and prospective competitors have greater financial, marketing or
technical resources and may be able to adapt more quickly to new or emerging
technologies, or devote greater resources to the promotion and sale of their
products than we can. Other companies may develop competitive products in the
future. In addition, the software industry is characterized generally by low
barriers to entry, as a result of which new competitors with technological,
marketing or other competitive advantages may emerge and rapidly acquire market
share. Furthermore, we may not be able to compete effectively in the future in
the professional services market. If price competition increases significantly,
competitive pressures could cause us to reduce the prices of our products and
services, which would result in reduced profit margins and could harm our
ability to provide adequate service to our customers.
INTERNATIONAL SALES ACCOUNT FOR A SIGNIFICANT PORTION OF OUR TOTAL REVENUE,
WHICH EXPOSES MERANT TO THE BUSINESS AND ECONOMIC RISKS OF GLOBAL OPERATIONS
In fiscal years 2000, 1999 and 1998, sales to customers outside of the
United States represented approximately 42%, 40% and 35%, respectively, of our
revenue. We intend to continue to expand our operations outside of the United
States and enter additional international markets, and commit significant time
and resources to developing international sales and support channels. The risks
inherent in conducting international business generally include:
- exposure to exchange rate fluctuations
- longer payment cycles
- greater difficulties in accounts receivable collection and enforcing
agreements
- tariffs and other restrictions on foreign trade
- U.S. export requirements
- economic and political instability
- withholding and other tax consequences
- restrictions on repatriation of earnings
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- the burdens of complying with a wide variety of foreign laws
- general economic conditions.
IF WE LOSE KEY PERSONNEL OR ARE UNABLE TO HIRE ADDITIONAL QUALIFIED PERSONNEL AS
NECESSARY, WE MAY NOT BE ABLE TO MANAGE OUR BUSINESS SUCCESSFULLY OR SELL OUR
PRODUCTS
Several of our senior management personnel are relatively new to MERANT and
our success will depend in part on the successful assimilation and performance
of these individuals. Competition for qualified personnel in the software
industry is intense, and we may not be able to attract and retain a sufficient
number of qualified personnel to conduct our business in the future. Our success
depends to a significant degree upon the continued contributions of our key
management, marketing, product development, professional services and
operational personnel, including key personnel of acquired companies. We do not
have employment agreements with most of our key personnel to ensure their
continued employment, and we do not maintain key person life insurance on any of
these persons.
IF MERANT WERE UNABLE TO MANAGE CHANGE EFFECTIVELY, OUR OPERATIONS WOULD BE
DISRUPTED
MERANT has recently experienced tremendous organizational change and
significant turnover of personnel. The company plans to continue making
adjustments in such areas as the sales and marketing organization and the COBOL
business. These changes have placed a significant strain on our financial,
management, operational and other resources. These strains will continue as the
company continues its transition to an e-business software solutions company.
Our management, personnel, systems, procedures and controls may not be adequate
to support existing and future operations.
MARKET VOLATILITY MAY CAUSE THE PRICE OF OUR SECURITIES TO DECLINE
The market price of MERANT's securities has experienced significant price
volatility, particularly since the announcement in June 1998 of the merger with
INTERSOLV, and volatility may occur in the future. Factors that may have a
significant impact on the market price of our securities include:
- actual or anticipated fluctuations in our operating results,
- changes in financial estimates by securities analysts,
- announcements of technological innovations,
- new products or new contracts by us or by our competitors,
- developments with respect to patents, copyrights or proprietary rights,
- conditions and trends in the software and other technology industries,
- adoption of new accounting standards affecting the software industry, and
- general market conditions.
Furthermore, the stock market has experienced extreme volatility that has
particularly affected the market prices of equity securities of many high
technology companies. These market fluctuations, as well as general economic,
political and market conditions, may cause the market price of our securities to
be volatile.
IF WE ENGAGE IN FUTURE BUSINESS COMBINATIONS, WE MAY FAIL TO INTEGRATE ACQUIRED
BUSINESSES EFFECTIVELY, WHICH COULD DISRUPT OUR ONGOING BUSINESS AND GENERATE
NEGATIVE PUBLICITY
We have completed a number of business combinations in recent years, most
recently the merger with INTERSOLV in September 1998, and the acquisitions of
Essential Software, Inc. in August 1999, EnterpriseLink Technology Corporation
in November 1999, Trillium Software Corporation in December 1999 and Northern
Software Partners AS in January 2000. We may complete additional acquisitions in
the future. The process of integrating an acquired company's business into our
operations may result in unforeseen operating difficulties and expenditures. It
may also absorb significant management attention that would
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otherwise be available for the ongoing development and operation of our
business. Moreover, the anticipated benefits of an acquisition might not be
realized. Future acquisitions could result in potentially dilutive issuances of
equity securities, the incurring of debt and contingent liabilities, and
amortization provisions related to goodwill and other intangible assets. In
addition, acquisitions involve numerous risks, including:
- difficulties in the assimilation of the operations, technologies and
products of the acquired companies,
- difficulties in managing diverse geographic sales and research and
development operations,
- the diversion of management attention from other business concerns,
- risks of entering markets in which we have no or limited direct prior
experience, and
- the potential loss of key employees of MERANT or the acquired company.
YEAR 2000 AND EURO ISSUES COULD STILL NEGATIVELY AFFECT OUR BUSINESS
We developed and implemented an enterprise-wide plan to analyze and address
potential Year 2000 issues affecting our internal systems, our interaction with
third party vendors and suppliers, and our products and services. As of
September 30, 1999, we completed the plan in all material respects, although we
have continued to address internal Year 2000 readiness issues on an ongoing
basis with respect to newly-acquired systems and suppliers, regularly-scheduled
system updates and upgrades, and internal operations. To date we have
experienced no significant impact from the Year 2000 problem on our ability to
carry on normal business operations. However, there can be no assurance that we
will not experience significant unanticipated negative consequences caused by
undiscovered Year 2000 problems with our internal systems, our third party
vendors and suppliers, or our products and services.
While we have not been subject to any claims or lawsuits to date relating
to any Year 2000-related failures of our products or services, there can be no
assurance that customers or former customers will not bring claims or lawsuits
against us seeking compensation for losses associated with any such failures. A
material adverse outcome in a Year 2000 claim or lawsuit could have a material
adverse effect on our business, financial condition and results of operations
Effective January 1, 1999, eleven of the fifteen member countries of the
European Union adopted the euro as their legal currency. On that date, the
participating countries established fixed euro conversion rates between their
existing sovereign currencies and the euro. The euro now trades on currency
exchanges and is available for non-cash transactions. As of May 1, 1999,
MERANT's internal systems have the ability to price and invoice customers in the
euro. We are also engaging in foreign exchange and hedging activities in the
euro. We will continue to modify the internal systems that will be affected by
this conversion, but do not expect the costs of further system modifications to
be material. There can be no assurance, however, that we will be able to
complete such modifications to comply with euro requirements, which could have a
material adverse effect on our business, financial condition and results of
operations. We will continue to evaluate the impact of the euro's introduction
on our foreign exchange and hedging activities, functional currency designations
and pricing strategies in the new economic environment. In addition, we face
risks to the extent that banks and vendors upon whom we rely are unable to make
appropriate modifications to support our operations with respect to euro
transactions. While we will continue to evaluate the impact of the euro,
management does not believe its introduction will have a material adverse effect
upon our business, financial condition or results of operations.
THE RIGHTS OF MERANT'S SHAREHOLDERS MAY DIFFER FROM THE SHAREHOLDER RIGHTS OF A
U.S. CORPORATION
The right of shareholders and, therefore, certain of the rights of holders
of ADRs, are governed by English law, including the Companies Act 1985, and by
MERANT's Memorandum and Articles of Association. These rights differ in many
respects from the rights of shareholders in typical U.S. corporations.
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U.S. JUDGMENTS MAY NOT BE ENFORCEABLE AGAINST MERANT
MERANT is a public limited company organized under the laws of England and
Wales. Judgments of U.S. courts, including judgments against MERANT, predicated
on the civil liability provisions of the federal securities laws of the United
States, may not be enforceable in English courts.
EXCHANGE RATE FLUCTUATIONS CAN CAUSE OUR OPERATING RESULTS TO FLUCTUATE
The majority of our revenue arises in U.S. dollars, while our costs are
incurred approximately equally in U.S. dollars and other currencies,
predominantly G.B. pounds. Consequently, fluctuations in exchange rates,
particularly between the U.S. dollar and the G.B. pound, may have a significant
impact on our operating results, notably when expressed in G.B. pounds. During
the current fiscal quarter, fluctuations between the U.S. dollar and the G.B.
pound were not significant, and net exchange rate gains or losses on operational
transactions were not material.
FORWARD-LOOKING STATEMENTS
The following statement is made in accordance with the U.S. Private
Securities Litigation Reform Act of 1995: This annual report contains
forward-looking statements that include statements regarding expectations for
our business strategy, our expenses in the COBOL business area, the company's
sales and marketing organization, and its prospects and growth, including the
growth of our e-business solutions business and related revenues.
