-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NhQ+bmFUCDT4xvK8COGUOtCZn2M6yKZ7MlhWcwF5Ht9yybP9zFFx+Ksaw4L008hJ RNwb+GvYrUFnmR4/2fB/7Q== 0001093114-00-000004.txt : 20000202 0001093114-00-000004.hdr.sgml : 20000202 ACCESSION NUMBER: 0001093114-00-000004 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000120 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEGATO SYSTEMS INC CENTRAL INDEX KEY: 0000859360 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 943077394 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-26130 FILM NUMBER: 510594 BUSINESS ADDRESS: STREET 1: 3210 PORTER DR CITY: PALO ALTO STATE: CA ZIP: 94304 BUSINESS PHONE: 4158126000 MAIL ADDRESS: STREET 1: 3210 PORTER DRIVE CITY: PALO ALTO STATE: CA ZIP: 94304 8-K 1 FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 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): January 20, 2000 ------------------------------- LEGATO SYSTEMS, INC. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 0-26130 94-3077394 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 3210 Porter Drive, Palo Alto, California 94304 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Company's telephone number, including area code: (650) 812-6000 -------------------------------- - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report.) ITEM 5. OTHER EVENTS On January 19, 2000, Legato Systems, Inc. (the "Company") issued a press release reporting its financial results for the fourth quarter and the twelve months ended December 31, 1999. The Company also announced a restatement of the financial results for the third quarter ending September 30, 1999. The press release which includes further details regarding this announcement is attached hereto as an exhibit and is incorporated by reference herein. ITEM 7. EXHIBITS. Exhibit Number Description ------ ----------- 99.1 Press Release dated January 19, 2000. 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. LEGATO SYSTEMS, INC. Date: January 20, 2000 By: /s/ Stephen C. Wise -------------------------------- Name: Stephen C. Wise Title: Senior Vice President, Finance and Administration and Chief Financial Officer EXHIBIT INDEX Exhibit Number Description ------ ----------- 99.1 Press Release dated January 19, 2000. EX-99.1 2 PRESS RELEASE DATED JANUARY 19, 2000 EDITORIAL CONTACT: Trish Terry Public Relations Manager 925.875.8062 tterry@legato.com INVESTOR CONTACT: Stephen C. Wise Chief Financial Officer 650.812.6102 FOR IMMEDIATE RELEASE LEGATO ANNOUNCES FOURTH QUARTER AND FISCAL 1999 RESULTS PALO ALTO, CA, January 19, 2000-Legato Systems, Inc. (Nasdaq: LGTO), a worldwide leader in enterprise storage management, today announced financial results for its fourth quarter and fiscal year 1999. The Company also announced restated results for the third quarter of 1999. For the fourth quarter, the Company reported revenue of $71.2 million, representing an increase of 47% over last year's fourth quarter revenue of $48.5 million. Operating income rose 41% to $14.4 million. Net income, excluding merger-related costs, increased 39% to $9.9 million, from $7.1 million in the same period of 1998. Diluted earnings per share, excluding merger-related costs, increased 38% to $0.11 per share, compared to $0.08 earned per share in the fourth quarter of last year. For the fiscal year 1999, the Company reported revenue of $251.1 million, registering an increase of 55% over the same period last year of $161.8 million. Operating income rose 130% to $63.9 million. Net income for 1999, excluding merger-related costs, increased 112% to $43 million, from $20.2 million for the same period of 1998. Diluted earnings of $0.48 per share, excluding merger-related costs, grew 100% over the $0.24 earned during fiscal year 1998. The Company is restating results for the third quarter of 1999 to reflect an adjustment concerning one contract that decreased revenue in the third quarter from $71.7 million to $65.9 million. The Company believes that this revenue will be recorded in the first and second quarters of 2000. As a result of this adjustment, earnings per share in the third quarter is reduced from $0.18 to $0.14. "During the last few days, in connection with the audit of the Company's 1999 results, Legato was informed by its auditors that one contract recorded as revenue in the third quarter should be recorded as revenue in 2000," said Stephen C. Wise, Legato's chief financial officer. "In spite of solid revenue and earnings growth," commented Louis C. Cole, Legato's president and chief executive officer, "we are very disappointed that results for the fourth quarter fell short of expectations." The shortfall in fourth quarter revenue resulted primarily from the Company's determination, in consultation with its auditors during the last few days in connection with the 1999 audit, that revenue from two contracts signed during the fourth quarter should be recognized during 2000. "As we enter 2000, Legato has the energy and momentum typically associated with a start-up company, yet as a leading storage management software company, we're financially