0000928385-01-502232.txt : 20011106 0000928385-01-502232.hdr.sgml : 20011106 ACCESSION NUMBER: 0000928385-01-502232 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20011030 ITEM INFORMATION: Other events FILED AS OF DATE: 20011101 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICROSTRATEGY INC CENTRAL INDEX KEY: 0001050446 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 510323571 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24435 FILM NUMBER: 1772551 BUSINESS ADDRESS: STREET 1: 1861 INTERNATIONAL DR CITY: MCLEAN STATE: VA ZIP: 22102 BUSINESS PHONE: 7038488600 MAIL ADDRESS: STREET 1: 1861 INTERNATIONAL DR CITY: MCLEAN STATE: VA ZIP: 22102 8-K 1 d8k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): October 30, 2001 ----------------- MICROSTRATEGY INCORPORATED -------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 0-24435 51-0323571 ------------------------------ ------------- ------------------ (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 1861 International Drive, McLean, Virginia 22102 ------------------------------------------- -------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (703) 848-8600 --------------------------------------------------------------------- ------------------------------------------------------------- (Former Name or Former Address, if Changed since Last Report) Item 5. Other Events. On October 30, 2001, the Registrant issued a press release announcing its financial results for the quarter ended September 30, 2001, and providing additional outlook and financial guidance information. A copy of this press release has been filed with this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference. EXHIBIT DESCRIPTION 99.1 Press Release regarding the Registrant's third quarter financial results, dated as of October 30, 2001. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MicroStrategy Incorporated (Registrant) By: /s/ Eric F. Brown -------------------------------- Name: Eric F. Brown Title: President and Chief Financial Officer Date: October 31, 2001 EX-99.1 3 dex991.txt EXHBIIT 99.1 Exhibit 99.1 FOR IMMEDIATE RELEASE Contact: Marc Brailov MicroStrategy Incorporated (703) 770-1670 mbrailov@microstrategy.com -------------------------- MicroStrategy Announces Third Quarter 2001 Results Earnings Results Exceed Expectations - Company On Track to Achieve Core-Business Profitability in Q4 2001 MCLEAN, Va., October 30, 2001 - MicroStrategy(R) Incorporated (NASDAQ: MSTR), a leading worldwide provider of business intelligence software, today announced its financial results for the three-month period ending September 30, 2001, (the third quarter of its 2001 fiscal year) meeting its own previously announced expectations for revenue and exceeding pro forma earnings per share expectations. Sequentially, the third quarter of 2001 compares favorably to the second quarter of 2001, with pro forma net operating results improving by 42%. Both the consolidated business and the core business were EBITDA positive in the third quarter of 2001. The company reported revenues for the third quarter of 2001 of $44.2 million compared to $49.2 million in the second quarter of 2001. MicroStrategy reported a pro forma net operating loss, which excludes certain items, for the third quarter of $5.7 million, which is $0.06 per share, an 81% improvement from the third quarter of 2000. Consolidated earnings for the third quarter of 2001 (GAAP) was $36.1 million compared to a loss of $170.4 million in the third quarter of 2000. A reconciliation of GAAP to pro forma earnings is included in the attached financial statements. "With the third quarter financial results exceeding consensus expectations, MicroStrategy remains on track to achieve core-business pro forma profitability in Q4 2001," said Eric Brown, MicroStrategy President and CFO. Our balance sheet remains strong with $43 million in cash and our core business produced positive operating cash flow this quarter. We increased gross margins to 71% and have now reduced annualized operational expenses by more than $185 million since the middle of last year." "We have successfully implemented a comprehensive plan to substantially increase cost-efficiency and productivity - to do more with less," said Michael J. Saylor, Chairman and CEO. He continued: "Our customer base continues to expand at a healthy rate and