In Re: Mercury Interactive Corporation Securities Litigation 05-CV-03395
Total Page:16
File Type:pdf, Size:1020Kb
EXHIBIT 1 Form 10-K/A Page 1 of 168 10-K/A 1 d10ka.htm FORM 10-K/A Table of .Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSIO N Washington, D.C. 20549 FORM 10-K/A ❑E ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2004 OR ❑ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number : 0-22350 MERCURY INTERACTIVE CORPORATIO N (Exact name of registrant as specified in its charter) Delaware 77-0224776 (State or other jurisdiction of (I .R.S . Employer incorporation or organization) Identification No. ) 379 North Whisman Road, Mountain View, California 94043-3969 (Address of principal executive offices, including zip code ) Registrant's telephone number, including area code : (650) 603-5200 Securities registered pursuant to Section 12(b) of the Act : None Securities registered pursuant to Section 12(g) of the Act : Common Stock, $0.002 par value Preferred Stock Purchase Rights (Title of class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such a shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days . YES ❑ NO ❑ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy information statements incorporated by reference in Part III of this Form 10-K/A or any amendment to this Form 10-K/A . ❑x Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) . YES ❑ NO ❑ The aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $3,500,862,858 as of June 30, 2004, based upon the closing sale price reported for that date on the NASDAQ National Market . Shares of Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded because such persons may be deemed to be affiliates . This determination of affiliate status is not necessarily conclusive for other purposes . http ://www.sec.gov/Archives/edgar/data/867058/000119312506141393/d1 Oka .htm 11/15/2006 Form 10-K/A Page 2 of 168 The number of shares of Registrant's Common Stock outstanding as of March 4, 2005 was 86,199,828 . DOCUMENTS INCORPORATED BY REFERENC E Portions of the Proxy Statement for Registrant's 2005 Annual Meeting of Stockholders held May 19, 2005 are incorporated by reference in Part III of this Annual Report on Form 10-K/A . http://www.sec.gov/Archives/ edgar/data/867058/000119312506141393/d10ka.htm 11/15/2006 Form 10-K/A Page 3 of 168 Table of Contents. TABLE OF CONTENTS Page Explanatory Note 1 PART I Item 1 . Business 3 General 3 Products and Services 4 Research and Development 9 Sales, Marketing, ._a...nd Alliance Partners 10 Lice...nsmg,_Pricmg,_Deferred Revenue, andSeasonality 11 Financial Information About Geographical Areas 11 Competition 12 Patents, Trademarks, and Licenses 12 Personnel 13 Available Information 13 Item 2. Properties 14 Item 3. Legal Proceedings 14 Item 4. Submission of Matters. to a Vote of Security Holders 14 PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters 15 Item 6. Selected Consolidated Financial Data 16 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 18 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 62 Item 8. Financial Statements and Supplementary Data 65 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial . Disclosures 65 Item 9A. Controls and Procedures 65 PART III Item 10 . Directors and Executive Officers of the Registrant 72 Item 11 . Executive Compensation 74 Item 12 . Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 74 Item 13 . Certain Relationships and Related Transactions 74 Item 14 . Principal Accountant Fees. and Services 74 PART IV Item 15 . Exhibits and Financial Statement Schedules 75 Signatures 80 http://www.sec.gov/Archives/edgar/data/867058/000119312506141393/dI Oka.htm 11/15/2006 Form 10-K/A Page 4 of 16 8 Table of Content s This Annual Report on Form 10-K/A contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. In some cases, forward-looking statements are identified by words such as "believes, " "anticipates, " "expects, " "intends, " "plans, " "will, " "may, " and similar expressions. In addition, any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements. Our actual results could differ materially fr om those discussed in, or implied by, these forward-looking statements . Factors that could cause actual results or conditions to differ from those anticipated by these and other forward-looking statements include those more fully described in "Management's Discussion and Analysis of Financial Condition and Results of Operations-Risk Factors ". Further, except for the forward-looking statements included in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations- Restatement of Consolidated Financial Statements, Special Committee and Company Findings, Remedial Measures and Related Proceedings " and Item 9A, "Controls and Procedures, " all forward-looking statements contained in this amended Annual Report on Form 10-K/A, unless they are specifically otherwise stated to be made as of a different date, are made as of March 14, 2005, the original filing date of ourAnnual Report on Form 10-Kfor the year ended December 31, 2004 . In addition, except for the sections of this Form 10-K/A entitled "Restatement of Consolidated Financial Statements, Special Committee and Company Findings, Remedial Measures and Related Proceedings" (included in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations'), Item 9A, "Controls and Procedures " and Note 3 and Note 19 (unaudited) of the Notes to Consolidated Financial Statements, this Form 10-K/A does not reflect events occurring after the filing of our Annual Report on Form 10-K filed on March 14, 2005 other than the restatement, and we undertake no obligation to update the forward-looking statements in this Annual Report on Form 10-K/A . Mercury, Mercury Interactive, the Mercury logo, LoadRunner, ProTune, QuickTest Professional, SiteScope, TestDirector, and WinRunner are trademarks of Mercury Interactive Corporation in the United States and may be registered in certain jurisdictions. The absence of a trademark from this list does not constitute a waiver of Mercury's intellectual property rights concerning that trademark . This Annual Report on Form 10-K/A contains references to other company, brand, and product names . These company, brand, and product names are used herein for identification purposes only and may be the trademarks of their respective owners. Mercury Interactive Corporation disclaims any responsibility for specifying which marks are owned by which companies or which organizations . Explanatory Not e We are amending our Annual Report on Form 10-K for the year ended December 31, 2004, filed on March 14, 2005 (the Original Filing), to restate our consolidated financial statements for the years ended December 31, 2004, 2003 and 2002 and the related disclosures . This amended Annual Report on Form 10-K/A also includes the restatement of selected consolidated financial data as of and for the years ended December 31, 2004, 2003, 2002, 2001 and 2000, which is included in Item 6, and the unaudited quarterly financial data for each of the quarters in the years ended December 31, 2004 and 2003, which is included in Item 15 . See Note 3, "Restatement of Consolidated Financial Statements," of the Notes to Consolidated Financial Statements for a detailed discussion of the effect of the restatement . The restatement of the Original Filing reflected in this amended Annual Report on Form 10-K/A includes adjustments arising from the determinations of a Special Committee, consisting of disinterested members of the Audit Committee, which was formed in June 2005 to conduct an internal investigation into the Company's past stock option practices, as well as our internal review relating to our historical financial statements . For more information on these matters, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations-Restatement of Consolidated Financial Statements, Special Committee and Company Findings, Remedial Measures and Related Proceedings", Note 3 of the Notes to the Consolidated Financial Statements, and Item 9A, "Controls and Procedures" . http://www.see.iov/Archives/edpar/data/867058/000119312506141393/d10ka .htm 11/15/2006 Form 10-K/A Page 5 of 16 8 Table Of Contents We have not amended and we do not intend to amend any of our other previously filed annual reports on Form 10-K for the periods affected by the restatement or adjustments other than this amended Annual Report on Form 10-K/A . As a result of the restatement of our consolidated financial statements, we will also restate the interim financial statements for th e quarterly and year to date periods ended March 31, June 30, and September 30, 2004 to be included in our quarterly reports on Forms 10-Q for the periods ended March 31, June 30 and September 30, 2005 .