and technologically strong, and delivering measurable value to customers," Cole said. "Looking ahead to 2000, we believe that annual revenues will grow in the range of 50 percent year-over-year, and that growth will be stronger in the second half of the year," Cole concluded. This press release contains forward-looking statements about the Company's restatement of the third quarter and expected results for the fourth quarter and fiscal year 1999, future profitability and operating results, competition and continuing acceptance of the company's products, and the Company's future prospects for 2000. These forward-looking statements involve a number of risks and uncertainties that could cause the Company's actual results to differ materially. Factors that might cause such a difference include, but are not limited to, additional accounting adjustments in connection with the Company's 1999 audit, fluctuations in quarterly operating results, product concentration, competition, rapid technological change, management of an expanding company, and integration of acquired companies. For a more detailed discussion of these factors, interested parties should review the "Risk Factors" listed in the Company's Form 10-K for 1998 and Forms 10-Q for the first, second and third quarters of 1999, which are on file with the U.S. Securities and Exchange Commission. ABOUT LEGATO SYSTEMS Legato Systems, Inc. (NASDAQ: LGTO), is a worldwide leader in the enterprise storage management software market. Helping companies leverage business-critical, corporate data assets, Legato's products and services enable information continuance, a seamless approach to the movement, management and protection of data throughout an enterprise. Founded in 1989, Legato's storage management software products have become the recognized industry standard with the largest installed base representing over 65,000 customers. Legato's products are available through a network of Legato-licensed resellers, integrators and OEM partners. Legato's corporate headquarters is located at 3210 Porter Drive, Palo Alto, CA 94304. Telephone: 650.812.6000. # # # Legato Systems, Inc., Legato logo, and Legato NetWorker are registered trademarks, and NetWorker Archive, NetWorker HSM, ClientPak, SmartClient, SmartMedia, StorSuite, BusinesSuite, Power Edition, Legato GEMS, and OpenTape are trademarks of Legato Systems, Inc. in the U.S. and/or other countries. All other product, trademark, company, or service names mentioned herein are the property of their respective owners. The following condensed consolidated financial statements have been restated to reflect the Company's acquisition of the Qualix Group, Inc. dba FullTime Software, completed April 19, 1999, and accounted for as a pooling-of-interests.
LEGATO SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) Three Months Ended Twelve Months Ended December 31, December 31, --------------------------- ------------------------------- (unaudited) 1999 1998 1999 1998 ---- ---- ---- ---- REVENUE: Product $ 51,454 $ 36,168 $ 183,611 $ 122,983 Service & support 19,767 12,323 67,473 38,774 ------------ ------------- ------------- -------------- Total revenues 71,221 48,491 251,084 161,757 COST OF REVENUE: Product 1,540 1,564 5,589 5,304 Service & Support 7,894 4,228 25,870 15,097 ------------ ------------- ------------- -------------- Total cost of revenue 9,434 5,792 31,459 20,401 ------------ ------------- ------------- -------------- GROSS PROFIT 61,787 42,699 219,625 141,356 OPERATING EXPENSES: Research and development 12,643 7,215 40,057 25,645 Sales and marketing 28,414 20,644 94,731 72,017 General and administration 6,346 4,654 20,984 15,874 ------------ ------------- ------------- -------------- Total operating expenses 47,403 32,513 155,772 113,536 OPERATING INCOME 14,384 10,186 63,853 27,820 Interest income, net 1,571 1,330 5,448 4,799 ------------ ------------- ------------- -------------- OPERATING INCOME BEFORE PROVISION FOR INCOME TAXES 15,955 11,516 69,301 32,619 Provision for income taxes 6,063 4,376 26,334 12,395 ------------ ------------- ------------- -------------- NET INCOME - OPERATIONAL $ 9,892 $ 7,140 $ 42,967 $ 20,224 ============ ============= ============= ============== DILUTED EARNINGS PER SHARE - OPERATIONAL $ 0.11 $ 0.08 $ 0.48 $ 0.24 ============ ============= ============= ============== - ----------------------------------------------------------------------------------------------------------------------- Reconciliation of net income - operational to net income - as reported: Net income - operational $ 9,892 $ 7,140 $ 42,967 $ 20,224 Amortization of intangibles 9,623 280 21,785 1,118 Merger related expenses - - 16,438 645 Qualix direct revenue and costs - (314) (132) (1,758) Income taxes (2,783) 91 (10,162) 350 ------------ ------------- ------------ -------------- Net income - as reported $ 3,052 $ 7,083 $ 15,038 $ 19,869 ============ ============= ============= ============== Diluted earnings per share - as reported $ 0.03 $ 0.08 $ 0.17 $ 0.24 ============ ============= ============= ============== Shares used in the calculation of operational and as reported diluted earnings per share 92,783 84,163 89,351 83,074 ============ ============= ============= ==============