Forward-looking statements are subject to the safe harbor created by the Private
Securities Litigation Reform Act, which provides that MERANT can be exempt from
liability for making forward-looking statements if cautionary language is
included with the statements. When used in this document, the words
"anticipate," "believe," "estimate," "expect," "plan" and 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 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, our ability to
effectively manage our 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, our ability 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 for a shift in demand for enterprise
application development solutions and e-business solutions based on changes in
technology and customer needs, the market acceptance of our e-business solutions
and e-business solutions generally, the effect of competitors' efforts to enter
our markets and the possible success of existing competitors in those markets,
and our ability to manage and integrate recently acquired businesses or other
businesses that we may acquire in the future.
Further information on potential factors which could affect our financial
results is included above in this Part I, Item 1 under the heading "Factors That
May Influence Future Operating Results" and elsewhere in this annual report 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.
ITEM 2. DESCRIPTION OF PROPERTY
MERANT owns its worldwide headquarters, which consists of approximately
80,000 square feet of office space located on an 8-acre site in Newbury,
England.
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MERANT also leases office space for its sales, distribution and development
operations. Major facility leases include the following:
FACILITY SIZE
LOCATION PURPOSE (SQUARE FEET)
- -------- ------- -------------
Rockville, MD............................... U.S. corporate headquarters 74,000
Mountain View, CA........................... Sales & development 56,000
Beaverton, OR............................... Sales & development 48,000
Morrisville, NC............................. Sales & development 39,000
Philadelphia, PA............................ Sales & development 26,000
St. Albans, U.K. ........................... Sales & development 20,000
In addition, MERANT recently signed a lease for new office space in
Beaverton, OR consisting of 65,000 square feet which will be available for
occupancy approximately May, 2001.
MERANT also maintains facilities, principally sales and distribution
offices around the world. In the U.S. these are located in Chicago, IL;
Gaithersburg, MD; Greensboro, NC; Irvine, CA; Lyndhurst, NJ; New York, NY; and
Raleigh, NC. Outside the U.S., MERANT maintains offices in Toronto and Montreal,
Canada; Paris, France; Ismaning, Germany; Barcelona and Madrid, Spain; Lisbon,
Portugal; Tokyo, Japan; Melbourne and Sydney, Australia; Duffel, Belgium;
Amersfoort, Netherlands; Rome and Milan, Italy; Sao Paulo Brazil; Seoul, Korea
and Singapore.
The total of rental payments for all facilities for fiscal 2000 was $14.3
million. All leases are subject to renewal clauses and rent increase provisions,
which are typical of similar leases in the relevant geographic areas.
MERANT believes that its premises are generally suitable and adequate for
the purposes for which they are used.
ITEM 3. LEGAL PROCEEDINGS
In December 1998 and January 1999, seven class action securities complaints
were filed in the U.S. District Court for the Southern District of New York
against MERANT and certain of its officers and directors. The Court ordered the
seven cases consolidated, appointed lead plaintiffs and lead counsel, and
ordered the filing of a consolidated complaint, which was filed on June 9, 1999.
The lead plaintiffs seek to have the matter certified as a class action of
purchasers of the ADSs of MERANT during the period from June 17, 1998 to
November 12, 1998, including the former shareholders of INTERSOLV who acquired
ADSs in connection with the merger involving the two companies. The consolidated
complaint alleges various violations of the federal securities laws and seeks
unspecified compensatory damages for alleged failure to disclose material
nonpublic information concerning MERANT's business condition and prospects.
In May 1999, MERANT filed a motion to transfer the matter to the Northern
District of California, and the Court granted MERANT's motion in November 1999.
The action was transferred in December 1999 to the Northern District of
California. After the action was transferred to California, plaintiffs again
amended their complaint alleging the same claims as described in the prior
amended complaint but without the 1934 Act claims or the class period. MERANT
filed a motion to dismiss the newly-amended complaint in June 2000. A hearing on
the motion took place on September 20, 2000 and the court has taken the parties'
arguments under submission.
MERANT intends to defend this litigation vigorously. However, due to the
inherent uncertainties of litigation, MERANT cannot accurately predict the
ultimate outcome of the litigation. Any unfavorable outcome of litigation could
have an adverse impact on MERANT's business, financial condition and results of
operations.
MERANT and its subsidiaries are also involved in legal proceedings, claims
and litigation arising in the ordinary course of business. Although the ultimate
results of these legal proceedings, claims and litigation are
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not currently determinable, in the opinion of management these matters will not
materially affect MERANT's financial position, results of operations, or
liquidity.
ITEM 4. CONTROL OF REGISTRANT
As far as is known to MERANT, the company is not directly or indirectly
owned or controlled by one or more corporations or a foreign government.
The following table discloses the numbers of shares held as of September
15, 2000, by:
- any person who is known by MERANT to be the owner of more than 10% of its
shares; and
- all directors and officers as a group.
PERCENT
IDENTITY OF PERSON OR GROUP AMOUNT OWNED OF CLASS
- --------------------------- ------------ --------
Schroder Investment Management Ltd.......................... 18,501,308 13.7%
Merrill Lynch Group......................................... 14,241,773 10.6%
Bank of New York(1)......................................... 16,039,450 11.9%
All directors and officers as a group (17 persons).......... 319,512 0.2%
- ---------------
(1) Held beneficially as the depositary of MERANT's ADSs for which ADRs have
been issued.
MERANT knows of no arrangements the operation of which may at a subsequent
date result in a change of control of MERANT.
ITEM 5. NATURE OF TRADING MARKET
MERANT's ordinary shares are listed on the London Stock Exchange.
Since 1992, MERANT's American Depositary Shares have been traded in the
United States. The ADSs are quoted on the Nasdaq National Market under the
symbol MRNT. Each ADS represents five ordinary shares. The ADSs are evidenced by
ADRs issued by the depositary under the terms of the deposit agreement. Further
information about the ADRs and the deposit agreement is provided under Item 14
of this Form 20-F.
The following table presents for the periods indicated --
- the high and low middle market quotations for the ordinary shares, as
derived from the Daily Official List of the London Stock Exchange, and
- the equivalent U.S. dollar prices translated at the noon buying rate on
the date of each high and low quotation.
HIGH LOW HIGH LOW
----- ----- ------- ------
(IN GB POUNDS) (IN U.S. DOLLARS)
FISCAL YEAR ENDED APRIL 30, 1999:
First quarter............................................. 6.75 4.27 10.99 7.15
Second quarter............................................ 4.80 1.90 7.89 3.23
Third quarter............................................. 2.40 0.97 3.98 1.64
Fourth quarter............................................ 1.52 1.06 2.48 1.71
FISCAL YEAR ENDED APRIL 30, 2000:
First quarter............................................. 3.11 1.47 4.84 2.36
Second quarter............................................ 3.03 2.43 4.88 3.99
Third quarter............................................. 4.67 2.40 7.48 3.94
Fourth quarter............................................ 4.87 1.56 7.75 2.43
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The table below shows the highest and lowest bid prices for the ADSs in U.S.
dollars as reported by the Nasdaq National Market for the periods indicated.
HIGH LOW
------- -------
(IN U.S. DOLLARS)
FISCAL YEAR ENDED APRIL 30, 1999:
First quarter............................................... 57.25 32.00
Second quarter.............................................. 39.38 15.25
Third quarter............................................... 19.63 7.90
Fourth quarter.............................................. 12.56 8.13
FISCAL YEAR ENDED APRIL 30, 2000:
First quarter............................................... 23.69 12.13
Second quarter.............................................. 24.13 19.31
Third quarter............................................... 37.00 19.13
Fourth quarter.............................................. 39.00 19.13
The following table provides detail of shares and ADSs held in the United
States. Since certain of these shares and ADSs were held by brokers or other
nominees, the number of record holders in the United States is not
representative of the number of beneficial holders or of where the beneficial
holders are resident.
ORDINARY
SHARES ADSS
-------- ---------
Held of record in the United States......................... 230,775 3,215,447
Percent of ordinary shares outstanding...................... 0.2% 10.8%
Record holders.............................................. 71 117
ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
There are currently no U.K. laws, decrees or regulations that restrict the
export or import of capital, including foreign exchange controls, or that affect
the remittance of dividends, interest or other payments to non-U.K. resident
shareholders or ADS holders. There are no limitations under English law or in
MERANT's Memorandum and Articles of Association relating to the right to hold or
exercise voting rights attaching to the shares or ADSs that apply only to
non-U.K. shareholders. However, English law currently forbids ownership of
shares or ADSs by, or payment of dividends to, the governments of Iraq and the
Federal Republic of Yugoslavia, the UNITA organization of Angola, the Taliban of
Afghanistan and certain members of the government of Burma (Myanmar). Similar
sanctions against the government of Libya are currently suspended.
ITEM 7. TAXATION
The following is a general summary that does not address all tax
consequences of the ownership of MERANT's ordinary shares or ADSs. This summary
is based on U.S. federal income tax law and administrative practice and the laws
and practice of the United Kingdom in effect on the date of this Form 20-F.
Future legislation, regulations, administrative interpretations or court
decisions could change these laws either prospectively or retroactively.
Shareholders or ADS holders should consult their own tax advisors as to the
particular tax consequences to them of ownership of MERANT's ordinary shares or
ADSs.
In particular, this summary:
- does not address U.S. estate, gift, state or local tax laws.
- does not address foreign law other than that of the United Kingdom as it
would affect U.S. holders (persons resident in the United States and not
resident in the United Kingdom, under the current double taxation
convention between the United States and the United Kingdom). Non-U.S.
holders may experience significantly different tax consequences and
should consult their own tax advisors.
