MicroStrategy Incorporated
02-02-09

MicroStrategy Announces Fourth Quarter 2008 Financial Results

MCLEAN, Va., Feb 02, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Revenues of $95 Million and Diluted EPS of $1.17 Per Share

MicroStrategy® Incorporated (Nasdaq: MSTR), a leading worldwide provider of business intelligence software, today announced financial results for the three-month period ended December 31, 2008 (the fourth quarter of its 2008 fiscal year).

Fourth quarter 2008 revenues were $95.0 million versus $95.2 million for the fourth quarter of 2007. Product licenses revenues for the fourth quarter of 2008 were $28.0 million versus $31.7 million for the fourth quarter of 2007, a 12% decrease. Product support and other services revenues for MicroStrategy's core business intelligence (BI) business in the fourth quarter of 2008 were $64.0 million versus $61.3 million for the fourth quarter of 2007, a 4% increase.

Operating expenses for the fourth quarter of 2008 were $57.6 million versus $53.6 million for the fourth quarter of 2007, an 8% increase. The increase in fourth quarter operating expenses was primarily due to an increase in the worldwide employee headcount and related expenses of the Company's core BI business. During the fourth quarter of 2008, MicroStrategy capitalized $5.5 million in software development costs associated with the anticipated release of its MicroStrategy 9 software, which is expected to be generally available in the first quarter of 2009. MicroStrategy did not capitalize any software development costs during the fourth quarter of 2007.

Income from continuing operations before financing and other income and income taxes for the fourth quarter of 2008 was $21.3 million, or 22% of revenue, versus $28.2 million, or 30% of revenue, for the fourth quarter of 2007. Income from continuing operations for the fourth quarter of 2008 was $13.8 million, or $1.13 per share on a diluted basis, compared to $18.5 million, or $1.47 on a diluted basis, for the fourth quarter of 2007. Net income for the fourth quarter of 2008 was $14.3 million, or $1.17 per share on a diluted basis, compared to $17.7 million, or $1.41 per share on a diluted basis, for the fourth quarter of 2007.

As of December 31, 2008, MicroStrategy had cash and cash equivalents of approximately $122.9 million and 9,119,721 shares of class A common stock and 2,770,244 shares of class B common stock outstanding.

New Customers and New Deals with Existing Customers in Q4 2008 Included:

24 Hour Fitness; Adobe Systems Incorporated; Alliance Data Systems Corporation; Ahold USA Holdings Inc.; Allstate Insurance Company; Amica Mutual Insurance; AutoTrader.com, LLC; BJ's Wholesale Club; Branch Banking & Trust Company; Burlington Coat Factory; Canadian Institute for Health Information; The Container Store, Inc.; Depository Trust & Clearing Corp.; DineEquity; The First American Corporation; GlaxoSmithKline; Idearc Media Corp.; KeySpan Corporate Services LLC; Lowe's Companies Inc.; McGraw-Hill Companies; Nationwide Mutual Insurance Company; Netflix; Novartis Pharmaceuticals Corporation; Nu Skin Enterprises, Inc.; O'Reilly Automotive; Pacific Sunwear; Payless ShoeSource Worldwide, Inc.; Real Networks; Republic Bank Limited; Silverton Casino, LLC; Spansion; State of Tennessee; Swagelok; VHA Inc.; Wells Fargo Bank, N.A.; Wilton Industries, Inc.

Examples of Customer Deals from Q4 2008:

AutoTrader.com

AutoTrader.com, created in 1997 and headquartered in Atlanta, Georgia, is the Internet's leading auto classifieds marketplace and consumer information Web site. AutoTrader.com selected MicroStrategy to expand its enterprise-wide reporting and analysis needs due to MicroStrategy's scalability, end user experience, integrated architecture and rich analytical features. Employees at AutoTrader.com run reports against a 50-terabyte data warehouse, and the company relies on the insight gained from its sales analysis and reporting to improve operational efficiencies and competitive insight.

Canadian Institute for Health Information

Canadian Institute for Health Information (CIHI) selected MicroStrategy software to expand its deployment of its eReporting program, a public and client accessible information service. CIHI is an independent, not-for-profit organization that collects and analyzes health data in Canada. The eReporting program enables the public, government officials and health care providers to run reports and access timely, accurate and comparable information on health and health care in Canada. Users are able to access information in an easy-to-use, Web-based environment to explore and answer health care questions. CIHI chose to standardize on MicroStrategy for its Web-based platform, intuitive interface and user scalability.

