SUNNYVALE, CALIF. — JANUARY 23, 2003 —Mercury Interactive Corporation
(Nasdaq: MERQ), the global leader in business technology optimization, today reported results for the fourth quarter and year ended December 31, 2002.
Revenue for the fourth quarter of 2002 was $117.8 million, an increase of 30 percent over the $90.3 million reported in the fourth quarter of 2001. On a GAAP basis, net income for the fourth quarter of 2002 was $18.8 million, or $0.21 diluted earnings per share. This includes amortization of $0.7 million associated with the Freshwater Software acquisition and the write-off of $4.9 million in investments in non-consolidated companies. Pro forma net income for the fourth quarter of 2002, which excludes the items mentioned above, was $23.4 million. This represents an increase of 92 percent compared to pro forma net income of $12.1 million in the fourth quarter of 2001. Pro forma diluted earnings per share were $0.27, up 93 percent from $0.14 per share for the fourth quarter of 2001.
For the year ended December 31, 2002, revenue was $400.1 million, an increase of 11 percent over the $361.0 million for 2001. On a GAAP basis, net income for the year ended December 31, 2002 was $65.2 million, or $0.74 diluted earnings per share. This includes amortization of $3.5 million, the write-off of $4.9 million in investments in non-consolidated companies, a reversal of $0.5 million in restructuring charges and a gain on early retirement of debt of $11.6 million. Pro forma net income for the year ended December 31, 2002 was $62.9 million, an increase of 16 percent compared to $54.3 million for 2001. Pro forma diluted earnings per share were $0.72, up 18 percent from $0.61 per share for 2001.
Cash generated from operations for the fourth quarter of 2002 was $41.2 million compared to $29.4 million in the fourth quarter of 2001. Cash generated from operations for the year ended December 31, 2002 was $132.2 million compared to $83.1 million for 2001. Deferred revenue for the fourth quarter of 2002 increased $32.7 million from the prior quarter to $159.4 million.
"Our strong fourth quarter performance demonstrates the viability of our strategy and ability to execute successfully in a challenging environment," said Amnon Landan, chairman, CEO and president of Mercury Interactive Corporation. "2002 was a transformational year for Mercury Interactive. We have adapted to the changing IT agenda by initiating our Business Technology Optimization (BTO) strategy to optimize quality and align IT with business objectives and by executing on our business objectives across the board."
Mercury Interactive will host a conference call today at 2:00pm Pacific Time to discuss fourth quarter and 2002 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 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 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 success of its Business Technology Optimization (BTO) strategy; 4) the ability to increase sales through our indirect channels as well as international sales; 5) intense competition for Mercury Interactive's products and services; and 6) 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, its most recent quarterly reports on Form 10-Q and other filings with the SEC.