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- does not take into account the specific circumstances of any particular
shareholders (such as tax-exempt entities, certain insurance companies,
broker dealers, shareholders liable for alternative minimum tax,
shareholders that actually or constructively own 10% or more of MERANT's
voting shares, shareholders that hold shares or ADSs as part of a
straddle or a hedging or conversion transaction, or shareholders whose
functional currency is not the U.S. dollar), some of which may be subject
to special rules.
U.K. INCOME TAXATION OF DIVIDENDS
MERANT has never paid dividends. However, if MERANT were to pay dividends
in cash and denominated in dollars, the following would apply.
Individual shareholders resident in the United Kingdom for tax purposes
should generally be entitled to a tax credit in respect of any dividend, which
they can offset against their total income tax liability. The amount of the tax
credit is equal to 10% of the "gross dividend" (which is the total of the
dividend received and the tax credit), which is also equal to one-ninth of the
amount of the dividend received. The gross dividend is included in computing the
income of the individual holder for U.K. tax purposes.
Lower and basic rate taxpayers will have no further liability to income
tax, but higher rate taxpayers will be liable to tax on the dividend at the rate
of 32.5% of the gross dividend. The tax credit will be available to reduce the
tax liability on the dividend but will not be repayable to the shareholder.
U.K. resident taxpayers who are not liable to U.K. tax on dividends will
not be entitled to claim repayment of the tax credit. Tax credits on dividends
paid in respect of shares held in personal equity plans or individual savings
accounts will be repayable until April 5, 2004.
A U.K. resident corporate shareholder will be liable to corporation tax in
respect of the gross amount of any dividend received. It will not be able to
claim repayment of the tax credit attaching to the dividend, but can offset the
tax credit against its corporation tax liability.
A shareholder who is not resident in the United Kingdom for tax purposes
will generally not benefit from any entitlement to a refund of any part of the
tax credit. Special rules apply in the case of U.S. corporate shareholders that
are:
- resident in the United Kingdom, or
- at least 25% owned, directly or indirectly, by persons that are not
individual residents or nationals of the United States and that satisfy
certain other conditions.
Further special rules may apply if the shareholder:
- is a partnership, an estate or a trust that is a resident of the United
States,
- is exempt from U.S. taxation on dividends paid by MERANT, or
- owns 10% or more of the class of shares on which the dividend is declared
U.S. FEDERAL INCOME TAXATION OF DIVIDENDS
Under the double income tax convention between the United Kingdom and the
United States, an eligible U.S. holder will be subject to U.S. federal income
tax on the sum of the cash dividend plus a tax credit amount to which the U.S.
holder would be entitled if it were a U.K. taxpayer. Dividends paid out of
current or accumulated earnings and profits (as determined for U.S. federal
income tax purposes) will generally be taxable to a U.S. holder as foreign
source dividend income, and will not be eligible for the dividends received
deduction allowed to corporations. Subject to certain conditions and
limitations, a U.S. holder will generally be entitled to a credit against its
U.S. federal income tax liability, or a deduction in computing its U.S. federal
taxable income, for all or part of the tax credit amount. The rules relating to
the determination of the foreign tax credit are complex and eligible U.S.
holders should consult their tax advisers to determine whether and to what
extent a tax credit would be available.
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TAXATION ON CAPITAL GAINS
Under the double income tax convention between the United Kingdom and the
United States, each country generally may tax capital gains in accordance with
the provisions of its domestic law. Under U.K. law, U.S. residents who are not
also resident or ordinarily resident for tax purposes in the United Kingdom will
not generally be liable for U.K. capital gains tax on capital gains made on the
disposal of shares. Special rules apply where the shares were held in connection
with a trade carried on in the U.K. through a permanent establishment. An
individual shareholder who has on or after March 17, 1998, ceased to be resident
or ordinarily resident in the United Kingdom for a period of five years and who
disposes of shares during that period may also be liable to U.K. taxation on
capital gains. U.S. residents who are liable for U.K. tax may also be liable for
both U.K. and U.S. tax in respect of a gain on the disposal of ADSs, but may be
entitled to a tax credit against their U.S. federal tax liability for the amount
of the U.K. tax paid in respect of the gain. A U.S. resident holder of an ADR
will be liable for U.S. federal income tax on the gains to the same extent as on
any other gains from sales of shares.
U.K. INHERITANCE TAX
Under the double estates and gift taxation convention between the United
States and the United Kingdom, an individual shareholder who is for the purpose
of the convention, not a U.K. national, but who is domiciled in the United
States will not (provided any tax chargeable in the United States is paid) be
subject to U.K. inheritance tax on the disposal of shares by way of gift or upon
the individual's death, unless:
- the shares are part of the business property of a permanent establishment
of the individual in the United Kingdom, or
- in the case of a shareholder who performs independent personal services,
pertain to a fixed base situated in the United Kingdom.
In the exceptional case where the shares are subject both to U.K.
inheritance tax and to U.S. federal gift or estate tax, the convention generally
provides for double taxation to be relieved by means of credit relief.
U.K. STAMP DUTY AND STAMP DUTY RESERVE TAX
U.K. stamp duty and/or stamp duty reserve tax ("SDRT") may be charged in
respect of, among other things, the following transactions:
- the transfer of an ADS,
- the transfer of a share,
- the deposit of a share with the custodian and the subsequent issue of an
ADR, and
- the transfer of a share on surrender of an ADS.
This section discusses in turn each possible charge.
On the transfer of an ADS, no U.K. stamp duty will be payable provided that
the instrument or transfer is executed and remains outside the United Kingdom,
nor will there be any liability to SDRT.
On the transfer of a share, ad valorem stamp duty will be charged at the
rate of 1/2% of the consideration, if any, for the transfer. SDRT will be
imposed, at the rate of 1/2% of the consideration for the transaction, if an
agreement is made for the sale of shares, unless a share transfer instrument in
favor of the purchaser or its nominee is executed and duly stamped. SDRT is in
general payable by the purchaser of the shares, but regulations have been made
which provide for collection from other persons in certain circumstances.
An instrument transferring shares to a nominee or agent for a depositary
which then issues depositary receipts (such as ADRs) will be subject to ad
valorem stamp duty. Where the instrument is liable to stamp duty as a
"conveyance on sale," because it completes a sale of shares or ADSs, the rate of
duty will be 1 1/2% of the consideration for the sale implemented by the
instrument. Where the transfer instrument is not stampable as a conveyance on
sale, the rate of duty will be 1 1/2% of the market value of the security
transferred by the
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instrument. There is also a potential charge to SDRT which will be payable by
the depositary at a rate of 1 1/2% of the consideration for the transfer, or
where there is no consideration, 1 1/2% of the market value of the securities
transferred. The charge to SDRT will, however, be reduced by the amount, if any,
of ad valorem stamp duty paid on the share transfer instrument.
A transfer of shares from the depositary or its agent or nominee to an ADR
holder, or a person designated by the holder, on cancellation of an ADS which is
liable to duty as a "conveyance of sale" because it completes a sale of the
shares, will be liable to ad valorem stamp duty, payable by the purchaser, at
the rate of 1/2% of the consideration, if any, for the transfer. Transfers not
liable to duty as a "conveyance on sale" will be liable to a fixed stamp duty of
50p.
OTHER U.S. ISSUES
As of September 15, 2000, MERANT is not a controlled foreign corporation
("CFC"), a passive foreign investment company ("PFIC"), or a foreign personal
holding company ("FPHC"), and MERANT does not anticipate becoming a CFC, PFIC or
FPHC. Neither MERANT nor its advisers have a duty or will undertake to inform
U.S. shareholders of changes in circumstances which would cause MERANT to become
a CFC, PFIC or a FPHC. U.S. shareholders should consult their own tax advisers
concerning the status of MERANT as a CFC, PFIC or FPHC.
ITEM 8. SELECTED FINANCIAL DATA
SELECTED CONSOLIDATED FINANCIAL DATA
The Selected Consolidated Financial Data in U.S. Format on page 19 and the
Selected Consolidated Financial Data in U.K. Format on page 62 of the MERANT
2000 Annual Report Detail are incorporated in this Form 20-F by reference.
EXCHANGE RATES
The following table shows the approximate noon buying rates for GB pounds
in U.S. dollars per GBP 1.
FISCAL PERIOD AVERAGE* HIGH LOW PERIOD-END
- ------------- -------- ---- ---- ----------
Year ended January 31, 1996................................. 1.57 1.61 1.51 1.51
Year ended January 31, 1997................................. 1.58 1.71 1.49 1.60
Year ended January 31, 1998................................. 1.64 1.70 1.58 1.63
Quarter ended April 30, 1998................................ 1.66 1.69 1.62 1.67
Year ended April 30, 1999................................... 1.65 1.71 1.59 1.61
Year ended April 30, 2000................................... 1.60 1.68 1.55 1.56
- ---------------
* The average of the exchange rates on the last day of each calendar month
during the period.
On September 15, 2000, the Noon Buying Rate was $1.4005 per GBP 1.
Fluctuations in the U.S. dollar/GB pound exchange rate will affect the U.S.
dollar amounts received by ADR holders on conversion by the depositary of
dividends paid in GB pounds on the shares represented by the ADRs. These
fluctuations may also affect the relative market prices of the ADSs in the U.S.
and the shares in the U.K.
