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
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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)
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