Silverton Casino Lodge

Silverton Casino Lodge selected MicroStrategy to expand its visibility across multiple areas of the business, including marketing promotions and casino operations. Silverton plans to provide more users with daily reports and dashboards for greater insight into key performance measures across the company. MicroStrategy's integrated BI platform, easy-to-use Web interface and Dynamic Enterprise Dashboards will enable Silverton employees to view large volumes of data in a highly interactive way to help them make timely, data-driven decisions.

MicroStrategy Positioned in "Leaders" Quadrant of Gartner 2009 Magic Quadrant for Business Intelligence Platforms Report:

In January 2009, MicroStrategy announced that it was positioned by Gartner, Inc. in the "leaders" quadrant in the 2009 Magic Quadrant for Business Intelligence Platforms report. Gartner's evaluation was based on completeness of vision and ability to execute. Gartner describes "leaders" as "vendors that are reasonably strong in the breadth and depth of their BI platform capabilities, and can deliver on enterprisewide implementations that support a broad BI strategy. Leaders articulate a business proposition that resonates with buyers, supported by the viability and operational capability to deliver on a global basis."

MicroStrategy Announces MicroStrategy 9:

MicroStrategy recently announced its upcoming software release, MicroStrategy 9, which is expected to be generally available in the first quarter of 2009. The company's most significant release in nearly a decade, MicroStrategy 9 will deliver new technology and features designed to:

Extending Enterprise BI

As BI systems grow to thousands of users and hundreds of terabytes of data, maintaining fast query performance can be a tremendous challenge. MicroStrategy 9 includes new adaptive caching technology called In-memory ROLAP, which takes advantage of the large addressable memory now available on 64-bit Unix, Linux and Windows computer servers, and provides a performance-optimized middle-tier database that can respond directly to data requests from reports, dashboards and OLAP analyses. MicroStrategy 9 also introduces new SQL generation optimizations that can greatly improve performance for sophisticated queries involving complex metrics.

As companies merge and expand, there is an increased urgency for business intelligence to span all operations, across business units, across departments and across the globe. This expansion introduces new requirements on BI systems to support global deployments. MicroStrategy 9 offers the ability to present reports, dashboards or OLAP analyses in the local language of business users viewing the information. In addition, MicroStrategy 9 offers numerous capabilities to streamline coordination between development teams working around the globe on the same BI applications.

Rapid Development and Deployment of Departmental BI

MicroStrategy 9 includes significant new architectural components and features designed to support the needs of smaller-scale BI systems for departments and workgroups. MicroStrategy 9 enables departmental BI applications to be set up quickly, providing end users with the ability to create reports and dashboards and distribute information among themselves with little or no IT support.

MicroStrategy's new Multi-source ROLAP, In-memory ROLAP and rapid metadata creation enables business departments to quickly set up small BI environments, accessing multiple databases without the time-consuming and technically-intensive work of first creating a data mart or data warehouse.

MicroStrategy 9 has numerous new features that make assembling reports simpler and faster. Business users can quickly create their own dashboards using new features in MicroStrategy 9, including out-of-the-box dashboard templates, support for custom-designed templates and new design assistants that aid novice users in creating their own dashboards.

Because of its ROLAP architecture, one of MicroStrategy's long-standing strengths is the ability of business users to freely investigate the data or "surf" through the data warehouse without having to design a new report for each new combination of data they want to see. MicroStrategy 9 has extended this ability by allowing users to perform these same OLAP manipulations such as pivoting and drilling directly on graphs.

MicroStrategy 9 gives users greater control of report and dashboard distribution with its Distribution Services product. Users can set up report distributions for themselves or for other users, sending reports via e-mail, networked printers, or directly to recipients' computers or servers. Business users are empowered to create and manage their own information subscriptions, without the intervention of a centralized IT administrator.

Seamless Consolidation from Departmental BI to Enterprise BI

Organizations have a mix of workgroup, departmental and enterprise BI systems, and face the problem of having multiple 'versions of the truth' across these BI islands that can undermine the credibility of its BI systems. The solution is to merge the islands of BI into a more cohesive, enterprise-wide BI system gradually and incrementally.