For information on the effect of exchange rate fluctuations on MERANT's
results of operations, see "Management's Discussion and Analysis of Results of
Operations and Financial Condition -- Exchange Rate Fluctuations" on pages 33
and 72 of the MERANT 2000 Annual Report Detail, which sections are incorporated
in this Form 20-F by reference.
DIVIDENDS
MERANT has never paid cash dividends on its shares. MERANT has investigated
the possibility of paying dividends and reviews the issue from time to time.
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If dividends were paid, they would probably be paid in GB pounds. Exchange
rate fluctuations would affect the U.S. dollar amounts that shareholders, or in
the case of ADR holders the depositary, would receive on conversion of dividend
payments into U.S. dollars.
ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's Discussion and Analysis of Results of Operations and Financial
Condition for fiscal years 2000, 1999 and 1998, and for the three-month period
ended April 30, 1998, which is contained on pages 20 through 35 and pages 63
through 73 of the MERANT 2000 Annual Report Detail, is incorporated in this Form
20-F by reference.
ITEM 9A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For information on market risks to which MERANT's business is exposed, see
"Management's Discussion and Analysis of Results of Operations and Financial
Condition -- Market Risk" on page 34 of the MERANT 2000 Annual Report Detail,
which section is incorporated in this Form 20-F by reference.
ITEM 10. DIRECTORS AND OFFICERS OF REGISTRANT
MERANT's Memorandum and Articles of Association provide that there must
always be at least two directors, unless otherwise determined by ordinary
resolution of MERANT. At each annual general meeting, one-third of the directors
(rounded down where the number of directors does not divide by three) retires
from office by rotation.
Executive officers serve at the discretion of the Board of Directors.
The directors and executive officers, effective September 25, 2000, are as
follows:
BOARD OF DIRECTORS
DATE ELECTED OR
NAME POSITION APPOINTED
- ---- -------- ---------------
Michel Berty................ Director September 1998
Kevin Burns................. Director September 1998
Gary Greenfield............. Director September 1998
President and Chief Executive Officer December 1998
J. Michael Gullard.......... Director and Chairman May 1995
Harold Hughes............... Director December 1993
Barry Lynn.................. Director September 1999
Don Watters................. Director December 1999
EXECUTIVE OFFICERS
NAME POSITION DATE APPOINTED
---- -------- --------------
Ken Sexton.................. Senior Vice President and Chief Financial December 1998
Officer
Panos Anastassiadis......... Executive Vice President, Worldwide September 1998
Distribution
Michael Consoli............. Senior Vice President and General Manager, October 1999
MERANT EDC
Greg Gehring................ Senior Vice President and Chief Information September 1998
Officer
Dean Genge.................. Senior Vice President, Corporate Marketing September 1998
Tony Hill................... Senior Vice President and General Manager, March 2000
MERANT ACT
Leo Millstein............... Vice President, General Counsel and Secretary April 2000
Andrew Weiss................ Chief Technology Officer May 1999
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Biographical information for the directors and officers is shown below.
Mr. Berty has been a non-executive director of MERANT since September 1998.
Prior to that date, he was a non-executive director of INTERSOLV. From 1972
until 1997 he was an executive of the Cap Gemini Group and serviced as Chief
Executive Officer of Cap Gemini America from 1993 to 1997.
Mr. Burns has been a non-executive director of MERANT since September 1998.
Prior to that date he was Chairman of INTERSOLV. He is a founding member of
Lazard Technology Partners, a venture capital firm investing in the information
technology industry.
Mr. Greenfield became a director of MERANT in September 1998. From 1996
until that date, he had been Chief Executive Officer of INTERSOLV. In December
1998, he became MERANT's Chief Executive Office and President.
Mr. Gullard has been a non-executive director of MERANT since May 1995. He
was elected Chairman in March 1996. He is General Partner of the venture capital
firm of Cornerstone Management.
Mr. Hughes has been a non-executive director of MERANT since December 1993.
He is Chairman and Chief Executive Officer of Pandesic LLC, an e-commerce joint
venture between Intel and SAP.
Mr. Lynn became a non-executive director of MERANT in September 1999. He is
the President and Chief Executive Officer of Be eXceL Inc., a corporation
specializing in e-commerce and internet management consulting.
Mr. Watters became a non-executive director of MERANT in December 1999. He
retired from McKinsey & Co. in 1997 after 28 years of service, most recently has
a director, and continues to act as a consultant and a member of McKinsey
Advisory Board.
Mr. Sexton joined MERANT in December 1998 as its Senior Vice President,
Finance & Administration, Chief Financial Officer and Secretary. Previously, he
was Senior Vice President, Finance & Administration and Chief Financial Officer
of INTERSOLV.
Mr. Anastassiadis joined MERANT in September 1998 as its Senior Vice
President, Worldwide Distribution upon the completion of MERANT's merger with
INTERSOLV, and became MERANT's Executive Vice President, Worldwide Distribution
in May 1999. Previously, he was Senior Vice President and General Manager of
INTERSOLV's Data Connectivity business unit.
Mr. Consoli joined MERANT in October 1999 as its Senior Vice President and
General Manager, MERANT EDC.
Mr. Gehring joined MERANT in September 1998 as its Senior Vice President
and Chief Information Officer upon the completion of MERANT's merger with
INTERSOLV. Previously, he was Senior Vice President and Chief Information
Officer for INTERSOLV.
Mr. Genge joined MERANT in September 1998 as its Senior Vice President,
Corporate Marketing upon the completion of MERANT's merger with INTERSOLV.
Previously, he was Senior Vice President, Corporate Marketing for INTERSOLV.
Mr. Hill joined MERANT in August 1987. In March 2000, he became Senior Vice
President and General Manager, MERANT ACT, having previously held the position
of Manager, European Direct Sales in MERANT's ADM business unit.
Mr. Millstein joined MERANT in April 2000 as its Vice President, General
Counsel and Secretary.
Mr. Weiss joined MERANT in May 1999 as its Chief Technology Officer.
There are no family relationships between any of the directors or executive
officers. There are no arrangements or understandings between any executive
officer or director and any other person under which an executive officer or
director was or is to be selected to such position.
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ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS
For the fiscal year ended April 30, 2000, the total amount of compensation
paid to directors and officers of MERANT (a total of 18 persons during the
fiscal year) was as follows:
U.S. DOLLARS GB POUNDS
------------ ---------
IN THOUSANDS
Salary...................................................... 2,199 1,392
Bonus....................................................... 1,268 803
Directors' fees............................................. 273 167
Compensation for loss of office............................. 0 0
Pension, retirement and similar benefits.................... 47 30
Other benefits.............................................. 135 85
TOTAL............................................. 3,922 2,477
Chairman.................................................... 140 84
Bonuses were payable under three different cash bonus programs. Each
program sets operating plans, and bonus amounts are paid based upon MERANT's
performance against the operating plan. Further compensation information is
provided under "Directors' Remuneration Report" on pages 15 through 18 of the
MERANT 2000 Annual Report Detail, which compensation information is incorporated
in this Form 20-F by reference.
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
MERANT currently operates four share option plans:
- the 1991 Share Option Plan
- the 1994 Group Employee Benefit Trust
- the 1996 Share Option Plan
- the 1998 Share Option Plan
These MERANT plans provide for the granting of options to purchase ordinary
shares in MERANT to MERANT employees and consultants. MERANT currently has the
authority to grant share options under the 1998 Share Option Plan.
When MERANT merged with INTERSOLV, it adopted INTERSOLV's 1982 Stock Option
Plan, 1992 Stock Option Plan and 1997 Employee Stock Option Plan, and the option
plans previously assumed by INTERSOLV from companies which it had acquired.
Under the merger agreement, each outstanding option or right to purchase or
acquire shares of INTERSOLV stock was assumed by MERANT and became an option or
right to purchase or acquire ADSs in MERANT, with appropriate adjustments to the
price and number of shares based on the exchange ratio of 0.55 ADSs per
INTERSOLV share. No further options have been or will be granted under these
INTERSOLV plans.
When MERANT acquired XDB Systems, Inc, it assumed XDB's 1992 Stock Option
Plan and 1996 Stock Option Plan. In accordance with the acquisition agreement,
the outstanding options under these XDB Plans were converted into options to
acquire MERANT shares. No further options have been or will be granted under the
XDB Plans.
When MERANT acquired EnterpriseLink Technology Corporation, it assumed
EnterpriseLink's 1996 Stock Plan and 1999 Stock Option Plan. Under the
Acquisition Agreement, the outstanding options under these EnterpriseLink Plans
were converted into options to acquire MERANT shares. No further options have
been or will be granted under the EnterpriseLink Plans.
