Thursday, October 17, 2002 4:24:33 PM
Mercury Interactive Reports Third Quarter Results
10/17/02 1:06 PM
Source: PR Newswire
Announces Revenue of $97.9 Million and Pro Forma EPS of $0.16
SUNNYVALE, Calif., Oct. 17 /PRNewswire-FirstCall/ -- Mercury Interactive Corporation (Nasdaq: MERQ), the leading provider of software and services that optimize business processes, today reported results for the third quarter ended September 30, 2002.
Revenue for the third quarter of 2002 was $97.9 million, an increase of 16 percent over the $84.0 million reported in the third quarter of 2001. Pro forma net income for the third quarter of 2002, which excludes amortization of goodwill and other intangible assets and amortization of unearned stock-based compensation, was $14.2 million. This represents an increase of 44 percent compared to pro forma net income of $9.8 million in the third quarter of 2001. Pro forma diluted earnings per share were $0.16, up 45 percent from $0.11 per share for the third quarter of 2001.
For the nine months ended September 30, 2002, revenue was $282.4 million, an increase of four percent over the $270.7 million for the same period in 2001. Pro forma net income in this period was $39.6 million, a decrease of six percent compared to $42.1 million for the same period in 2001. Pro forma diluted earnings per share were $0.45, down four percent from $0.47 per share for the same period in 2001.
For the third quarter of 2002, net income was $13.3 million or $0.15 per share on a diluted basis. This includes amortization of $0.9 million associated with the Freshwater Software acquisition. Net income for the nine months ended September 30, 2002 was $46.5 million or $0.52 diluted earnings per share.
Cash generated from operations for the third quarter of 2002 was $28.0 million compared to $7.7 million in the third quarter of 2001.
"Mercury Interactive's strong third quarter performance is a result of our ability to address customers' needs and the new IT reality," said Amnon Landan, chairman, CEO and president of Mercury Interactive Corporation. "Our Business Technology Optimization (BTO) solutions enable our customers to optimize the quality of their applications and infrastructure, eliminate technology waste and better align IT with the business."
Mercury Interactive will host a conference call today at 2:00 pm Pacific Time to discuss third quarter results. Information regarding the conference call and webcast is available at www.mercuryinteractive.com/company/ir.
About Mercury Interactive
Mercury Interactive, the global leader in business technology optimization (BTO), delivers Optane(TM), a suite of integrated products for enterprise testing, production tuning and performance management, that enables customers to optimize business processes and maximize business results. Customers worldwide -- including 75% of the Fortune 500 -- use Mercury Interactive solutions across their application and technology infrastructures to continuously measure, maximize and manage performance at every level of the business process and each stage of the application lifecycle to improve quality, reduce costs, and align IT with business goals.
Founded in 1989, Mercury Interactive is headquartered in Sunnyvale, California, with offices in more than 25 countries. Further information is available at www.mercuryinteractive.com or by phone at U.S. +1-408-822-5200. The company's common stock trades on the Nasdaq National Market under the symbol MERQ.
The statements concerning Mercury Interactive's future business prospects and product and service offerings contained in this press release are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Numerous important factors affect Mercury Interactive's operating results and could cause Mercury Interactive's actual results to differ materially from forecasts and estimates or from any other forward-looking statements made by, or on behalf of, Mercury Interactive. These factors include, but are not limited to, the following: 1) the effect of continued weak economic factors on the overall demand for software and services which could result in decreased revenues or lower revenue growth rates and increased uncertainty as to our expected revenues in future periods; 2) Mercury Interactive has historically received a substantial portion of its orders at the end of the quarter and if an order shortfall occurs at the end of a quarter it could negatively impact the company's operating results for that quarter; 3) the dependence of Mercury Interactive's financial growth on the continued success and acceptance of its existing and new software products and services and the ability to increase international sales; 4) intense competition for Mercury Interactive's products and services; and 5) the additional risks and important factors described in Mercury Interactive's SEC reports, including the Annual Report to Stockholders on Form 10-K for the fiscal year ended December 31, 2001 and other filings with the SEC. NOTE: Mercury Interactive is a registered trademark. Freshwater Software
is a registered trademark of our wholly owned subsidiary, Freshwater Software,
Inc. Product and company names are used herein for identification purposes
only, and may be trademarks of their respective companies.