we maintained a 50:50 balance in new versus existing customer revenue for the quarter. Our technology continues to set industry standards and our latest 7.1 release won the PC Magazine, Editors' Choice award as the best business intelligence software. In the face of severe macroeconomic turbulence, we have configured our business to not only help us reach profitability on schedule, but also put us in the right position to build on our market and technological leadership in the years ahead." Highlights for the third quarter 2001 include: Added 102 New Customers New customers include: American Healthways, Brasil Telecom, Cardinal Health, Delphi, Federal Highway Administration, IMS Health, Centers for Medicare & Medicaid Services, Merck & Co., Monsanto, Pfizer Inc., PPL Corporation, Sainsbury, Thomas Cook, and Tricon Global Restaurants. New deals with existing customers include: Clorox, Dupont, Edwards Life Sciences, Estee Lauder, First USA, Franklin Templeton Companies, Hallmark, Pharmacia & Upjohn, SuperValu, VeriSign, Inc., Verizon, Raley's, and VHA. Signed Agreements with 20 OEMs (Original Equipment Manufacturers) & Systems Integrators New partners include: Ascential Software, Dynamic Information Systems Corporation (DISC), Hycube, Infinis, Inc., Intellectual Capital, Inc., Magma Solutions, MG Solutions, Miriade, nSpin LLC, Quantisense, Systech Solutions, Inc., Teevra Technologies, Inc, and Vector Research, Inc. Won Major Technology Award In August, PC Magazine, a Ziff Davis Media publication, selected MicroStrategy 7.1 as its "Editors' Choice" for business intelligence software in a review of business intelligence software. MicroStrategy 7, the Scalable Business Intelligence Platform Built for the Internet(TM), outperformed its competition and was given the highest rating of four stars in this report, which included Cognos(R) Business Intelligence Platform, Brio(R) Enterprise 6.2.2, and Crystal(R) Enterprise 8.0, each of which received a 3-star rating. Introduced Enterprise Manager MicroStrategy introduced Enterprise Manager, allowing organizations to monitor and run detailed reports about their business intelligence deployments. Companies benefit from the ease Enterprise Manager brings to monitoring, analyzing, and optimizing business intelligence applications, particularly when deploying to growing user communities. Using Enterprise Manager, administrators can determine ways to improve the performance of their reporting applications. This information enables them to appropriately allocate system resources, assess performance improvements over time, and determine the impact of their data warehouse investment on their organization. Outlook and Financial Guidance Information ------------------------------------------ The following statements are subject to risks and uncertainties described at the end of this press release. Management offers the following guidance for the consolidated operations of MicroStrategy, including its Strategy.com segment, for the quarter ending December 31, 2001, which supersedes any previously announced guidance as to the Company's expectations for the operations of the core MicroStrategy business for 2001: Revenue is expected to be in the range of approximately $40 to $44 million. Pro forma results of operations, excluding special charges, are expected to range from approximately a loss of $4 million to breakeven. Pro forma earnings per share, excluding special charges, are expected to range from a loss of approximately $0.04 per share to $0.00 per share. Average share count in the quarter using the basic shares method is expected to be approximately 93-94 million. Management offers the following guidance for the operations of the core MicroStrategy business, excluding the Strategy.com segment, for the quarter ending December 31, 2001, which supersedes any previously announced guidance as to the Company's expectations for the operations of the core MicroStrategy business for 2001: Revenue is expected to be in the range of approximately $38 to $42 million. Pro forma results of operations and pro forma earnings per share, excluding special charges, are expected to be above breakeven. Management offers the following guidance for the full year 2002, which supersedes any previously announced guidance as to the Company's expectations for financial results for 2002: Consolidated