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7/14/2006
05:10 PM
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Mercury Has Delivered Under Tough Conditions

About a year ago, the 3,000 people of Mercury faced a huge challenge: Rectify past stock option accounting practices while continuing to build our business. This daunting challenge could now face over 50 companies--many in the tech industry.

As you may know, Mercury is a leader in the business technology optimization (BTO) software market. Our software is used by many of the largest companies and governments to automate quality management and testing, application and service management, and IT governance/portfolio management.

On July 10, InformationWeek published an article by J. Nicholas Hoover that we believe did not accurately reflect Mercury's track record of customer success. Now, we'd like to set the record straight. Over the last year we've had four basic goals:

  • First, be as rigorous and thorough as possible while restating and recertifying our financial statements. We achieved a significant milestone in that process when we filed our amended annual report for 2004 on July 3, 2006.

  • Second, implement the remedial measures required to achieve our goal of being a model for best business practices and full compliance.

  • Third, communicate accurately and effectively with all of our stakeholders regarding the facts and the actions we are taking to rectify this situation.

  • Fourth, effectively serve our global customers and successfully execute our business plan.

    We are proud of our progress toward these goals. Over the last year, the positive response from our global customers has been amazing. One indicator of customer belief in Mercury can be seen in their investments with us. We finished 2005 with record revenue of about $843 million, representing 23% year-over-year growth. In 2005 we closed 79 transactions greater than $1 million. At the end of 2005, Mercury's cash and investment balance was $1.4 billion.

    Our success with customers is also validated through other actions. We increased our investments in our BTO Enterprise offerings and launched numerous new products; we made key acquisitions in the SOA and service desk areas; and we expanded our relationships with SAP, BEA, and Oracle, to name a few.

    We take particular pride in our customer service and the quality of our products. Our customer support organization has received five STAR Awards from the Service & Support Professionals Association. We have been inducted into the SSPA STAR Awards Hall of Fame and received a Life Time Achievement Award, awarded to companies that have won five STAR Awards for exemplary customer support. Also, in the last year we increased the number of people and amount of investments in our research and development and global services organizations.

    When you look at our market opportunity, our BTO offerings, our people, and our proven ability to execute under tough conditions, we believe that Mercury is well positioned for the future. We want to extend a heartfelt thanks to our customers, partners, and shareholders for continuing to invest with us.

    Christopher Lochhead
    Chief Marketing Officer
    Mercury Interactive Corp.

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