MERCURY INTERACTIVE CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
Revenue:
License fees $44,055 $42,474 $133,639 $155,617
Subscription fees 14,062 8,726 37,678 22,883
Service fees 39,735 32,800 111,035 92,200
Total revenue 97,852 84,000 282,352 270,700
Cost and expenses:
Cost of revenue 15,485 13,148 43,491 40,891
Marketing and selling 50,478 45,171 147,097 142,003
Research and development 9,233 9,255 27,716 28,051
General and administrative 6,537 5,578 20,147 16,696
Total cost and expenses 81,733 73,152 238,451 227,641
Income from operations 16,119 10,848 43,901 43,059
Other income, net 1,582 1,418 5,559 9,597
Income before provision for
income taxes 17,701 12,266 49,460 52,656
Provision for income taxes 3,540 2,453 9,892 10,531
Net income $14,161 $9,813 $39,568 $42,125
Net income per share (basic) $0.17 $0.12 $0.47 $0.51
Net income per share (diluted) $0.16 $0.11 $0.45 $0.47
Weighted average common shares
(basic) 84,187 83,266 83,732 82,494
Weighted average common shares
and equivalents (diluted) 87,743 88,426 88,548 90,386
The above Pro Forma Condensed Consolidated Statements of Operations for
the three and nine months ended September 30, 2002 and 2001 have been
adjusted to present the Company's operating results excluding
non-operating items. Amortization of goodwill and other intangible assets
of $639 and $12,452, restructuring, integration and other related charges
of $-0- and $4,415, and amortization of unearned stock-based compensation
of $251 and $934 for the three months ended September 30, 2002 and 2001
have been excluded. Amortization of goodwill and other intangible assets
of $1,917 and $17,783, restructuring, integration and other related
charges of $(537) and $5,361, amortization of unearned stock-based
compensation of $918 and $1,489 and a gain on early retirement of debt of
$11,610 and $-0- for the nine months ended September 30, 2002 and 2001
have been excluded.
MERCURY INTERACTIVE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
10/17/02 1:06 PM
Source: PR Newswire
Announces Revenue of $97.9 Million and Pro Forma EPS of $0.16
SUNNYVALE, Calif., Oct. 17 /PRNewswire-FirstCall/ -- Mercury Interactive Corporation (Nasdaq: MERQ), the leading provider of software and services that optimize business processes, today reported results for the third quarter ended September 30, 2002.
Revenue for the third quarter of 2002 was $97.9 million, an increase of 16 percent over the $84.0 million reported in the third quarter of 2001. Pro forma net income for the third quarter of 2002, which excludes amortization of goodwill and other intangible assets and amortization of unearned stock-based compensation, was $14.2 million. This represents an increase of 44 percent compared to pro forma net income of $9.8 million in the third quarter of 2001. Pro forma diluted earnings per share were $0.16, up 45 percent from $0.11 per share for the third quarter of 2001.
For the nine months ended September 30, 2002, revenue was $282.4 million, an increase of four percent over the $270.7 million for the same period in 2001. Pro forma net income in this period was $39.6 million, a decrease of six percent compared to $42.1 million for the same period in 2001. Pro forma diluted earnings per share were $0.45, down four percent from $0.47 per share for the same period in 2001.
For the third quarter of 2002, net income was $13.3 million or $0.15 per share on a diluted basis. This includes amortization of $0.9 million associated with the Freshwater Software acquisition. Net income for the nine months ended September 30, 2002 was $46.5 million or $0.52 diluted earnings per share.
Cash generated from operations for the third quarter of 2002 was $28.0 million compared to $7.7 million in the third quarter of 2001.
"Mercury Interactive's strong third quarter performance is a result of our ability to address customers' needs and the new IT reality," said Amnon Landan, chairman, CEO and president of Mercury Interactive Corporation. "Our Business Technology Optimization (BTO) solutions enable our customers to optimize the quality of their applications and infrastructure, eliminate technology waste and better align IT with the business."
Mercury Interactive will host a conference call today at 2:00 pm Pacific Time to discuss third quarter results. Information regarding the conference call and webcast is available at www.mercuryinteractive.com/company/ir.
About Mercury Interactive
Mercury Interactive, the global leader in business technology optimization (BTO), delivers Optane(TM), a suite of integrated products for enterprise testing, production tuning and performance management, that enables customers to optimize business processes and maximize business results. Customers worldwide -- including 75% of the Fortune 500 -- use Mercury Interactive solutions across their application and technology infrastructures to continuously measure, maximize and manage performance at every level of the business process and each stage of the application lifecycle to improve quality, reduce costs, and align IT with business goals.
Founded in 1989, Mercury Interactive is headquartered in Sunnyvale, California, with offices in more than 25 countries. Further information is available at www.mercuryinteractive.com or by phone at U.S. +1-408-822-5200. The company's common stock trades on the Nasdaq National Market under the symbol MERQ.