revenue is expected to be in the range of approximately $160 to $175 million. Consolidated pro forma earnings per share, excluding special charges, are expected to be at approximately breakeven. The Company expects that the pro forma results of operations of the core MicroStrategy business, excluding the Strategy.com segment, will be profitable for the full year 2002. The Company also expects that by the middle of 2002, its Strategy.com segment will contribute, on a quarterly basis, a pro forma loss of no more than $0.02 per share to the consolidated earnings per share results. The Company expects to be operating cash flow positive in the second half of 2002. The attached summary of financial highlights compares the 2001 third quarter results to the same period last year. MicroStrategy will hold a conference call chaired by Michael Saylor today at 5:30 p.m. (EST). Domestically, dial 877-597-9704 and mention Michael Saylor as the chairperson prior to 5:30 p.m. EST, or for 48-hour playback access, dial 800-642-1687 with the access code 2042136. Internationally, dial 706-634-6550 and mention Michael Saylor as the chairperson prior to 5:30 p.m. EST, or for 48- hour playback, dial 706-645-9291 with the access code 2042136. For a live Webcast or replay of the call, visit -- http://www.microstrategy.com/investor or http://www.streetevents.com for StreetEvents subscribers. About MicroStrategy Incorporated Leadership in a Critical Market: Founded in 1989, MicroStrategy is a worldwide leader in the increasingly critical business intelligence software market. Large and small companies alike are harnessing MicroStrategy's business intelligence software to gain vital insights from their data to help them proactively enhance cost-efficiency, productivity and customer relations and optimize revenue-generating strategies. MicroStrategy's business intelligence platform offers exceptional capabilities that provide organizations -- in virtually all facets of their operations -- with user-friendly solutions to their data query, reporting, and advanced analytical needs, and distributes valuable insight on this data to users via Web, wireless, and voice. PC Magazine recently selected MicroStrategy 7(TM) as the 2001 "Editors' Choice" for business intelligence software. Built for the Internet: MicroStrategy 7(TM) is the Scalable Business Intelligence Platform Built for the Internet(TM). Its pure-Web architecture provides Web reporting, security, performance and standards that are critical for Web deployment. Within intranets, MicroStrategy's products provide employees with information to enable them to make better, more cost-effective business decisions. In extranets, enterprises can use MicroStrategy 7 to build stronger relationships by linking customers and suppliers via the Internet. Diverse Customer Base: MicroStrategy's customer base cuts across industry and sector lines, with approximately 1,400 enterprise-class customers, including Lowe's Home Improvement Warehouse, AT&T Wireless Group, Wachovia and GlaxoSmithKline. MicroStrategy also has relationships with over 400 systems integrators and application development and platform partners, including IBM, PeopleSoft, Compaq, Informatica and JD Edwards. MicroStrategy is listed on Nasdaq under the symbol MSTR. For more information on the company, or to purchase or demo MicroStrategy's software, please visit MicroStrategy's Web site at http://www.microstrategy.com MicroStrategy, MicroStrategy 7, and Scalable Business Intelligence Platform Built for the Internet are either trademarks or registered trademarks of MicroStrategy Incorporated in the United States and certain other countries. Other product and company names mentioned herein may be the trademarks of their respective owners. This press release may include statements that may constitute "forward-looking statements," including its estimates of future business prospects or financial results and statements containing the words "believe," "estimate," "project," "expect" or similar expressions. Forward-looking statements inherently involve risks and uncertainties that could cause actual results of MicroStrategy Incorporated and its subsidiaries (collectively, the "Company") to differ materially from the forward-looking statements. Factors that could contribute to such differences include: the possibility that the