At September 15, 2000, there were outstanding stock options under the
MERANT plans, INTERSOLV plans, XDB plans and EnterpriseLink plan to purchase a
total of 23,867,276 ordinary shares with exercise prices ranging from GBP 0.34
to GBP 7.15 and expiration dates ranging from July 2001 to August 2010. At
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the same date, the following directors (and directors and officers as a group)
held options to purchase the number of shares presented opposite their names in
the following table:
NUMBER OF OPTION PRICE,
SHARES IN GBP EXPIRATION DATE
--------- ------------- ------------------
Michel Berty.............................. None
Kevin Burns............................... 10,000 2.94 September 16, 2009
Gary Greenfield........................... 2,569,550* 1.47-3.42 May 1, 2008
3,250,000 1.05 January 4, 2009
J. Michael Gullard........................ 100,000 1.67 June 21, 2006
20,000 2.94 September 16, 2009
Harold Hughes............................. 50,000 3.00 August, 19, 2002
10,000 2.40 June 16, 2004
10,000 2.94 September 16, 2009
Barry Lynn................................ 10,000 2.94 September 16, 2009
Don Watters............................... 10,000 4.54 December 8, 2009
Directors and officers as a group......... 5,187,390* 1.47-3.68 May 1, 2008
3,250,000 1.05 January 4, 2009
3,725,000 1.06 December 15, 2008
250,000 1.41 April 30, 2009
100,000 1.64 April 25, 2010
100,000 1.67 June 21, 2006
10,000 2.40 June 16, 2004
250,000 2.80 October 18, 2009
50,000 2.94 September 16, 2009
50,000 3.00 August 19, 2002
125,000 3.10 April 6, 2010
75,000 3.36 February 10, 2010
10,000 4.54 December 8, 2009
- ---------------
* Asterisked items represent the share equivalents of options issued by
INTERSOLV, which were converted into options to acquire MERANT ADSs. Options
were issued by INTERSOLV at various prices and dates; the table discloses
average grant prices and the latest expiration dates. These options are
denominated in U.S. dollars, and for the above disclosures have been converted
to pounds sterling using the April 30, 2000 rate of $1.58 = GBP 1.00.
ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
The information required by this item is incorporated by reference from the
"Directors' Remuneration Report" on pages 15 through 18, and from the "Notes to
Consolidated Financial Statements -- Related party transaction" on pages 59 and
106, of the MERANT 2000 Annual Report Detail.
PART II
ITEM 14. DESCRIPTION OF SECURITIES TO BE REGISTERED
The Registrant has elected to respond to this item.
DESCRIPTION OF ORDINARY SHARES
The rights of MERANT's shareholders are determined by the Memorandum and
Articles of Association and by current English law. This summary does not
purport to be complete and is qualified by reference to the Memorandum and
Articles of Association, which are incorporated by reference in this annual
report.
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The authorised share capital of MERANT plc is GBP 4,240,000 divided into
212,000,000 ordinary shares of 2p each, of which 149,388,888 ordinary shares
were outstanding on April 30, 2000. Each of the issued shares is fully paid and
not subject to any further calls or assessments. There are no conversion rights,
redemption provisions or sinking fund provisions related to the shares. The
shares are issued in registered form.
In the following description, a shareholder is the person registered in
MERANT's register of members as the holder of the relevant share. The depositary
for MERANT's ADSs is the shareholder for shares represented by ADSs against
which ADRs have been issued.
DIVIDENDS
All dividends will be declared and paid according to the amount paid up on
the shares, but no dividend will be declared in excess of the amount recommended
by the directors. The directors may from time to time pay interim dividends to
shareholders if it appears to the directors to be justified by the profits
available for distribution. Final dividends may be declared by resolution of the
members on the recommendation of the Board. There are no fixed dates on which
entitlement to dividends arises on the shares.
Any dividend unclaimed 12 years after the date when it became due for
payment will, if the directors so resolve, be forfeited and cease to remain
owing by MERANT.
RIGHTS IN A WINDING UP
In the event of a winding-up or reduction of MERANT's capital involving
repayment, the assets available for distribution among the members will be
divided between the shareholders according to the respective number of shares
held by them and in accordance with the provisions of The Companies Act 1985 of
Great Britain. The liquidator may, with the sanction of an extraordinary
resolution and subject to the Companies Act, divide among the members in specie
the whole or any part of MERANT's assets.
VOTING
Voting at any general meeting of shareholders is by a show of hands unless
a poll is duly demanded by:
- the chairman of the meeting,
- at least two shareholders entitled to vote at the meeting,
- any shareholder or shareholders representing at least one-tenth of the
total voting rights of all shareholders entitled to vote at the meeting,
or
- any shareholder or shareholders holding shares conferring a right to vote
at the meeting on which the paid up sums are at least one-tenth of the
total sum paid up on all the shares conferring that right.
On a show of hands, every shareholder who is present in person at a general
meeting will have one vote, and on a poll, every shareholder who is present in
person or by proxy will have one vote per share. The necessary quorum for a
shareholder meeting is two persons entitled to vote on the business to be
transacted. A resolution proposed at a meeting may be either:
- an ordinary resolution (e.g., for the election of directors, the approval
of financial statements, the declaration of final dividends, the
appointment of auditors, the increase of authorized share capital or the
grant of authority to allot shares). An ordinary resolution requires the
affirmative vote of a majority of the votes cast at a meeting at which
there is a quorum.
- a special resolution (e.g., relating to certain matters concerning an
alteration of the Memorandum or Articles of Association or a winding-up).
- an extraordinary resolution (e.g., modifying the rights of any class of
shares at a meeting of the holders of the class), which requires the
affirmative vote of not less than three-fourths of the votes cast.
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Unless specified by law or MERANT's Articles of Association, voting in a
general meeting is by ordinary resolution. Meetings are generally convened upon
advance notice of 21 or 14 clear days, depending on the nature of the business
to be transacted.
PRE-EMPTIVE RIGHTS
Under Part III of the Companies Act, a company cannot allot equity
securities which are to be paid for wholly in cash (except shares held under an
employees' share scheme) unless it has made an offer to existing shareholders to
allot the equity securities to them on the same or more favorable terms and in
proportion to their shareholdings. In this context, equity securities generally
means, in relation to MERANT, ordinary shares, that is shares with no
restrictions on the amounts receivable in a distribution of dividends or capital
and all rights to subscribe for or convert into shares.
This statutory pre-emption right does not, however, apply where the right
has been disapplied by a special resolution of the shareholders. A special
resolution was passed at MERANT's annual general meeting on September 16, 1999,
disapplying the statutory pre-emption right in respect of the allotment of
equity securities for cash in connection with:
- a rights issue in favor of ordinary shareholders where the equity
securities respectively attributable to the interests of all ordinary
shareholders are proportionate (as nearly as may be) to the respective
numbers of shares held by them but subject to any exclusions which the
directors may consider appropriate to deal with fractional entitlements
or holders of shares outside the U.K., or
- the allotment of equity securities up to an aggregate nominal value of
GBP 144,087.98.
This disapplication will, unless extended or renewed, expire on the earlier
of the date of MERANT's 2000 annual general meeting and December 16, 2000.
VARIATION OF RIGHTS AND SHARE CAPITAL
MERANT may, by passing an ordinary resolution:
- increase its share capital
- consolidate and divide all or any of its shares into shares of larger
amounts, or
- subdivide its shares into shares of smaller amount or cancel shares which
have not been taken or agreed to be taken by any person (subject to the
provisions of the Companies Act).
MERANT may, by passing a special resolution (and subject to the provisions of
the Companies Act):
- reduce its share capital, capital redemption reserve and any share
premium account, or
- purchase its own shares.
Subject to the provisions of the Companies Act, the rights attached to any
class of shares may be varied either:
- with the consent in writing of the holders of three-fourths in nominal
value of the issued shares of that class, or
- with the sanction of an extraordinary resolution passed at a separate
meeting of the holders of the shares of that class.
At any separate general meeting, the necessary quorum is one or more
persons holding or representing by proxy not less than one-third in nominal
amount of the issued shares of the class in question (but at any adjourned
meeting, any person holding shares of the class or his proxy will be a quorum).
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DISCLOSURE OF INTERESTS
The Companies Act gives MERANT power to require persons who it knows are,
or has reasonable cause to believe to be, or to have been within the previous
three years, interested in its issued share capital to disclose prescribed
particulars of those interests. Sanctions may be imposed against the holder of
the relevant shares for failure to provide the information requested in a timely
manner. MERANT's Articles of Association impose the withdrawal of voting rights
of these shares and restrictions on the rights to receive dividends on and to
transfer these shares. In this context, shares includes ADSs. The Companies Act
also requires any person who acquires (alone or, in specified circumstances,
with others) a direct or indirect interest in excess of the "notifiable
percentage" (currently 3% of the issued share capital of a company or 10% for
certain types of interest) to disclose prescribed information to the company in
respect of those shares within a period of two business days. An obligation of
disclosure also arises where the person's interest subsequently falls below the
notifiable percentage or where, above that level, that person's interest in the
issued share capital (expressed in whole percentages) increases or decreases.
MISCELLANEOUS
There are currently no U.K. foreign exchange controls on the payment of
dividends or the conduct of MERANT's operations. There are no restrictions under
the Articles of Association or under English law that limit the right of
non-resident or foreign owners to hold or vote MERANT's shares, except as
described elsewhere in this Form 20-F under Item 6, "Exchange Controls and Other
Limitations Affecting Security Holders."
DESCRIPTION OF AMERICAN DEPOSITARY RECEIPTS
American depositary receipts, or ADRs, are issued by a depositary as
evidence of the ownership of American depositary shares, or ADSs. Each ADS
represents five of MERANT's ordinary shares. The rules and regulations by which
ADRs are issued, held and withdrawn are governed by a deposit agreement between
MERANT, the ADR holders, and the Bank of New York, which acts as the depositary.
The following is a summary of the principal terms of the deposit agreement.
These statements are subject to the terms and conditions of the deposit
agreement. Copies of the deposit agreement and MERANT's Memorandum and Articles
of Association are available for inspection at:
- The depositary's Corporate Trust Office, at 101 Barclay Street, New York,
NY 10286, and
- The depositary's London office, at 46 Berkeley Street, London W1X 6AA,
England, which acts as custodian under the terms of the deposit
agreement.