The statements concerning Mercury Interactive's future business prospects and product and service offerings contained in this press release are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Numerous important factors affect Mercury Interactive's operating results and could cause Mercury Interactive's actual results to differ materially from forecasts and estimates or from any other forward-looking statements made by, or on behalf of, Mercury Interactive. These factors include, but are not limited to, the following: 1) the effect of continued weak economic factors on the overall demand for software and services which could result in decreased revenues or lower revenue growth rates and increased uncertainty as to our expected revenues in future periods; 2) Mercury Interactive has historically received a substantial portion of its orders at the end of the quarter and if an order shortfall occurs at the end of a quarter it could negatively impact the company's operating results for that quarter; 3) the dependence of Mercury Interactive's financial growth on the continued success and acceptance of its existing and new software products and services and the ability to increase international sales; 4) intense competition for Mercury Interactive's products and services; and 5) the additional risks and important factors described in Mercury Interactive's SEC reports, including the Annual Report to Stockholders on Form 10-K for the fiscal year ended December 31, 2001 and other filings with the SEC. NOTE: Mercury Interactive is a registered trademark. Freshwater Software
is a registered trademark of our wholly owned subsidiary, Freshwater Software,
Inc. Product and company names are used herein for identification purposes
only, and may be trademarks of their respective companies.
MERCURY INTERACTIVE CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
Revenue:
License fees $44,055 $42,474 $133,639 $155,617
Subscription fees 14,062 8,726 37,678 22,883
Service fees 39,735 32,800 111,035 92,200
Total revenue 97,852 84,000 282,352 270,700
Cost and expenses:
Cost of revenue 15,485 13,148 43,491 40,891
Marketing and selling 50,478 45,171 147,097 142,003
Research and development 9,233 9,255 27,716 28,051
General and administrative 6,537 5,578 20,147 16,696
Total cost and expenses 81,733 73,152 238,451 227,641
Income from operations 16,119 10,848 43,901 43,059
Other income, net 1,582 1,418 5,559 9,597
Income before provision for
income taxes 17,701 12,266 49,460 52,656
Provision for income taxes 3,540 2,453 9,892 10,531
Net income $14,161 $9,813 $39,568 $42,125
Net income per share (basic) $0.17 $0.12 $0.47 $0.51
Net income per share (diluted) $0.16 $0.11 $0.45 $0.47
Weighted average common shares
(basic) 84,187 83,266 83,732 82,494
Weighted average common shares
and equivalents (diluted) 87,743 88,426 88,548 90,386
The above Pro Forma Condensed Consolidated Statements of Operations for
the three and nine months ended September 30, 2002 and 2001 have been
adjusted to present the Company's operating results excluding
non-operating items. Amortization of goodwill and other intangible assets
of $639 and $12,452, restructuring, integration and other related charges
of $-0- and $4,415, and amortization of unearned stock-based compensation
of $251 and $934 for the three months ended September 30, 2002 and 2001
have been excluded. Amortization of goodwill and other intangible assets
of $1,917 and $17,783, restructuring, integration and other related
charges of $(537) and $5,361, amortization of unearned stock-based
compensation of $918 and $1,489 and a gain on early retirement of debt of
$11,610 and $-0- for the nine months ended September 30, 2002 and 2001
have been excluded.
MERCURY INTERACTIVE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
Revenue:
License fees $44,055 $42,474 $133,639 $155,617
Subscription fees 14,062 8,726 37,678 22,883
Service fees 39,735 32,800 111,035 92,200
Total revenue 97,852 84,000 282,352 270,700
Cost and expenses:
Cost of revenue 15,485 13,148 43,491 40,891
Marketing and selling 50,478 45,171 147,097 142,003
Research and development 9,233 9,255 27,716 28,051
General and administrative 6,537 5,578 20,147 16,696
Amortization of unearned
stock-based compensation 251 934 918 1,489
Restructuring, integration and
other related charges -- 4,415 (537) 5,361
Amortization of goodwill and
intangible assets 639 12,452 1,917 17,783
Total cost and expenses 82,623 90,953 240,749 252,274
Income (loss) from operations 15,229 (6,953) 41,603 18,426
Other income, net 1,582 1,418 17,169 9,597
Income (loss) before provision
for income taxes 16,811 (5,535) 58,772 28,023
Provision for income taxes 3,540 1,570 12,321 9,648
Net income (loss) $13,271 $(7,105) $46,451 $18,375
Net income (loss) per share
(basic) $0.16 $(0.09) $0.55 $0.22
Net income (loss) per share
(diluted) $0.15 $(0.09) $0.52 $0.20
Weighted average common
shares (basic) 84,187 83,266 83,732 82,494
Weighted average common shares
and equivalents (diluted) 87,743 83,266 88,548 90,386
Pro forma net income and net income per diluted share before
non-operating items for the three months ended September 30, 2002 and
2001 were $14,161 and $0.16 compared to $9,813 and $0.11; for the
nine months ended September 30, 2002 and 2001 pro forma net income and
net income per diluted share before non-operating items were $39,568 and
$0.45 compared to $42,125 and $0.47, respectively.For further detail see
attached Pro Forma Condensed Consolidated Statements of Operations.
