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Micromuse reports Q4, fiscal 2005 results

Provides guidance for fiscal year 2006
By Evolution PR
Johannesburg, 22 Nov 2005

* Q4 2005 revenues of $44.7 million for the quarter; 23% higher than Q4 2004
* Q4 adjusted (non-GAAP) earnings per share of $0.06; GAAP earnings per share of $0.02
* FY 2005 revenues of $160.8 million for the year; 10% higher than FY 2004
* FY 2005 adjusted (non-GAAP) earnings per share of $0.21; GAAP loss per share of ($0.05)

Micromuse Inc, the leading provider of ultra-scalable, real-time business and service assurance software, today announced that fourth quarter 2005 net revenues were $44.7 million, an increase of 23% over $36.3 million in the fourth quarter of 2004.

Adjusted (or non-GAAP) net income was $4.7 million, or $0.06 per share, versus $5.6 million, or $0.07 per share, in the fourth quarter a year ago. Net income on a GAAP basis for the fourth quarter of 2005 was $1.9 million, or $0.02 per share, compared to a net income of $4.9 million, or $0.06 per share, in the fourth quarter a year ago.

Fiscal year 2005 net revenues were $160.8 million, an increase of 10% over $146.6 million in 2004. Adjusted net income was $17.1 million, or $0.21 per share, compared with adjusted net income of $14.1 million, or $0.17 per share, in fiscal year 2004. This represents an increase of 24% on a per share basis. Net loss on a GAAP basis was $3.8 million, or ($0.05) per share, compared with GAAP net income of $4.4 million, or $0.05 per share, in fiscal year 2004.

Adjusted (or non-GAAP) results, as presented in the attached reconciliation table, exclude amortisation of intangibles from acquisitions, in-process research and development write-off, amortisation of deferred stock-based compensation and other items such as restructuring charges and credits, restatement and forensic accounting expenses, severance expenses, expenses related to the settlement of securities and patent lawsuits, a non-cash facilities expense, and related tax effects.

In addition, as Micromuse begins to apply FAS 123 in fiscal 2006, adjusted (non-GAAP) results will also exclude stock-based compensation expenses associated with the adoption of FAS 123.

Cash and cash equivalents, short-term investments and long-term investments were $159.9 million as of 30 September 2005.

"Fiscal 2005 was another year of excellent performance for Micromuse," said Lloyd Carney, CEO of Micromuse. "We achieved double-digit revenue growth and adjusted earnings per share growth in excess of 20% for the second consecutive year, and we increased deferred revenues by 80%. We also accomplished our main operational goals for the year in the areas of partnership expansion, training and education, and product integration. We have continued confidence in the outlook for our business in FY06, and are providing guidance for the full fiscal year for the first time. Revenues for fiscal year 2006 are estimated to be in the $195 million to $200 million range, with adjusted (non-GAAP) earnings per share of $0.27-$0.29.

"Revenues for the first quarter of fiscal 2006 are estimated to be in the $44 million to $46 million range, with adjusted (non-GAAP) EPS of $0.03-$0.04. We are unable to provide earnings per share guidance on a GAAP basis as we are still assessing the impact of adopting FAS 123, which addresses the accounting treatment of stock-based compensation. This guidance also reflects continued investment in pre-sales and professional services staff to support demand for recently acquired Quallaby and GuardedNet products."

The company has also decided to change its fiscal year end from 30 September to 31 October in order to better align with the buying patterns of its largest customers.

Q4 2005 conference call, Webcast, replay information

Micromuse will host a conference call and simultaneous Webcast on Wednesday, 16 November 2005 at 2pm PT, 5pm ET to announce adjusted and GAAP results for the fourth quarter and fiscal year 2005. The live call will be available to the general public by dialling 866-831-5605 (domestic) or 617-213-8851 (international) and entering access code 10159965.

A live Webcast of the conference call will be available at http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=MUSE&script=2100 or via a link from the Micromuse Web site at http://www.micromuse.com/.

A replay of this conference call will be available by dialling 888-286-8010 (domestic) or 617-801-6888 (international) and entering access code 99286370.

The replay will be available from Wednesday, 16 November 2005 at 7pm PT until Wednesday, 23 November 2005 at 11:59pm PT. The replay will also be available as an archived audio file at http://www.micromuse.com/.

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Micromuse

Micromuse Inc (Nasdaq: MUSE) is the leading provider of ultra-scalable, real-time business and service assurance software solutions. The Netcool software suite provides organisations with the assurance that their IT systems are supporting and driving profits 24 hours a day.

Unlike traditional infrastructure management systems, Netcool solutions provide real-time end-to-end visibility and accurate troubleshooting from a business perspective. Such business intelligence allows organisations to respond to problems quickly, streamline workflow processes and improve business uptime.

Micromuse customers include BT, Cable & Wireless, Deutsche Telekom, EarthLink, ITC^DeltaCom, JPMorgan Chase, MCI, T-Mobile and Verizon. Headquarters are located at 650 Townsend Street, Suite 475, San Francisco, California 94103; (415) 568-9800. The Web site is at www.micromuse.com.

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