AXENT Reports First Quarter 1999 Results.ROCKVILLE, Md.--(BUSINESS WIRE)--April 29, 1999-- AXENT Technologies, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :AXNT), one of the world's leading information security solution providers, today reported first quarter revenues of $21,444,000 for the three months ending March 31, 1999, compared to revenues of $20,331,000 for the same three-month period of 1998. Excluding non-recurring items, AXENT had a net loss for the three months ended March 31, 1999 of $2,315,000, or $0.09 per share, compared to net income of $3,225,000, or $0.12 per share, for the same period of 1998. "After delivering eleven consecutive quarters of exceeding our expectations, we are disappointed with the results of the first quarter," said John Becker, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. and chairman of the board of AXENT. "However, we remain confident in our future and will continue to deliver on our Lifecycle Security Strategy to provide products and services that make AXENT a trusted security partner. As more companies turn to AXENT for e-business security solutions, we will continue to focus on helping customers manage their information asset risk and facilitate e-business initiatives safely." Quarterly Highlights include: --Acquisitions Strengthen Intrusion Detection See IDS and IPS. and Single Sign-on An identification system that lets users log into multiple Web sites on the Internet with one username and password. Single sign-on systems are also used within an enterprise, enabling users to access all authorized resources in the local network using the same username and password. Offerings --AXENT expanded its leadership in intrusion detection solutions (IDS) with the acquisition of Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the Tools, Inc., a provider of advanced network-based IDS. The acquisition solidifies AXENT's role as the industry leader in intrusion detection. The acquired technology will continue to be offered as a stand alone product and will be integrated with AXENT's host-based Intruder An attacker that gains, or tries to gain, unauthorized access to a system. See attacker, intrusion and IDS. Alert(tm) solution for a complete, enterprise-wide IDS system. In addition, the acquisition of United Kingdom-based PassGo(tm) Technologies strengthens AXENT's ability to provide simplified, secure access to information and centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. user access control for e-business. PassGo's single sign-on and password synchronization Password synchronization is defined as any process or technology that helps users to maintain a single password that is subject to a single security policy, and changes on a single schedule across multiple systems. products complement AXENT's current offerings in central authentication server A device used in network access control. It stores the usernames and passwords that identify the clients logging in, or it may hold the algorithms for token access (see authentication token). and user-administration solutions. The acquisitions of Internet Tools and PassGo build upon AXENT's strategy to bring complementary, value-add security offerings to its customers that are both leaders in technology and market acceptance. --Product Delivery--AXENT launched a major new release of its market leading policy assessment software product Enterprise Security Manager(tm) 5.0 (ESM (1) (Enterprise Storage Management) Managing the online, nearline and offline storage within a large organization. It includes analysis of storage requirements as well as making routine copies of files and databases for backup, archiving, disaster recovery, ). ESM is now, as a result of this significant release, the only security solution with a central management console A terminal or workstation used to monitor and control a network. See Microsoft Management Console. and advanced reporting features that help organizations easily check, manage and enforce sound security practices across tens of thousands of systems connected to the Internet. In addition, ESM received Network Computing's "Editor's Choice" award and several positive product reviews in major publications such as PCWeek and PC Magazine. --Market Leadership--AXENT's leadership position in the security industry received significant coverage in top business and trade publications worldwide. PCWeek's tests revealed that competitor ISS' RealSecure(tm)3.0 product "can't hold a candle to AXENT's products." In addition, AXENT's security suite received a near perfect score and a "Best Buy" award from Secure Computing magazine Secure Computing Magazine is a computer magazine emphasising security. . Finally, in a recent survey conducted by the SANS Institute The SANS Institute (SysAdmin, Audit, Networking, and Security) is a trade name owned by the for-profit Escal Institute of Advanced Technologies. SANS provides computer security training, professional certification, and a research archive. , a leading authority in intrusion detection, AXENT's intrusion detection and vulnerability assessment A Department of Defense, command, or unit-level evaluation (assessment) to determine the vulnerability of a terrorist attack against an installation, unit, exercise, port, ship, residence, facility, or other site. solutions (Intruder Alert, NetProwler(tm), NetRecon(tm)and ESM) were among the few to be listed in every category deemed necessary to protect organizations against unwanted users and to assess security risk. --Strategic Partnerships --As part of its strategy to streamline security for large companies that are rapidly expanding their e-business and e-commerce solutions, AXENT continues to team with major players in the computer industry. This quarter, AXENT strengthened its partnership with Entrust(R) Technologies (NASDAQ: ENTU), by enabling Entrust sales representatives to resell re·sell tr.v. re·sold , re·sell·ing, re·sells 1. To sell again. 