MERCURY INTERACTIVE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
September 30, December 31,
2002 2001
ASSETS
Current assets:
Cash and cash equivalents $343,324 $248,297
Short-term investments 141,526 179,484
Trade accounts receivable, net 64,096 66,529
Prepaid expenses and other assets 35,973 30,945
Total current assets 584,919 525,255
Long-term investments 137,244 161,091
Property and equipment, net 89,509 93,375
Goodwill and other intangible assets, net 116,334 117,843
Interest rate swap 15,991 --
Restricted cash 6,000 --
Other assets, net 29,169 30,061
Total assets $979,166 $927,625
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $12,756 $12,420
Accrued liabilities 58,351 58,131
Income taxes payable 42,837 32,630
Deferred revenue 126,664 92,619
Total current liabilities 240,608 195,800
Convertible subordinated notes 315,605 377,480
Total liabilities 556,213 573,280
Stockholders' equity:
Common stock 169 166
Capital in excess of par value 250,872 232,750
Treasury stock (16,082) (16,082)
Notes receivable from issuance of stock (11,060) (11,164)
Unearned stock-based compensation (1,580) (4,795)
Accumulated other comprehensive loss (1,552) (2,265)
Retained earnings 202,186 155,735
Total stockholders' equity 422,953 354,345
Total liabilities and stockholders'
equity $979,166 $927,625
MERCURY INTERACTIVE CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
Cash flows from operating
activities:
Net income (loss) $13,271 $(7,105) $46,451 $18,375
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities:
Depreciation and amortization 3,930 3,701 11,606 9,904
Sales reserve 1,723 309 2,017 2,456
Unrealized gain on interest
rate swap (386) -- (386) --
Amortization of goodwill and
other intangible assets 639 12,452 1,917 17,783
Amortization of unearned
stock-based compensation 251 934 918 1,489
Gains on early retirement
of debt -- -- (11,610) --
Loss on non-consolidated
companies -- -- 411 --
Non-cash restructuring charge -- 230 -- 230
Changes in assets and
liabilities:
Trade accounts receivable (6,095) 2,432 1,402 886
Prepaid expenses and
other assets 3,166 615 (4,539) 969
Accounts payable (247) (2,065) 207 (3,284)
Accrued liabilities (5,428) (6,906) (1,204) (10,242)
Income taxes payable 3,213 914 10,846 7,481
Deferred revenue 13,917 2,154 32,906 7,662
Net cash provided by
operating activities 27,954 7,665 90,942 53,709
Cash flows from investing
activities:
Cash paid in conjunction with
Freshwater acquisition, net -- -- -- (143,961)
Maturity of investments 189,339 165,686 305,868 811,400
Purchases of investments (30,049) (131,518) (244,063) (733,023)
Purchases of investments
in non-consolidated
companies (744) (5,808) (2,244) (18,944)
Acquisition of property and
equipment, net (2,682) (6,929) (6,461) (19,289)
Net cash provided by
(used in) investing
activities 155,864 21,431 53,100 (103,817)
Cash flows from financing
activities:
Issuance of common stock,
net of related notes
receivable 5,404 4,800 20,524 23,498
Purchases of treasury stock -- (16,082) -- (16,082)
Increase in restricted cash -- -- (6,000) --
Retirement of convertible
subordinated notes -- -- (64,640) --
Net cash provided by
(used in) financing
activities 5,404 (11,282) (50,116) 7,416
Effect of exchange rate
changes on cash 658 (872) 1,101 (453)
Net increase (decrease) in
cash and cash equivalents 189,880 16,942 95,027 (43,145)
Cash and cash equivalents at
beginning of period 153,444 166,300 248,297 226,387
Cash and cash equivalents at
end of period $343,324 $183,242 $343,324 $183,242
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SOURCE Mercury Interactive Corporation
Copyright 2000, PR Newswire
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