The depositary's principal executive office is at 48 Wall Street, New York,
NY 10286.
The depositary and MERANT will only treat as owners those persons in whose
names ADRs are registered on the depositary's books.
DEPOSIT, TRANSFER AND WITHDRAWAL
The depositary has agreed that on delivery of ordinary shares to the
custodian (or evidence of rights to receive ordinary shares), the depositary
will execute and deliver at its Corporate Trust Office an ADR or ADRs.
Delivery of the ordinary shares must be accompanied by any appropriate
instruments of transfer or endorsement in a form satisfactory to the custodian,
and any other documents required by the depositary or the custodian in
accordance with the deposit agreement. Execution and delivery of an ADR or ADRs
will depend on payment of the depositary's fee and of all taxes and governmental
charges and fees. The delivery at its Corporate Trust Office will be to, or upon
the order of, the person or persons named in the notice of the custodian
delivered to the depositary or requested by the person depositing the ordinary
shares with the depositary. The ADR or ADRs will be registered in the name or
names of the person (or persons), and will represent any authorized number of
ADSs requested by that person (or persons).
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The depositary has no obligation to accept ordinary shares for deposit from
any person or entity identified by MERANT as holding restricted securities,
except upon compliance with the provisions of the deposit agreement.
The term "Restricted Securities" means ordinary shares, or ADRs
representing ordinary shares, which are acquired directly or indirectly from
MERANT or its affiliates, as defined in Rule 144 to the Securities Act of 1933,
- that are issued in a transaction or chain of transactions not involving
any public offering, or which are subject to resale limitations under
Regulation D under the Securities Act or both,
- that are held by an officer, director or other affiliate of MERANT, or
- that are subject to other restrictions on sale or deposit under the laws
of the United States or England, or under a shareholder agreement or
MERANT's Memorandum and Articles of Association.
To withdraw the deposited securities represented by an ADR, the owner must:
- surrender the ADR at the depositary's Corporate Trust Office,
- pay the depositary's fee for the surrender of ADRs and all taxes and
governmental charges and fees, and
- bear the risk and expense for the forwarding of share certificates and
other proper documents of title.
The owner of the ADR will then be entitled to delivery, to him or upon his
order, of the amount of deposited securities at the time represented by the ADR.
The depositary may deliver, or pre-release, ADRs before the receipt of
ordinary shares. The depositary may also deliver ordinary shares upon the
receipt and cancellation of ADRs which have been pre-released, whether or not
cancellation is before the termination of the pre-release or the depositary
knows that the ADR has been pre-released.
The depositary may receive ADRs instead of ordinary shares in satisfaction
of a pre-release. Each pre-release must be
- preceded or accompanied by a written representation from the person to
whom the ADRs are to be delivered that that person, or its customer, owns
the ordinary shares or ADRs to be remitted, as the case may be,
- at all times fully collateralized with cash or other collateral as the
depositary deems appropriate,
- terminable by the depositary on not more than five business days' notice,
and
- subject to further indemnities and credit regulations as the depositary
deems appropriate.
DIVIDENDS, OTHER DISTRIBUTIONS AND RIGHTS
When the depositary receives cash dividends and other cash distributions
denominated in a currency other than U.S. dollars, in respect of the deposited
ordinary shares, it is required to arrange for the conversion of the funds into
U.S. dollars, subject to:
- any restrictions imposed by English law, regulations or applicable
permits,
- its judgment that it can do so on a reasonable basis, and
- its judgment that it can transfer the resulting dollars to the United
States.
On conversion, it must then distribute the resulting dollar amount (net of
reasonable and customary expenses incurred in converting the foreign currency)
to the owners entitled to the cash, in proportion to the number of ADSs
representing the deposited securities held by them. The amount distributed to
the owners will be reduced by any taxes to be withheld by MERANT or the
depositary. See "Liability of owner for
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taxes." If this conversion or distribution can be effected only with the
approval or license of any government or government agency, the depositary will
apply for approval or license, if any, as it deems desirable.
The depositary may distribute the foreign currency it receives to, or in
its discretion may hold it for the respective accounts of, the owners entitled
to receive it, if:
- in its judgment it cannot convert any received foreign currency on a
reasonable basis into dollars transferable to the United States,
- any approval or license of any government or government agency that is
required for the conversion is denied, or in the opinion of the
depositary is not obtainable, or
- any approval or license is not obtained within a reasonable period as
determined by the depositary
If the conversion of foreign currency, in whole or in part, cannot be
effected for distribution to some of the owners entitled to the cash, the
depositary may convert and distribute the funds in U.S. dollars to the extent
permissible to the owners entitled to the cash, and distribute the balance of
the foreign currency received to, or hold the balance for, the accounts of the
owners entitled to the cash.
If MERANT declares a dividend in, or free distribution of, ordinary shares,
the depositary may, and will if MERANT requests, distribute to the owners
additional ADRs for a total number of ADSs representing the amount of ordinary
shares received as the dividend or free distribution. This distribution would be
in proportion to the number of ADSs held by them. Instead of delivering ADRs for
fractional ADSs in the event of dividend or free distribution, the depositary
will sell the amount of ordinary shares represented by the total of the
fractions and distribute the net proceeds in accordance with the deposit
agreement. If additional ADRs are not distributed, each ADS will then also
represent the additional ordinary shares distributed upon the deposited
securities represented by the ADRs.
If MERANT offers or causes to be offered to the holders of any deposited
securities any rights to subscribe for additional ordinary shares or any other
rights, the depositary will have discretion as to the procedure for making those
rights available to any owners, or in disposing of these rights on behalf of any
owners and making the net proceeds available in U.S. dollars to the owners. If,
for any reason, the depositary may not either make the rights available to any
owners or dispose of the rights and make the net proceeds available to the
owners, then the depositary will allow the rights to lapse.
The depositary may reasonably determine that it is lawful and feasible to
make rights available to all owners, or to certain owners but not to other
owners. In this event, the depositary must distribute to any owner to whom it
determines the distribution to be lawful and feasible, in proportion to the
number of ADSs held by that owner, warrants or other instruments for the rights.
If:
- the depositary reasonably determines that it is not lawful and feasible
to make the rights available to certain owners, or
- the rights represented by the warrants or other instruments are not
exercised and appear about to lapse,
then the depositary may sell the rights, warrants or other instruments in
proportion to the number of ADSs held by the owners to whom it has determined it
may not lawfully or feasibly make the rights available, and allocate the net
proceeds of the sales for the account of the owners that would have been
entitled to the rights, warrants or other instruments, upon an averaged or other
practical basis without regard to any distinctions among the owners because of
exchange restrictions or the date of delivery of any ADR or ADRs, or otherwise.
If an owner requests the distribution of warrants or other instruments in
order to exercise the rights, in circumstances in which rights would not
otherwise be distributed, the depositary will make the rights available to the
owner upon written notice from MERANT to the depositary that:
- MERANT has elected in its sole discretion to permit the rights to be
exercised, and
- the owner has signed any documents that MERANT determines in its sole
discretion are reasonably required under applicable law.
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The depositary will, on behalf of an owner, exercise the rights and
purchase the ordinary shares:
- upon instruction from the owner to exercise the rights,
- upon payment by the owner of the purchase price of the ordinary shares to
be received upon exercise of the rights, and
- upon payment of the depositary's fees as provided in the warrants or
other instruments,
and MERANT will arrange for the ordinary shares purchased to be delivered to the
depositary on behalf of the owner. As agent for the owner, the depositary will
arrange for the purchased ordinary shares to be deposited, and will execute and
deliver restricted ADRs to the owner.
If registration under the Securities Act of the securities to which any
rights relate is required in order for MERANT to offer the rights to owners and
sell the securities represented by the rights, MERANT or the depositary are not
required to offer the rights to owners --
- unless and until a registration statement is in effect, or
- unless the offering and sale of the securities to the owners are exempt
from registration under the Securities Act.
The deposit agreement does not create any obligation on the part of MERANT
to file a registration statement covering the rights or underlying securities or
to endeavor to have a registration statement declared effective.
Whenever the depositary receives any distribution other than cash or
ordinary shares upon any deposited securities, it will cause the securities or
property it receives to be distributed to the owners --
- after deduction or upon payment of any fees of the depositary or any
taxes or other governmental charges or fees,
- in proportion to the number of ADSs representing the deposited securities
held by them, and
- in any manner that the depositary considers fair and practicable for
accomplishing the distribution.
However, if the depositary decides that a distribution cannot be made
proportionately among the owners, or if for any other reason (including any
requirement that MERANT or the depositary withhold an amount on account of
taxes) the depositary decides that a distribution is not feasible, then it may
make the distribution in any way it considers fair and practicable. This might
include the public or private sale of all or any part of the securities or
property received, and distribution of the net proceeds of the sale to the
owners.
If the depositary determines that any distribution in property (including
ordinary shares and rights to subscribe for them) is subject to any tax which
the depositary is obligated to withhold, the depositary may, by public or
private sale, dispose of all or a portion of the property as it considers
necessary and practicable to pay the taxes. In this event the depositary will
distribute the net proceeds of any sale after deduction of the taxes to the
owners in proportion to the number of ADSs held by them.
