Revenue from continuing operations of £58.5 million ($84.5 million).

Pre-tax earnings from continuing operations under U.K. GAAP of £7.1 million ($10.3 million under U.S. GAAP) before goodwill, exceptional items, and in-process research and development.

Cash totalling £61.2 million ($88.1 million), or 45.3 pence per ordinary share ($3.26 per ADS).

Days Sales Outstanding (DSO’s) – 81 days.

Fiscal Year Highlights (ended April 30, 2001)

Revenue from continuing operations of £209.8 million ($309.2 million).

Pre-tax earnings from continuing operations of £12.8 million ($18.1 million) before goodwill, exceptional items, and in-process research and development.

Headcount reduced 30% during the year over the prior year.

Improved execution in the fourth fiscal quarter ended April 30, 2001 produced strong sequential revenue and earnings growth. The strength of the Company’s revenue, along with reduced operating costs, contributed to increased profitability. MERANT has undergone significant change throughout the organization in the past several quarters. In light of the changes and the current economic climate, the Company undertook a complete review of its business and strategy, and believes that focus around core product families will help create and maintain a sustainable and profitable business model. These product families include:

MERANT PVCS – to manage change to digital assets, specifically enterprise change management of applications, code and content;

MERANT DataDirect – to deliver applications faster with reliable, high-performance data connectivity technology; and

MERANT Micro Focus – to deliver improved business systems by exploiting existing investments in COBOL applications, data and skills.

Commenting on the quarter, Gary Greenfield, MERANT president and chief executive office, said:

This quarter marks a very satisfying end to the fiscal year. Improved execution has resulted in a strong revenue and earnings performance. With a focus on our core strengths, we have enhanced our specialist sales and marketing capabilities, and we are now better positioned to leverage our well-established brands in each key market we serve. MERANT will continue to invest to address our customers’ core market needs, and has withdrawn from markets with unacceptable potential. We are confident we have built a firm foundation for future success of the Company’s core businesses.

MERANT’s progress is demonstrated in its sequential growth, with revenues from continuing operations of £58.5 million ($84.5 million) for the quarter ended April 30, 2001. The Company’s fourth quarter pre-tax earnings from continuing operations, under U.K. GAAP, were £7.1 million (net earnings of 3.6 pence per ordinary share) before exceptional charges and amortisation of goodwill. Under U.K. GAAP, these earnings from continuing operations represent a sequential improvement of 1.5 pence per ordinary share when compared to the third fiscal quarter of this fiscal year, and an increase of over 50% when compared to the fourth quarter of the previous fiscal year.

Under U.S. GAAP, pre-tax earnings from continuing operations for the same period were $10.3 million (net earnings of $0.26 per American Depositary Share (ADS)), before goodwill amortization and acquired in-process research and development costs. This represents a sequential earnings increase of $0.10 per ADS when compared to the quarter ended January 31, 2001, and an increase of over 35% against the fourth quarter ended April 30, 2000.

For the fiscal year ended April 30, 2001, revenues from continuing operations were £209.8 million ($309.2 million) as compared to £207.9 million ($334.2 million) for the same period last year. Under U.K. GAAP, MERANT’s fiscal year 2001 pre-tax earnings were £12.8 million (net earnings of 6.2 pence per ordinary share) before exceptional charges and amortisation of goodwill. Pre-tax earnings from continuing operations under U.S. GAAP for the twelve-month period ended April 30, 2001 were $18.1 million (net earnings of $0.44 per ADS) before goodwill amortization and acquired in-process research and development costs.

Since the beginning of the fiscal year, MERANT has significantly reduced costs and headcount. Today headcount is approximately 1,450 as compared to almost 2,200 in May 2000, a decrease of one third during the year over the prior year. The Company’s financial position remains very strong, with cash of £61.2 million ($88.1 million) or 45 pence per ordinary share ($3.26 per ADS), as well as continuing improvements in accounts receivables. Lastly, during the second fiscal quarter, MERANT bought back 10% of its outstanding shares.

MERANT is also reporting that Gary Greenfield, CEO, proposes to stand down as CEO of MERANT. The search for a replacement has begun. Greenfield will remain as CEO until his successor has joined, and will then work with the new CEO to ensure a smooth transition. During that time, Greenfield will continue to serve as a director of MERANT.

Stated Greenfield, Over the course of the last several months, the Board and I have worked to focus MERANT on its core strengths, separating the group into three lines of business and reducing the cost base to generate acceptable returns. The proposed disposal of the Micro Focus business is a major step in the generation of shareholder value. I am confident that the new CEO will take over the group at a time when its fortunes are on the rise.

Ken Sexton, chief financial officer of MERANT said:

Amid challenging market and economic conditions, MERANT has maintained positive sequential growth. We have taken prompt and pragmatic steps to significantly reduce operating costs since the start of the fiscal year. We are very pleased to see the strong earnings performance and believe the adjustments to our cost structure will allow us to expand operating margins in the next fiscal year.

SOURCE: COMPANY PRESS RELEASE