conditions to the securities class action and shareholder derivative settlement agreements will not be satisfied; the Company's ability to secure financing for its current operations and long-term plans on acceptable terms; the ability of the Company to implement and achieve widespread customer acceptance of its MicroStrategy 7 software on a timely basis; the Company's ability to recognize deferred revenue through delivery of products or satisfactory performance of services; continued acceptance of the Company's products in the marketplace; the timing of significant orders; delays in the Company's ability to develop or ship new products; market acceptance of new products; competitive factors; general economic conditions; currency fluctuations and other risks detailed in the Company's registration statements and periodic reports filed with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release. ### MICROSTRATEGY INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ----------------------------- ------------------------ 2001 2000 2001 2000 ----------------------------- ------------------------ Revenues Product licenses $ 16,559 $ 28,124 $ 57,335 $ 75,964 Product support and other services 27,639 36,731 87,456 89,850 ---------- --------- ---------- ---------- Total revenues 44,198 64,855 144,791 165,814 ---------- --------- ---------- ---------- Cost of Revenues Product licenses 1,145 120 3,443 1,117 Product support and other services 11,736 26,153 44,493 63,690 ---------- --------- ---------- ---------- Total cost of revenues 12,881 26,273 47,936 64,807 ---------- --------- ---------- ---------- Gross profit 31,317 38,582 96,855 101,007 ---------- --------- ---------- ---------- Operating Expenses Sales and marketing 16,001 36,419 65,539 116,274 Research and development 8,814 16,031 32,539 48,044 General and administrative 9,252 17,108 34,339 46,611 Restructuring and impairment charges 2,907 10,835 46,010 10,835 Amortization of goodwill and intangible assets 4,248 4,798 12,746 12,946 ---------- --------- ---------- ---------- Total operating expenses 41,222 85,191 191,173 234,710 ---------- --------- ---------- ---------- Loss from operations (9,905) (46,609) (94,318) (133,703) Financing & Other Income (Expense) Net interest (989) 1,360 (546) 2,251 Loss on investments (923) (8,985) (2,253) (7,629) Reduction in (provision for) estimated cost of litigation settlement 7,046 (113,700) 41,652 (113,700) Minority interest (779) - (3,108) - Other income, net 554 56 45 161 ---------- --------- ---------- ---------- Total financing & other income (expense) 4,909 (121,269) 35,790 (118,917) ---------- --------- ---------- ---------- Loss before income taxes (4,996) (167,878) (58,528) (252,620) Provision for income taxes 1,003 350 1,340 600 ---------- --------- ---------- ---------- Net loss (5,999) (168,228) (59,868) (253,220) Dividends on and accretion of Series A, B, C, D and E convertible preferred stock (2,789) (2,188) (7,311) (2,500) Net gain on refinancing of Series A redeemable convertible preferred stock - - 29,370 - Gain on early redemption of mandatorily redeemable convertible preferred stock of consolidated subsidiary 44,923 - 44,923 - Preferred stock beneficial conversion feature - - - (19,375) ---------- --------- ---------- ---------- Net income (loss) attributable to common stockholders $ 36,135 $(170,416) $ 7,114 $ (275,095) ========== ========= ========== ========== Earnings (loss) per share, excluding dilutive participating convertible securities $ 0.40 $ (2.13) $ 0.08 $ (3.46) ========== ========= ========== ========== Weighted average shares outstanding, excluding dilutive participating convertible securities 89,452 79,975 84,693 79,546 ========== ========= ========== ========== Supplemental Data Pro Forma Net Operating Loss $ (5,665) $ (29,910) $ (39,225) $ (108,110) Pro Forma Net Operating Loss per share $ (0.06) $ (0.37) $ (0.46) $ (1.36)
Supplemental Pro Forma Net Operating Loss data excludes charges for restructuring and impairment charges, amortization of goodwill and intangible assets, loss on investments, reduction in (provision for) estimated cost of litigation settlement, minority interest, dividends on and accretion of Series A, B, C, D and E convertible preferred stock, net gain on refinancing of Series A redeemable convertible preferred stock, gain on early redemption of mandatorily redeemable convertible preferred stock of consolidated subsidiary, preferred stock beneficial conversion feature, and other non-recurring items. MICROSTRATEGY INCORPORATED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)