LEGATO SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) December 31, December 31, 1999 1998 ------------------- -------------------- ASSETS Current assets: Cash, cash equivalents and investments $ 169,929 $ 125,972 Accounts receivables, net 69,018 39,982 Other current assets 10,112 6,059 Deferred tax asset 32,437 11,836 ------------------- -------------------- Total current assets 281,496 183,849 Property and equipment, net 27,090 21,119 Deposits and other assets 2,254 536 Intangible assets, net 141,988 2,243 ------------------- -------------------- Total assets $ 452,828 $ 207,747 =================== ==================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 31,915 $ 26,816 Deferred revenues 46,450 21,879 ------------------- -------------------- Total current liabilities 78,365 48,695 Deferred tax liability 22,975 523 Stockholders' equity: Common stock 293,086 115,165 Retained earnings 58,402 43,364 ------------------- -------------------- Total stockholders' equity 351,488 158,529 ------------------- -------------------- Total liabilities and stockholders' equity $ 452,828 $ 207,747 =================== ====================
LEGATO SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) Three Months Ended Nine Months Ended September 30, September 30, ------------------------------ -------------------------------- 1999 1998 1999 1998 ---- ---- ---- ---- REVENUE: Product $ 48,332 $ 32,726 $ 132,157 $ 86,815 Service & support 17,621 10,312 47,706 26,451 --------------- ------------ --------------- --------------- Total revenues 65,953 43,038 179,863 113,266 COST OF REVENUE: Product 1,385 1,504 4,049 3,740 Service & Support 6,639 4,077 17,976 10,869 --------------- ------------ --------------- --------------- Total cost of revenue 8,024 5,581 22,025 14,609 --------------- ------------ --------------- --------------- GROSS PROFIT 57,929 37,457 157,838 98,657 OPERATING EXPENSES: Research and development 10,354 6,837 27,414 18,430 Sales and marketing 23,763 17,883 66,317 51,373 General and administration 5,052 3,717 14,638 11,220 --------------- ------------ --------------- --------------- Total operating expenses 39,169 28,437 108,369 81,023 OPERATING INCOME 18,760 9,020 49,469 17,634 Interest income, net 1,257 1,262 3,877 3,469 --------------- ------------ --------------- --------------- OPERATING INCOME BEFORE PROVISION FOR INCOME TAXES 20,017 10,282 53,346 21,103 Provision for income taxes 7,606 3,907 20,271 8,019 --------------- ------------ --------------- --------------- NET INCOME - OPERATIONAL $ 12,411 $ 6,375 $ 33,075 $ 13,084 =============== ============ =============== =============== DILUTED EARNINGS PER SHARE - OPERATIONAL $ 0.14 $ 0.08 $ 0.38 $ 0.16 =============== ============ =============== =============== - -------------------------------------------------------------------------------------------------------------------------- Reconciliation of net income - operational to net income - as reported: Net income - operational $ 12,411 $ 6,375 $ 33,075 $ 13,084 Amortization of intangibles 7,722 279 12,162 838 Merger related expenses 8,300 645 16,438 645 Qualix direct revenue and costs - (469) (132) (1,444) Income taxes (2,964) (182) (7,380) 259 --------------- ------------ --------------- --------------- Net income - as reported $ (647) $ 6,102 $ 11,987 $ 12,786 =============== ============ =============== =============== Diluted earnings per share - as reported $ (0.01) $ 0.07 $ 0.14 $ 0.16 =============== ============ =============== =============== Shares used in the calculation of operational and as reported diluted earnings per share 90,694 83,723 87,802 82,465 =============== ============ =============== ===============
LEGATO SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) September 30, December 31, 1999 1998 ------------------- -------------------- (Unaudited) ASSETS Current assets: Cash, cash equivalents and investments $ 144,724 $125,972 Accounts receivables, net 62,087 39,982 Other current assets 9,194 6,059 Deferred tax asset 12,231 11,836 ------------------- -------------------- Total current assets 228,236 183,849 Property and equipment, net 23,895 21,119 Deposits and other assets 2,253 536 Intangible assets, net 151,620 2,243 ------------------- -------------------- Total assets $ 406,004 $207,747 =================== ==================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 11,093 $ 26,816 Deferred revenues 39,594 21,879 ------------------- -------------------- Total current liabilities 50,687 48,695 Deferred tax liability 25,519 523 Stockholders' equity: Common stock 274,448 115,165 Retained earnings 55,350 43,364 ------------------- -------------------- Total stockholders' equity 329,798 158,529 ------------------- -------------------- Total liabilities and stockholders' equity $ 406,004 $ 207,747 =================== ====================
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