Upon any change in nominal or par value, split-up, consolidation or any
other reclassification of deposited securities, or upon any recapitalization,
reorganization, merger or consolidation or sale of assets affecting MERANT or to
which it is a party, any securities that are received by the depositary or
custodian in exchange for, in conversion of, or in respect of deposited
securities will be treated as new deposited securities under the deposit
agreement. From then on, the ADSs will represent the new deposited securities
received in exchange or conversion unless additional ADRs are delivered. The
depositary may, upon consultation with MERANT, and must if MERANT requests,
execute and deliver additional ADRs as in the case of a dividend on ordinary
shares, or call for the surrender of outstanding ADRs to be exchanged for new
ADRs specifically describing the new deposited securities.
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RECORD DATES
Whenever the depositary receives notice of the fixing of a record date by
MERANT, the depositary, in consultation with MERANT, will fix a record date for
the determination of the owners of ADRs.
VOTING OF DEPOSITED SECURITIES
When the depositary receives notice of any meeting or solicitation of
consents or proxies of shareholders or holders of other deposited securities, it
will, as soon as practicable, mail to all owners a notice containing:
- the information included in the notice of meeting,
- a statement that each owner at the close of business on a specified
record date will be entitled, subject to applicable law and the
provisions of MERANT's Memorandum and Articles of Association and the
provisions of or governing deposited securities, to instruct the
depositary in writing as to the exercise of the owner's voting rights, if
any, and
- a statement on how owners must give voting instructions.
When the depositary receives voting instructions from an owner who is
entitled to vote within the time established by the depositary, it will endeavor
to vote the deposited securities or cause them to be voted in accordance with
any nondiscretionary proxy. The depositary will not exercise any voting
discretion over any deposited securities.
If the depositary does not receive instructions from an owner within the
time established by the depositary, it will deliver a discretionary proxy for
the deposited securities in the form provided by MERANT. However, the depositary
will not give a proxy for any matter as to which MERANT informs the depositary
that:
- MERANT does not wish a proxy given,
- substantial opposition exists, or
- the matter materially and adversely affects the rights of shareholders.
Owners generally, and any owner in particular, may not receive notice
sufficiently in advance of the date established by the depositary for the
receipt of instructions to ensure that the depositary will vote the ordinary
shares or deposited securities.
REPORTS AND OTHER COMMUNICATIONS
The depositary will make available for inspection by owners at its
Corporate Trust Office any reports and communications, including any proxy
soliciting material, received from MERANT, which are both:
- received by the depositary as the holder of the deposited securities and
- made generally available to the holders of deposited securities by
MERANT.
The depositary will also send copies of reports to the owners when
furnished by MERANT.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
MERANT and the depositary, may, by written agreement, amend the form of
ADRs and any provisions of the deposit agreement at any time and in any respect
which they consider necessary or desirable. Any amendment that imposes or
increases any fees or charges, other than taxes and other governmental charges,
registration fees, cable, telex or facsimile transmission costs, delivery costs
or other similar expenses, or that otherwise prejudices any substantial existing
right of owners of ADRs, will, however, not take effect as to outstanding ADRs
until three months after notice of the amendment has been given to the owners of
outstanding ADRs. Every owner who continues to hold ADRs at the time any
amendment becomes effective, will be treated as having consented and agreed to
the amendment and will be bound by the deposit agreement as amended. In no event
will any amendment impair the right of the owner to surrender an ADR and receive
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the deposited securities it represents. If the depositary resigns or is removed
and a successor depositary is appointed, the successor depositary will notify
owners of outstanding ADRs.
Upon the resignation or removal of the depositary, either in accordance
with the deposit agreement, or at any time at the direction of MERANT, the
depositary will terminate the deposit agreement by mailing notice of termination
to the owners. The notice will be sent at least 30 days before the date fixed
for termination. On and after the date of termination, the owner will, upon
- surrender of the ADR at the Corporate Trust Office,
- payment of the depositary's fee for the surrender of ADRs as provided in
the deposit agreement, and
- payment of any applicable taxes or governmental charges,
be entitled to delivery to the owner or upon the owner's order of the amount of
deposited securities represented by the ADR. If any ADRs remain outstanding
after the date of termination of the deposit agreement, the depositary:
- will discontinue the registration of transfers of ADRs,
- will suspend the distribution of dividends to the owners, and
- will not give any further notices or perform any further acts under the
deposit agreement, except for
- the collection of dividends and other distributions pertaining to the
deposited securities, and
- the sale of rights and the delivery of deposited securities, together
with any dividends or other distributions related to them and the net
proceeds of the sale of any rights or other property in exchange for
surrendered ADRs (after deducting, in each case, its fee for the
surrender of ADRs, any expenses set forth in the deposit agreement and
any applicable taxes or governmental charges).
For a period of up to one year from the date of termination, the depositary
may sell the deposited securities then held under the deposit agreement and hold
the net proceeds of the sale, uninvested, together with any other cash,
unsegregated and without liability for interest, for the pro rata benefit of the
owners that have not surrendered their ADRs. These owners are treated as general
creditors of the depositary with respect to these net proceeds. After making the
sale, the depositary will be discharged from all obligations under the deposit
agreement, except to account for net proceeds and other cash, after deducting,
in each case, its fee for the surrender of ADRs, any expenses set forth in the
deposit agreement and any applicable taxes or governmental charges.
CHARGES OF DEPOSITARY
MERANT will pay the fees and reasonable expenses of the depositary and
those of any registrar. MERANT will not pay or be liable for:
- the fees of the depositary for the execution and delivery of ADRs,
transfers, the surrender of ADRs and the making of any distribution,
- taxes and other governmental charges,
- fees for the registration of transfers of ordinary shares on the share
register of MERANT or its appointed agent which apply to transfers of
ordinary shares to the depositary or its nominee or the custodian or its
nominee on the making of deposits or withdrawals under the deposit
agreement,
- any cable, telex and facsimile transmission expenses that are expressly
provided in the deposit agreement to be at the expense of persons
depositing ordinary shares or owners, and
- expenses incurred by the depositary in the conversion of foreign
currency.
The depositary will charge a fee of $5.00 or less per 100 ADSs (or portion
of 100) to anyone to whom ADRs are issued or who surrenders ADRs. In this
context, issuance includes, without limitation, a stock dividend or stock split
declared by MERANT, an exchange of stock regarding the ADRs or deposited
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33
securities, or a distribution of ADRs. In addition, the depositary will charge
the same fee to owners and holders of ADRs for the distribution of proceeds
under the deposit agreement. This fee will be deducted from the proceeds.
The depositary may own and deal in any class of securities of MERANT and
its affiliates and in ADRs.
LIABILITY OF OWNER FOR TAXES
The owner is liable to pay any tax or other governmental charge that
becomes payable with respect to any ADR, or any deposited securities represented
by any ADR. Until payment is made, the depositary may:
- refuse to effect any transfer of the ADR or any withdrawal of deposited
securities,
- withhold any dividends or other distributions,
- sell for the account of the owner any part or all of the deposited
securities represented by the ADR, and
- apply dividends or other distributions or the proceeds of any sale to pay
any tax or other governmental charge.
The owner will remain liable for any deficiency.
GENERAL
Neither the depositary nor MERANT will be liable to any owner, if either or
both of them is prevented from, or subjected to any civil or criminal penalty
for, doing any action that is provided for in the deposit agreement because of
any present or future law of any country or governmental authority, or any
provision, present or future, of MERANT's Memorandum and Articles of
Association, or any act of God or war or other circumstances beyond its control.
Neither the depositary nor MERANT will be liable to any owner for any
nonperformance or delay, from these same causes, in the performance of their
obligations in the deposit agreement, or for any exercise of, or failure to
exercise, any discretion provided for in the deposit agreement. If a
distribution or offering may not be made available to owners, and the depositary
may not dispose of the distribution or offering on behalf of the owners and make
the net proceeds available to them, then the depositary will not make the
distribution or offering, and will allow any rights, if applicable, to lapse.
MERANT and the depositary assume no obligation nor will they be subject to
any liability under the deposit agreement to owners or holders of ADRs, except
that they agree to perform their obligations in the deposit agreement without
negligence or bad faith.
The ADRs are transferable on the books of the depositary. However, the
depositary may close the transfer books at any time in the performance of its
duties. Before the depositary executes and delivers any ADR, registers any ADR
for transfer, split-up, combination or surrender or withdraws any deposited
securities, the depositary or the custodian may require the depositor of the
ordinary shares or the presenter of the ADR to reimburse it for any tax or other
governmental charge and any stock transfer or registration fee (including any
tax or charge and fee due for ordinary shares being deposited or withdrawn) and
to pay any fees provided for in the deposit agreement. The depositary may, and
if requested by MERANT must, refuse to deliver ADRs, to register the transfer of
any ADR, to make any distribution on, or related to, ordinary shares or to
deliver any deposited securities until it has received information,
certificates, representations and warranties such as proof of citizenship or
residence or exchange control approval as it reasonably considers to be
necessary or proper. The delivery, transfer or registration of transfer of ADRs
may be suspended during any period when the transfer books of the depositary are
closed or at any time as the depositary or MERANT may consider necessary or
advisable. The surrender of outstanding ADRs and the withdrawal of deposited
securities may not be suspended, subject only to:
- temporary delays caused by closing the transfer books of the depositary
or MERANT or the deposit of ordinary shares in connection with voting at
a shareholders' meeting or the payment of dividends,
- the payment of fees, taxes and similar charges, and
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34
- compliance with any laws or governmental regulations relating to the ADRs
or to the withdrawal of the deposited securities.