September 30, December 31, 2001 2000 (unaudited) (audited) ----------- --------- Assets Current assets Cash and cash equivalents $ 42,166 $ 67,685 Restricted cash 603 25,884 Short-term investments 361 1,085 Accounts receivable, net 24,043 49,061 Prepaid expenses and other current assets 7,548 11,158 --------- --------- Total current assets 74,721 154,873 Property and equipment, net 28,860 61,409 Long-term investments 250 5,271 Goodwill and intangible assets, net of accumulated amortization of $30,916 and $18,170 respectively 21,542 34,300 Deposits and other assets 3,268 3,234 --------- --------- Total Assets $ 128,641 $ 259,087 ========= ========= Liabilities and Stockholders' Equity (Deficit) Current liabilities Accounts payable and accrued expenses $ 30,804 $ 35,025 Accrued restructuring costs 11,134 - Accrued compensation and employee benefits 13,662 26,929 Deferred revenue and advance payments 42,032 50,303 Working capital line of credit 1,097 - --------- --------- Total current liabilities 98,729 112,257 Deferred revenue and advance payments 16,351 31,260 Accrued litigation settlement 57,082 99,484 Other long-term liabilities 3,560 1,509 Accrued restructuring costs 3,338 - --------- --------- Total Liabilities 179,060 244,510 --------- --------- Series A redeemable convertible preferred stock 6,322 119,585 Series B redeemable convertible preferred stock 32,263 - Series C redeemable convertible preferred stock 25,745 - Series D redeemable convertible preferred stock 4,332 - Mandatorily redeemable convertible preferred stock of consolidated subsidiary - 40,530 Stockholders' equity (deficit): Preferred stock undesignated; $.001 par value; 4,973 shares authorized; no shares issued or outstanding - - Class A common stock; $.001 par value; 330,000 shares authorized; 42,672 and 28,736 shares issued and outstanding, respectively 43 29 Class B common stock; $.001 par value; 165,000 shares authorized; 49,421 and 52,033 shares issued and outstanding, respectively 49 52 Additional paid-in capital 239,892 152,821 Deferred compensation (121) (624) Accumulated other comprehensive income 183 1,443 Accumulated deficit (359,127) (299,259) --------- --------- Total Stockholders' Equity (Deficit) (119,081) (145,538) Total Liabilities and Stockholders' Equity (Deficit) $ 128,641 $ 259,087 ========= =========
MICROSTRATEGY INCORPORATED Reconciliation of net income (loss) attributable to common stockholders to Pro forma net operating loss (in thousands, except per share data) (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, -------------------- ---------------------- 2001 2000 2001 2000 -------------------- ---------------------- Net income (loss) attributable to common stockholders $ 36,135 $(170,416) $ 7,114 $ (275,095) Restructuring and impairment charges 2,907 10,835 46,010 10,835 Amortization of goodwill and intangible assets 4,248 4,798 12,746 12,946 Loss on investments 923 8,985 2,253 7,629 Reduction in (provision for) estimated cost of litigation settlement (7,046) 113,700 (41,652) 113,700 Minority interest 779 - 3,108 - Dividends on and accretion of Series A, B, C, D and E convertible preferred stock 2,789 2,188 7,311 2,500 Net gain on refinancing of Series A redeemable convertible preferred stock - - (29,370) - Gain on early redemption of mandatorily redeemable convertible preferred stock of consolidated subsidiary (44,923) - (44,923) - Preferred stock beneficial conversion feature - - - 19,375 Other non-recurring items (1,477) - (1,822) - Pro forma net operating loss $ (5,665) $ (29,910) $(39,225) $ (108,110) ======== ========= ======== ==========