MicroStrategy 9 was designed to enable the easy merger of independent islands of MicroStrategy BI into a larger, more expansive enterprise BI system. Using the new Multi-source ROLAP capability, metadata and reports from departmental BI islands can be gradually merged into larger enterprise BI metadata, without having to move any of the original data into data warehouses or data marts. As a next step, MicroStrategy 9 also enables companies to gradually move their data from disparate databases into the data warehouse simply by "re-pointing" the metadata to access the same data, but at its new location, with no disruption to reports or redesign required.

MicroStrategy Receives TechWeb's Intelligent Enterprise 2009 Editors' Choice Award:

MicroStrategy was awarded the 2009 Editors' Choice Award by TechWeb's Intelligent Enterprise. Winners of this award are considered by the publication to be the most influential vendors in Enterprise IT for 2009. MicroStrategy joined technology companies, including Microsoft, Oracle, and SAP in the elite "Dozen" companies that are expected to drive the intelligent enterprise in 2009. In selecting the 2009 Editors' Choice winners, Intelligent Enterprise cited the companies' exceptional vision, innovation, and leadership.

According to Intelligent Enterprise, MicroStrategy has "focused on delivering world-class BI with state-of-the-art dynamic dashboards. The MicroStrategy 9 release set for Q1 2009 adds in-memory analysis to speed queries and reduce data-prep dependency on IT. And a new multi-source engine opens up data access while supporting flexible modeling as BI spreads from workgroup to enterprisewide deployments."

MicroStrategy World 2009:

MicroStrategy hosted its 12th annual user conference, MicroStrategy World 2009, January 13-16, 2009 at the Wynn Las Vegas in Las Vegas, Nevada. The event featured numerous keynote presentations, more than 120 educational sessions and an exhibit hall showcasing MicroStrategy partners.

Executives from more than 35 world-class companies presented their success strategies and experiences using BI to enhance business performance. Some of the companies that presented at MicroStrategy World 2009 included AARP, AEG Worldwide, Belgacom, Bluegreen Corporation, Canadian Institute of Health Information, Cancer Care Ontario, Catalina Marketing, CVS Caremark, David's Bridal, FAMIQ, GUESS?, Herbalife, KeyBank, Liquor Control Board of Ontario, Lowe's Companies, Meredith Corporation, Nationwide Insurance, Raley's, Republic Bank Limited, Saint Elizabeth Health Care, Saint-Gobain Abrasives, Sepracor, Target, Transportation Security Administration, Turkcell and Yahoo!.

At the conference, MicroStrategy honored several companies for achieving outstanding business performance with their MicroStrategy-based business intelligence applications:

Nationwide Mutual Insurance Company: Nationwide Mutual Insurance Company was recognized in the Enterprise Deployment category. Nationwide has deployed MicroStrategy across its enterprise, and has 27 MicroStrategy applications in production, primarily focused on four business areas: personal lines policy analysis, claims management, risk management appraisal and agent productivity. Nationwide, based in Columbus, Ohio, is one of the largest diversified insurance and financial services organizations in the world, with more than $158 billion in assets.

Target Corporation: Target Corporation was the award recipient in the Data Scalability category. The second-largest general-merchandise retailer in America, Target has adopted MicroStrategy as one of its enterprise-wide business intelligence tools. Target uses MicroStrategy's software to analyze over 100+ terabytes of vendor, sales and product data stored in its data warehouse.

Bank of America: Bank of America was the award recipient in the User Scalability category. Bank of America is one of the world's largest financial institutions, serving individual consumers, small and middle market businesses, and large corporations with a full range of banking, investing, asset management, and other financial and risk-management products and services. Global Product Solutions (GPS), a division of Global Corporate & Investment Banking at Bank of America, employs the BI Platform and designs, delivers and services integrated credit and treasury products to more than 140,000 clients around the world, including small businesses, middle-market and large corporations, multi-nationals, financial institutions and governments.

MicroStrategy Recognized as a Top Software Vendor for Retailers:

MicroStrategy was named by Retail Info Systems (RIS) News to its 2008 Software LeaderBoard, which highlights the top software vendors for retailers. The RIS Software LeaderBoard compares software companies serving the retail industry in a head-to-head ranking that is based largely on retailer evaluations. MicroStrategy was also ranked in the top five in the following RIS LeaderBoard categories:

About MicroStrategy Incorporated

Founded in 1989, MicroStrategy is a global leader in business intelligence (BI) technology. MicroStrategy provides integrated reporting, analysis, and monitoring software that helps leading organizations worldwide make better business decisions every day. Companies choose MicroStrategy for its advanced technical capabilities, sophisticated analytics, and superior data and user scalability. More information about MicroStrategy (Nasdaq: MSTR) is available at www.microstrategy.com.