The depositary will keep books, at its Corporate Trust Office, for the
registration and transfer of ADRs, which at all reasonable times will be open
for inspection by the owners. However, inspection must not be for the purpose of
communicating with owners in the interest of a business or object other than the
business of MERANT or a matter related to the deposit agreement or the ADRs.
The depositary may appoint one or more co-transfer agents at designated
transfer offices. In carrying out its functions, a co-transfer agent may require
holders or owners or persons entitled to ADRs to provide evidence of authority
and compliance with applicable laws and other requirements. Co-transfer agents
are also entitled to protection and indemnity to the same extent as the
depositary.
LISTING
The ADSs are quoted on the Nasdaq National Market under the trading symbol
MRNT.
PART III
ITEM 15. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES
AND USE OF PROCEEDS
None.
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PART IV
ITEM 17. FINANCIAL STATEMENTS
See Item 18.
ITEM 18. FINANCIAL STATEMENTS
Reference is made to Item 19 for a list of all financial statements filed
as part of this annual report.
ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS.
1. The following audited consolidated financial statements, together with
the related reports of Ernst & Young, are incorporated in this annual report by
reference from the MERANT 2000 Annual Report Detail:
US Format
Audited Financial Statements
Consolidated Statements of Operations for the year ended April 30, 2000,
the year ended April 30, 1999, the three-month period ended April 30,
1998 and the year ended January 31, 1998
Consolidated Balance Sheets at April 30, 2000 and April 30, 1999
Consolidated Statements of Cash Flow for the year ended April 30, 2000,
the year ended April 30, 1999, the three-month period ended April 30,
1998 and the year ended January 31, 1998
Consolidated Statements of Shareholders' Equity for the year ended April
30, 2000, the year ended April 30, 1999, the three-month period ended
April 30, 1998 and the year ended January 31, 1998
Notes to Consolidated Financial Statements
Report of the Independent Auditors
UK Format
Audited Financial Statements
Consolidated Profit and Loss Account for the year ended April 30, 2000,
the fifteen months ended April 30, 1999 and the year ended January 31,
1998
Consolidated Balance Sheet at April 30, 2000 and April 30, 1999
Consolidated Cash Flow Statement for the year ended April 30, 2000, the
fifteen months ended April 30, 1999 and the year ended January 31, 1998
Notes to Consolidated Cash Flow Statement for the year ended April 30,
2000, the fifteen months ended April 30, 1999 and the year ended January
31, 1998
Company Balance Sheet at April 30, 2000 and April 30, 1999
Consolidated Statement of Total Recognised Gains and Losses for the year
ended April 30, 2000, the fifteen months ended April 30, 1999 and the
year ended January 31, 1998
Movement in Shareholders' Funds for the year ended April 30, 2000, the
fifteen months ended April 30, 1999 and the year ended January 31, 1998
Notes to the Financial Statements
Report of the Auditors
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2. The following financial statement schedules and reports have been filed
as part of this annual report:
US Format
Schedule for the year ended April 30, 2000, the year ended April 30, 1999,
the three-month period ended April 30, 1998 and the year ended January 31,
1998
Schedule II -- Valuation and Qualifying Accounts
Report of PriceWaterhouseCoopers LLP, Independent Accountants
UK Format
Schedule for the year ended April 30, 2000, the fifteen months ended April
30, 1999 and the year ended January 31, 1998
Schedule II -- Valuation and Qualifying Accounts
All other schedules have been omitted because the required information is not
significant or is not applicable.
(b) EXHIBITS.
2.01(2) Memorandum of Association of MERANT dated as of March 28,
1983, as amended and restated to date
2.02(1) Articles of Association of MERANT adopted as of June 19,
1996, as amended and restated to date
2.03(1) Form of Specimen Certificate for MERANT's ordinary shares at
GBP 0.02 each
2.04(2) Amended and Restated Deposit Agreement dated as of March 16,
1998 among MERANT, the Bank of New York and all owners and
holders from time to time of American Depositary Receipts
2.05(3)+ MERANT's 1994 Employee Benefit Trust
2.06(1)+ MERANT's 1998 Share Option Plan, as amended
2.07(1)+ MERANT's 1998 Inland Revenue Approved Share Option Scheme
2.08(1)+ MERANT's 1999 Employee Share Purchase Plan
2.09(2) Form of Indemnification Agreement entered into by MERANT
with each of its directors and certain executive officers
2.10(2) Form of Indemnity Agreement entered into by MERANT
Incorporated, a subsidiary of MERANT ("MERANT
Incorporated"), with each of its directors and certain
executive officers of MERANT and MERANT Incorporated
2.11(4) Agreement and Plan of Reorganization among Micro Focus Group
plc, Tower Merger Sub, Inc. and INTERSOLV, Inc. dated June
17, 1998.
13.01* The portions of the MERANT 2000 Annual Report Detail
incorporated in this Form 20-F by reference.
23.01* Consents of Ernst & Young LLP, Independent Auditors, dated
October 24, 2000.
23.02* Consent of Ernst & Young, Independent Auditors, dated
October 24, 2000.
23.03* Consent of PriceWaterhouseCoopers LLP, Independent
Accountants, dated October 31, 2000.
- ---------------
(1) Filed on November 1, 1999 as an exhibit to MERANT's Annual Report on Form
20-F (File No. 000-19696), and incorporated in this Form 20-F by reference.
(2) Filed on May 29, 1998 as an exhibit to MERANT's Annual Report on Form 20-F
(File No. 000-19696), and incorporated in this Form 20-F by reference.
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37
(3) Filed on April 9, 1997 as an exhibit to MERANT's Registration Statement on
Form S-8 (File No. 333-24867), and incorporated in this Form 20-F by
reference.
(4) Filed on August 24, 1998 as an exhibit to MERANT's Registration Statement on
Form F-4 (File No. 333-62095), and incorporated in this Form 20-F by
reference.
+ Indicates a management contract or compensatory plan or arrangement.
* Filed with this Form 20-F.
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SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(U.S. FORMAT) MERANT PLC
CHARGED
BALANCE AT CHARGED TO/ CREDITED
BEGINNING TO COSTS FROM OTHER BALANCE AT
DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS(*) WRITE OFFS END OF PERIOD
- ----------- ---------- ------------ ------------ ---------- -------------
IN THOUSANDS OF U.S. DOLLARS
PROVISION FOR BAD AND DOUBTFUL DEBTS
Year ended January 31:
1998............................... 5,860 3,065 706 **(4,770) 4,861
Quarter ended April 30:
1998............................... 4,861 196 29 47 5,133
Year ended April 30:
1999............................... 5,133 5,269 (29) (5,588) 4,785
2000............................... 4,785 3,082 (99) (3,513) 4,255
- ---------------
(*) Includes exchange rate adjustments
(**) Adjusted for INTERSOLV movements previously reported
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SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(U.K. FORMAT) MERANT PLC
CHARGED
BALANCE AT CHARGED TO/ CREDITED
BEGINNING TO COSTS FROM OTHER BALANCE AT
OF PERIOD AND EXPENSES ACCOUNTS(*) WRITE OFFS END OF PERIOD
DESCRIPTION GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
- ----------- ---------- ------------ ------------ ---------- -------------
PROVISION FOR BAD AND DOUBTFUL DEBTS
Year ended January 31:
1998............................... 1,081 358 405 (381) 1,463
Fifteen months ended April 30:
1999............................... 1,463 2,839 1,087 (2,416) 2,973
Year ended April 30:
2000............................... 2,973 1,914 323 (2,182) 3,028
- ---------------
(*) Includes exchange rate adjustments
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
INTERSOLV, Inc.
In our opinion, the consolidated balance sheets and the related
consolidated statements of operations, cash flows and changes in stockholders'
equity present fairly, in all material respects, the financial position of
INTERSOLV, Inc. and its subsidiaries at April 30, 1998 and 1997, and the results
of their operations and their cash flows for each of the two years in the period
ended April 30, 1998 and the three month period ended April 30, 1998, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 13 to the INTERSOLV, Inc. financial statements,
INTERSOLV, Inc. signed an agreement to merge with Micro Focus Group, plc.
subsequent to year end.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
McLean, Virginia
June 17, 1998
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this Annual Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MERANT plc
By:
------------------------------------
Leo L. Millstein
Vice President, General Counsel
and Secretary
Date: October 31, 2000
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EXHIBIT INDEX**
EXHIBIT
NO. DESCRIPTION
------- -----------
13.01 The portions of the MERANT 2000 Annual Report Detail
incorporated in this Form 20-F by reference.
23.01 Consent of Ernst & Young LLP, Independent Auditors, dated
October 24, 2000.
23.02 Consent of Ernst & Young, Independent Auditors, dated
October 24, 2000.
23.03 Consent of PriceWaterhouseCoopers LLP, Independent
Accountants, dated October 31, 2000.
- ---------------
** Upon request, MERANT will provide you without charge with a copy of any
requested exhibits to this document. Please direct your requests to: Vicki
Weikert, Investor Relations, 9420 Key West Avenue, Rockville, Maryland 20850,
USA; Phone: (301) 838-5454; email: vicki.weikert@merant.com.
In addition, electronic copies of this document (including exhibits) are
available via the EDGAR searchable database located at www.sec.gov.
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