MICROSTRATEGY INCORPORATED CONSOLIDATING STATEMENT OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Ended September 30, 2001 ------------------------------------------------------------- Core Non-Core Eliminations Consolidated -------- --------- ------------ ------------- Revenues Product licenses $ 15,160 $ 1,399 $ - $ 16,559 Product support and other services 25,912 1,727 - 27,639 -------- ------- ------- -------- Total revenues 41,072 3,126 - 44,198 Cost of Revenues Product licenses 1,136 9 - 1,145 Product support and other services 9,203 2,533 - 11,736 -------- ------- ------- -------- Total cost of revenues 10,339 2,542 - 12,881 -------- ------- ------- -------- Gross profit 30,733 584 - 31,317 -------- ------- ------- -------- Operating Expenses Sales and marketing 15,497 504 - 16,001 Research and development 7,539 1,275 - 8,814 General and administrative 8,872 380 - 9,252 Restructuring and impairment charges 2,972 (65) - 2,907 Amortization of goodwill and intangible assets 4,248 - - 4,248 -------- ------- ------- -------- Total operating expenses 39,128 2,094 - 41,222 -------- ------- ------- -------- Loss from operations (8,395) (1,510) - (9,905) Financing & Other Income (Expense) Net interest (1,189) 200 - (989) Loss on investments (923) - - (923) Reduction in (provision for) estimated cost of litigation settlement 7,046 - 7,046 Minority interest - - (779) (779) Other (expense) income, net (923) 1,477 - 554 -------- ------- ------- -------- Total financing & other income (expense) 4,011 1,677 (779) 4,909 -------- ------- ------- -------- (Loss) income before income taxes (4,384) 167 (779) (4,996) Provision for income taxes 1,003 - - 1,003 -------- ------- ------- -------- Net (loss) income (5,387) 167 (779) (5,999) Dividends on and accretion of Series A, B, C, D and E convertible preferred stock (2,789) (779) 779 (2,789) Net gain on refinancing of Series A redeemable convertible preferred stock - - - - Gain on early redemption of mandatorily redeemable convertible preferred stock of consolidated subsidiary 44,923 - - 44,923 Preferred stock beneficial conversion feature - - - - -------- ------- ------- -------- Net income (loss) attributable to common stockholders $ 36,747 $ (612) $ - $ 36,135 ======== ======= ======= ======== Earnings per share, excluding dilutive participating convertible securities $ 0.40 ======== Weighted average shares outstanding, excluding dilutive participating convertible securities 89,452 ======== Supplemental Data Pro Forma Net Operating Loss $ (4,290) $(1,375) $ - $ (5,665) Pro Forma Net Operating Loss per share $ (0.06)
Supplemental Pro Forma Net Operating Loss data excludes charges for restructuring and impairment charges, amortization of goodwill and intangible assets, loss on investments, provision for litigation settlement, minority interest, dividends on and accretion of Series A, B, C, D and E convertible preferred stock, net gain on refinancing of Series A redeemable convertible preferred stock, gain on early redemption of mandatorily redeemable convertible preferred stock of consolidated subsidiary, preferred stock beneficial conversion feature, and other non-recurring items. The Non-Core segment includes Strategy.com and other non-core R&D activities. MICROSTRATEGY INCORPORATED Reconciliation of Net income (loss) attributable to common stockholders to Pro forma net loss (in thousands, except per share data) (unaudited)
Three Months Ended September 30, 2001 ------------------------------------------------------ Core Non-Core Eliminations Consolidated ---------- ----------- ------------ ------------ Net income (loss) attributable to common stockholders $ 36,747 $ (612) $ - $ 36,135 Restructuring and impairment charges 2,972 (65) - 2,907 Amortization of goodwill and intangible assets 4,248 - - 4,248 Loss on investments 923 - - 923 Reduction in (provision for) estimated cost of litigation settlement (7,046) - - (7,046) Minority interest - - 779 779 Dividends on and accretion of Series A, B, C, D and E convertible preferred stock 2,789 779 (779) 2,789 Net gain on refinancing of Series A redeemable convertible preferred stock - - - - Gain on early redemption of mandatorily redeemable convertible preferred stock of consolidated subsidiary (44,923) - - (44,923) Preferred stock beneficial conversion feature - - - - Other non-recurring items - (1,477) - (1,477) -------- -------- ------- -------- Pro forma net operating loss $ (4,290) $ (1,375) $ - $ (5,665) ======== ======== ======= ========
MICROSTRATEGY INCORPORATED CONSOLIDATING STATEMENT OF OPERATIONS (in thousands, except per share data) (unaudited)