MicroStrategy, MicroStrategy 9 and MicroStrategy Dynamic Enterprise Dashboards 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 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 ability of the Company to effect a timely general release of the MicroStrategy 9 software in the first quarter of 2009; the ability of the Company to implement and achieve widespread customer acceptance of its MicroStrategy 9 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; the Company's ability to effect the sale of its Alarm.com business on acceptable terms, or at all; competitive factors; general economic conditions, including significant downturns in industries, including the financial services and retail industries, in which we have a significant number of customers; 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.

    Contact:
    MicroStrategy Incorporated
    Investor Relations
    ir@microstrategy.com
    (703) 848-8600
                            MICROSTRATEGY INCORPORATED
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)

                                  Three Months Ended     Twelve Months Ended
                                     December 31,           December 31,
                                  -------------------    -------------------
                                      2008      2007         2008      2007
                                      ----      ----         ----      ----
                               (unaudited) (unaudited)  (unaudited) (audited)
    Revenues
    Product licenses                $27,959   $31,736      $95,924  $100,344
    Product support and other
     services                        67,046    63,491      264,469   235,029
                                     ------    ------      -------   -------
      Total revenues                 95,005    95,227      360,393   335,373
                                     ------    ------      -------   -------

    Cost of Revenues
    Product licenses                    434       899        1,877     3,055
    Product support and other
     services                        15,631    12,561       61,529    47,486
                                     ------    ------       ------    ------
      Total cost of revenues         16,065    13,460       63,406    50,541
                                     ------    ------       ------    ------

    Gross profit                     78,940    81,767      296,987   284,832
                                     ------    ------      -------   -------

    Operating Expenses
    Sales and marketing              37,624    31,214      137,683   110,437
    Research and development          6,122    10,045       30,571    35,172
    General and administrative       13,878    12,337       60,933    49,512
                                     ------    ------       ------    ------
      Total operating expenses       57,624    53,596      229,187   195,121
                                     ------    ------      -------   -------

    Income from continuing
     operations before financing
     and other income and income
     taxes                           21,316    28,171       67,800    89,711
                                     ------    ------       ------    ------

    Financing and Other Income
    Interest income, net                185       892        2,266     3,674
    Other income (expense), net         974       (77)         705      (866)
                                        ---       ---          ---      ----
      Total financing and other
       income                         1,159       815        2,971     2,808
                                      -----       ---        -----     -----

    Income from continuing
     operations before income
     taxes                           22,475    28,986       70,771    92,519
      Provision for income
       taxes                          8,638    10,514       29,003    33,311
                                      -----    ------       ------    ------
    Income from continuing
     operations                      13,837    18,472       41,768    59,208
      Income (loss) from
      discontinued operations,
      net of tax provision
      (benefit) ($358 and ($638)
      for the three months ended,
      respectively, and $534 and
      ($591) for the twelve months
      ended, respectively)              448      (798)          65      (740)
                                        ---      ----           --      ----
    Net Income                      $14,285   $17,674      $41,833   $58,468
                                    -------   -------      -------   -------

    Basic earnings (loss) per
     share (1):
      From continuing
       operations                     $1.16     $1.54        $3.51     $4.80
      From discontinued
       operations                     $0.04    $(0.07)       $0.01    $(0.06)
                                      -----    ------        -----    ------
        Basic earnings per
         share                        $1.20     $1.47        $3.52     $4.74
                                      -----     -----        -----     -----
    Weighted average shares
     outstanding used in computing
     basic earnings per share        11,889    12,055       11,886    12,325
                                     ------    ------       ------    ------

    Diluted earnings (loss) per
     share (1):
      From continuing
       operations                     $1.13     $1.47        $3.39     $4.61
      From discontinued
       operations                     $0.04    $(0.06)       $0.01    $(0.06)
                                      -----    ------        -----    ------
        Diluted earnings per
         share                        $1.17     $1.41        $3.40     $4.55
                                      -----     -----        -----     -----
    Weighted average shares
     outstanding used in computing
     diluted earnings per share      12,226    12,556       12,303    12,853
                                     ------    ------       ------    ------

    (1) Basic and fully diluted earnings per share for class A and class B
        common stock are the same



                           MICROSTRATEGY INCORPORATED
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)
                                   (unaudited)

                        Core BI Business     Angel.com        Consolidated
                        ----------------    -----------       ------------
                          Three Months     Three Months       Three Months
                              Ended            Ended              Ended
                          December 31,     December 31,       December 31,
                          ------------     --------------     ------------
                          2008     2007     2008     2007     2008     2007
                          ----     ----     ----     ----     ----     ----


    Revenues
    Product licenses   $27,959  $31,736       $-       $-  $27,959  $31,736
    Product support
     and other
     services           64,030   61,296        -        -   64,030   61,296
    Angel.com
     telephony
     services                -        -    3,016    2,195    3,016    2,195
                        ------   ------    -----    -----   ------   ------
      Total revenues    91,989   93,032    3,016    2,195   95,005   95,227
                        ------   ------    -----    -----   ------   ------

    Cost of Revenues
    Product licenses       434      899        -        -      434      899
    Product support
     and other
     services           14,729   12,180        -        -   14,729   12,180
    Angel.com
     telephony
     services                -        -      902      381      902      381
                        ------   ------      ---      ---      ---      ---
      Total cost of
       revenues         15,163   13,079      902      381   16,065   13,460
                        ------   ------      ---      ---   ------   ------
    Gross profit        76,826   79,953    2,114    1,814   78,940   81,767
                        ------   ------    -----    -----   ------   ------

    Operating Expenses
    Sales and
     marketing          35,759   29,841    1,865    1,373   37,624   31,214
    Research and
     development         5,318    9,416      804      629    6,122   10,045
    General and
     administrative     13,811   12,232       67(a)   105(a)13,878   12,337
                        ------   ------       --      ---   ------   ------
      Total operating
       expenses         54,888   51,489    2,736    2,107   57,624   53,596
                        ------   ------    -----    -----   ------   ------

    Income (loss) from
    continuing
    operations before
    financing and
     other income and
     income taxes       21,938   28,464     (622)    (293)  21,316   28,171
                        ------   ------     ----     ----   ------   ------

    Financing and
    Other Income
    Interest
    income, net            185      892        -        -      185      892
    Other income
     (expense), net        974      (77)       -        -      974      (77)
                           ---      ---      ---      ---      ---      ---
      Total financing
       and other
       income            1,159      815        -        -    1,159      815
                         -----      ---      ---      ---    -----      ---
    Income (loss)
     from continuing
     operations before
     income taxes      $23,097  $29,279    $(622)   $(293) $22,475  $28,986
      Provision for
       income taxes                                          8,638   10,514
                                                             -----   ------
    Income from
     continuing
     operations                                             13,837   18,472
      Income (loss)
       from
       discontinued
       operations,
       net of tax                                              448     (798)
                                                               ---     ----
    Net income                                             $14,285  $17,674
                                                           =======  =======

    Basic earnings
     (loss) per share:
      From continuing
       operations                                            $1.16    $1.54
      From discontinued
       operations                                            $0.04   $(0.07)
                                                             -----   ------
        Basic earnings
         per share                                           $1.20    $1.47
                                                             -----    -----

    Diluted earnings
     (loss) per share:
      From continuing
       operations                                            $1.13    $1.47
      From discontinued
        operations                                           $0.04   $(0.06)
                                                             -----   ------
        Diluted earnings
         per share                                           $1.17    $1.41
                                                             -----    -----

       Basic weighted
        average shares
        outstanding                                         11,889   12,055
                                                            ======   ======
       Diluted weighted
        average shares
        outstanding                                         12,226   12,556
                                                            ======   ======

    (a)  An insignificant amount of general and administrative services is
         provided to the Angel.com business unit by MicroStrategy's core
         business operations.



                           MICROSTRATEGY INCORPORATED
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)
                                   (unaudited)

                        Core BI Business     Angel.com        Consolidated
                        ----------------     ---------        ------------
                         Twelve Months     Twelve Months     Twelve Months
                              Ended            Ended              Ended
                          December 31,     December 31,       December 31,
                          ------------     ------------       ------------
                          2008     2007     2008     2007     2008     2007
                          ----     ----     ----     ----     ----     ----


    Revenues
    Product licenses   $95,924 $100,344       $-       $-  $95,924 $100,344
    Product support
     and other
     services          253,660  227,917        -        -  253,660  227,917
    Angel.com
     telephony
     services                -        -   10,809    7,112   10,809    7,112
                           ---      ---   ------    -----   ------    -----
      Total revenues   349,584  328,261   10,809    7,112  360,393  335,373
                       -------  -------   ------    -----  -------  -------