Nine Months Ended September 30, 2001 ----------------------------------------------------------------- Core Non-Core Eliminations Consolidated ---------- ---------- ------------ ------------ Revenues Product licenses $ 54,074 $ 3,261 $ $ 57,335 Product support and other services 83,107 4,349 - 87,456 -------- --------- --------- --------- Total revenues 137,181 7,610 - 144,791 -------- --------- --------- --------- Cost of Revenues - Product licenses 2,997 446 3,443 Product support and other services 34,623 9,870 - 44,493 -------- --------- --------- --------- Total cost of revenues 37,620 10,316 - 47,936 -------- --------- --------- --------- Gross profit (loss) 99,561 (2,706) - 96,855 -------- --------- --------- --------- Operating Expenses Sales and marketing 62,272 3,267 - 65,539 Research and development 24,438 8,101 - 32,539 General and administrative 31,259 3,080 - 34,339 Restructuring costs and other special charges 26,160 19,850 - 46,010 Amortization of goodwill and intangible assets 12,746 - - 12,746 -------- --------- --------- --------- Total operating expenses 156,875 34,298 - 191,173 -------- --------- --------- --------- Loss from operations (57,314) (37,004) - (94,318) Financing & Other Income (Expense) Net interest (1,652) 1,106 - (546) Loss on investments (2,253) - - (2,253) Reduction in (provision for) estimated cost of litigation settlement 41,652 - - 41,652 Minority interest - - (3,108) (3,108) Other (expense) income, net (1,432) 1,477 - 45 -------- --------- --------- --------- Total financing & other income (expense) 36,315 2,583 (3,108) 35,790 -------- --------- --------- --------- Loss before income taxes (20,999) (34,421) 3,108 (58,528) Provision for income taxes 1,340 - - 1,340 -------- --------- --------- --------- Net loss (22,339) (34,421) (3,108) (59,868) Dividends on and accretion of Series A, B, C, D and E convertible preferred stock (7,311) (3,108) 3,108 (7,311) Net gain on refinancing of Series A redeemable convertible preferred stock 29,370 - - 29,370 Gain on early redemption of mandatorily redeemable convertible preferred stock of consolidated subsidiary 44,923 - - 44,923 Preferred stock beneficial conversion feature - - - - -------- --------- --------- --------- Net income (loss) attributable to common stockholders $ 44,643 $ (37,529) $ - $ 7,114 ======== ========= ========= ========= Earnings per share, excluding dilutive participating convertible securities $ 0.08 ========= Weighted average shares outstanding, excluding dilutive participating convertible securities 84,693 ========= Supplemental Data Pro Forma Net Operating Loss $(23,177) $ (16,048) $ - $ (39,225) Pro Forma Net Operating Loss per share $ (0.46)
Supplemental Pro Forma Net Operating Loss data excludes charges for restructuring and impairment charges, amortization of goodwill and intangible assets, loss on investments, provision for litigation settlement, minority interest, dividends on and accretion of Series A, B, C, D and E convertible preferred stock, net gain on refinancing of Series A redeemable convertible preferred stock, gain on early redemption of mandatorily redeemable convertible preferred stock of consolidated subsidiary, preferred stock beneficial conversion feature, and other non-recurring items. The Non-Core segment includes Strategy.com and other non-core R&D activities. MICROSTRATEGY INCORPORATED Reconciliation of Net income (loss) attributable to common stockholders to Pro forma net operating loss (in thousands, except per share data) (unaudited)
Nine Months Ended September 30, 2001 ------------------------------------------------------- Core Non-Core Eliminations Consolidated ---- -------- ------------ ------------ Net income (loss) attributable to common stockholders $ 44,643 $ (37,529) $ - $ 7,114 Restructuring costs and other special charges 26,160 19,850 - 46,010 Amortization of goodwill and intangible assets 12,746 - - 12,746 Loss on investments 2,253 - - 2,253 Reduction in (provision for) estimated cost of litigation settlement (41,652) - - (41,652) Minority interest - - 3,108 3,108 Dividends on and accretion of Series A, B, C, D and E convertible preferred stock 7,311 3,108 (3,108) 7,311 Net gain on refinancing of Series A redeemable convertible preferred stock (29,370) - - (29,370) Gain on early redemption of manditorily redeemable convertible preferred stock of consolidated subsidiary (44,923) - - (44,923) Preferred stock beneficial conversion feature - - - - Other non-recurring items (345) (1,477) - (1,822) --------- --------- -------- -------- Pro forma net operating loss $ (23,177) $ (16,048) $ - $(39,225) ========= ========= ======== ========