    Cost of Revenues
    Product licenses     1,877    3,055        -        -    1,877    3,055
    Product support
     and services
     revenues           59,331   45,662        -        -   59,331   45,662
    Angel.com
     telephony
     services                -        -    2,198    1,824    2,198    1,824
                           ---      ---    -----    -----    -----    -----
      Total cost of
       revenues         61,208   48,717    2,198    1,824   63,406   50,541
                        ------   ------    -----    -----   ------   ------
    Gross profit       288,376  279,544    8,611    5,288  296,987  284,832
                       -------  -------    -----    -----  -------  -------

    Operating Expenses
    Sales and
     marketing         129,721  104,526    7,962    5,911  137,683  110,437
    Research and
     development        27,546   32,465    3,025    2,707   30,571   35,172
    General and
     administrative     60,651   49,400      282(a)   112(a)60,933   49,512
                        ------   ------      ---      ---   ------   ------
      Total operating
       expenses        217,918  186,391   11,269    8,730  229,187  195,121
                       -------  -------   ------    -----  -------  -------

    Income (loss)
     from continuing
     operations
     before financing
     and other income
     and income taxes   70,458   93,153   (2,658)  (3,442)  67,800   89,711
                        ------   ------   ------   ------   ------   ------

    Financing and Other
     Income Interest
     income, net         2,266    3,674        -        -    2,266    3,674
    Other expense, net     705     (866)       -        -      705     (866)
                           ---     ----      ---      ---      ---     ----
      Total financing
       and other
       income            2,971    2,808        -        -    2,971    2,808
                         -----    -----      ---      ---    -----    -----
    Income (loss)
     from continuing
     operations before
     income taxes      $73,429  $95,961  $(2,658) $(3,442) $70,771  $92,519
      Provision for
       income taxes                                         29,003   33,311
                                                            ------   ------
    Income from
     continuing
     operations                                             41,768   59,208
      Income (loss)
       from
       discontinued
       operations,
       net of tax                                               65     (740)
                                                                --     ----
    Net income                                             $41,833  $58,468
                                                           =======  =======

    Basic earnings
     (loss) per
     share:
      From continuing
       operations                                            $3.51    $4.80
      From discontinued
       operations                                            $0.01   $(0.06)
                                                             -----   ------
        Basic earnings
         per share                                           $3.52    $4.74
                                                             -----    -----

    Diluted earnings
     (loss) per share:
      From continuing
       operations                                            $3.39    $4.61
      From discontinued
       operations                                            $0.01   $(0.06)
                                                             -----   ------
        Diluted earnings
         per share                                           $3.40    $4.55
                                                             -----    -----

       Basic weighted
        average shares
        outstanding                                         11,886   12,325
                                                            ======   ======
       Diluted weighted
        average shares
        outstanding                                         12,303   12,853
                                                            ======   ======

    (a)  An insignificant amount of general and administrative services is
         provided to the Angel.com business unit by MicroStrategy's core
         business operations.



                   MICROSTRATEGY INCORPORATED
                   CONSOLIDATED BALANCE SHEETS
              (in thousands, except per share data)

                                                December 31,  December 31,
                                                     2008          2007
                                                ----------    -----------
    Assets                                      (unaudited)    (audited)
    Current assets
      Cash and cash equivalents                  $122,915       $85,194
      Restricted cash and investments                 619         2,982
      Accounts receivable, net                     49,670        49,392
      Prepaid expenses and other
       current assets                               9,518        12,106
      Deferred tax assets, net                     26,743        29,652
      Assets held-for-sale                          4,964         4,272
                                                    -----         -----
    Total current assets                          214,429       183,598

    Property and equipment, net                     8,978         9,473
    Capitalized software development cost, net     14,823         2,340
    Deposits and other assets                      36,804        11,433
    Deferred tax assets, net                       17,105        35,347
                                                   ------        ------
    Total Assets                                 $292,139      $242,191
                                                 --------      --------

    Liabilities and Stockholders' Equity
    Current liabilities
      Accounts payable and accrued expenses       $27,697       $22,083
      Accrued compensation and employee
       benefits                                    42,634        38,604
      Deferred revenue and advance payments        66,495        64,234
      Liabilities held-for-sale                     6,325         3,436
                                                    -----         -----
    Total current liabilities                     143,151       128,357

    Deferred revenue and advance payments           1,679         1,368
    Other long-term liabilities                     9,268         9,137
                                                    -----         -----

    Total Liabilities                             154,098       138,862
                                                  -------       -------

    Stockholders' Equity
      Preferred stock undesignated, $0.001
       par value; 5,000 shares authorized;
       no shares issued or outstanding                  -             -
      Class A common stock, $0.001 par value;
       330,000 shares authorized; 14,167
       shares issued and 9,120 shares
       outstanding, and 14,113 shares issued
       and 9,184 shares outstanding,
        respectively                                   14            14
      Class B common stock, $0.001 par value;
       165,000 shares authorized; 2,770 issued
       and outstanding, respectively                    3             3
      Additional paid-in capital                  450,953       448,229
      Treasury stock, at cost; 5,047 and
       4,929 shares, respectively                (366,191)     (357,804)
      Accumulated other comprehensive income        1,471         2,929
    Retained earnings                              51,791         9,958
                                                   ------         -----
    Total Stockholders' Equity                    138,041       103,329
                                                  -------       -------
    Total Liabilities and
     Stockholders' Equity                        $292,139      $242,191
                                                 --------      --------



                           MICROSTRATEGY INCORPORATED
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

                                                      Twelve Months Ended
                                                         December 31,
                                                    ----------------------
                                                           2008       2007
                                                           ----       ----
                                                    (unaudited)  (audited)
    Operating activities:
      Net income                                        $41,833    $58,468
      Plus:  (Income) loss from discontinued
       operations, net                                      (65)       740
                                                            ---        ---
          Income from continuing operations              41,768     59,208
      Adjustments to reconcile net income to net
       cash provided by operating activities:
        Depreciation and amortization                     6,399      7,557
        Bad debt expense                                  1,142      1,370
        Deferred taxes                                   20,925     26,137
        Stock-based compensation                             46        528
        Excess tax benefits from stock-based
         payment arrangements                              (422)    (3,270)
        Other, net                                           72        160
      Changes in operating assets and liabilities:
        Accounts receivable                              (2,975)     4,879
        Prepaid expenses and other current assets         1,643     (3,301)
        Deposits and other assets                           157     (1,434)
        Accounts payable and accrued expenses,
         compensation and employee benefits              10,676      3,382
        Deferred revenue and advance payments             5,278      4,119
        Other long-term liabilities                         190      1,244
                                                            ---      -----
          Net cash provided by operating
           activities from continuing operations         84,899    100,579
          Net cash provided by (used in) operating
           activities from discontinued operations        4,019     (2,683)
                                                          -----     ------
              Net cash provided by operating
               activities                                88,918     97,896
                                                         ------     ------
    Investing activities:
      Advance deposits on purchases of property
       and equipment                                    (25,000)    (7,500)
      Purchases of property and equipment                (5,167)    (3,426)
      Capitalized software development costs            (13,575)    (2,650)
      Decrease in restricted cash and investments         1,100        931
                                                          -----        ---
          Net cash used in investing activities
           from continuing operations                   (42,642)   (12,645)
          Net cash used in investing activities
           from discontinued operations                    (160)       (50)
                                                           ----        ---
              Net cash used in investing activities     (42,802)   (12,695)
                                                        -------    -------
    Financing activities:
      Proceeds from sale of class A common stock
      under exercise of employee stock options and
      employee stock purchase plan                        2,104      3,293
      Excess tax benefits from stock-based payment
       arrangements                                         422      3,270
      Purchases of treasury stock                        (8,387)   (89,028)
                                                         ------    -------
          Net cash used in financing activities
           from continuing operations                    (5,861)   (82,465)
          Net cash used in financing activities
           from discontinued operations                       -          -
                                                            ---        ---
              Net cash used in financing activities      (5,861)   (82,465)
          Effect of foreign exchange rate changes
           on cash and cash equivalents                  (2,534)     3,478
                                                         ------      -----
    Net increase in cash and cash equivalents from
     continuing operations                               37,721      6,214
    Cash and cash equivalents, beginning of period       85,194     78,980
                                                         ------     ------
    Cash and cash equivalents, end of period           $122,915    $85,194
                                                       ========    =======

SOURCE MicroStrategy Incorporated

 
http://www.microstrategy.com

Copyright © 2009 PR Newswire. All rights reserved