2. To sell (a product or service) to the public or to an end user, especially as an authorized dealer. the Defender(tm) solution as a part of their product line. In addition, AXENT's PCShield(tm) and Enterprise Resource Manager(tm) were certified See certification. as Entrust-Ready products, joining previously certified RaptorMobile(tm). --Customer Success-- Internet Week, PC Week and Insurance and Technology profiled AXENT customers Coca-Cola Bottling Company A bottling company is a commercial enterprise whose output is the bottling of beverages for distribution. Many bottling companies are franchisees of corporations such as Coca-Cola and PepsiCo who distribute the beverage in a specific geographic region. Consolidated, Regence BlueCross and BlueShield of Oregon, and City of Hope National Medical Center City of Hope is one of 39 NCI-designated Cancer Centers and is located in the city of Duarte, California. City of Hope comprises an ambulatory and in-patient cancer treatment center as well as a biomedical research facility known as the Beckman Research Institute and the City of Hope . These profiles illustrate successful deployments of AXENT's security solutions and how AXENT helped these leading companies facilitate opportunities for e-business with AXENT's Lifecycle Security solutions. About AXENT(tm) AXENT Technologies, Inc., a global leader in information security, provides solutions for e-security that maximizes our customers' business advantage. As a trusted partner, AXENT delivers integrated products and expert services to assess, protect, enable and manage business processes and information assets through our unique Lifecycle Security(tm) approach. AXENT's award winning security solutions include policy compliance and assessment, firewall, intrusion detection, authentication (1) Verifying the integrity of a transmitted message. See message integrity, e-mail authentication and MAC. (2) Verifying the identity of a user logging into a network. , VPN (Virtual Private Network) A private network that is configured within a public network (a carrier's network or the Internet) in order to take advantage of the economies of scale and management facilities of large networks. , Web-access, single sign-on, and user administration for the entire enterprise. Headquartered in Rockville, MD, AXENT's customer-proven information security solutions are used by Fortune 1000 companies and governments worldwide. Contact AXENT via e-mail at info@axent.com, or visit AXENT's World Wide Web site at http://vpo.axent.com. Statements in this release concerning AXENT's future prospects are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of provisions of the Federal securities laws and involve risk and uncertainties. Those statements are subject to known and unknown risks and uncertainties that could cause anticipated future results not to be achieved or actual results to differ materially, including, but not limited to, (1) management's ability to manage growth, accurately forecast revenues and control expenses, (2) the highly competitive environment for AXENT's products and services and the consolidation of the information security industry, (3) the possibility of rapid technological advances and new product introductions in AXENT's market, (4) Year 2000 issues and the responses of prospective customers, (5) AXENT's ability to manage recent and potential acquisitions and (6) other factors identified under the caption "Certain Factors That May Affect Future Performance" in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for 1998 or discussed in the "Risk Factors" section of the Company's Prospectus/Joint Proxy Statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. dated January 2, 1998, each as filed with the SEC. The Company assumes no obligation to update or correct forward-looking statements due to events or changes after the date of this release. AXENT, AXENT Technologies, the AXENT logo, Lifecycle Security, PCShield, Enterprise Security Manager, Intruder Alert, NetProwler, NetRecon, Defender, Enterprise Resource Manager, RaptorMobile, and PassGo are trademarks or registered trademarks, in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and certain other countries, of AXENT Technologies, Inc. or its subsidiaries. RealSecure is a trademark of Internet Security ''This article or section is being rewritten at Internet security is the process of protecting data and privacy of devices connected to internet from information robbery, hacking, malware infection and unwanted software. Systems, Inc.; Entrust is a registered trademark of Entrust Technologies, Inc. and other product names and trademarks are the property of their respective owners. -0-
AXENT Technologies, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
March 31, December 31,
1999 1998
(unaudited)
ASSETS
Current assets:
Cash and equivalents $92,818 $80,035
Marketable securities 19,033 31,774
Accounts receivable, net 26,608 28,300
Other current assets 3,632 4,128
Total current assets 142,091 144,237
Property and equipment, net 11,113 7,482
Goodwill and other intangible assets 28,370 --
Other assets 12,069 9,557
Total assets $193,643 $161,276
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued liabilities $24,455 $15,764
Deferred revenue 13,561 11,184
Total liabilities 38,016 26,948
Loan Payable 1,009 --
Total liabilities 39,025 26,948
Stockholders' equity 154,618 134,328
Total liabilities and
stockholders' equity $193,643 $161,276
-0- NOTE: The Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated Balance Sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. of AXENT Technologies, Inc. as of March 31, 1999 includes the acquired assets and liabilities of PassGo and reflects goodwill and other intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. of approximately $28,370 associated with the acquisition of PassGo completed on March 31, 1999. This amount is an estimate based on preliminary results of an independent third-party valuation analysis of PassGo and is subject to adjustment and review by the Company's auditors. The final accounting for the PassGo transaction is expected to be reflected in AXENT's financial statements, to be filed with the SEC on Form 10Q on or about May 15, 1999. -0-
AXENT Technologies, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
For the Three Months
Ended March 31,
1999 1998
Net revenues:
Product licenses $15,186 $16,283
Services 6,258 4,048
Total net revenues 21,444 20,331
Cost of net revenues: 3,294 2,118
Gross profit 18,150 18,213
Operating expenses:
Sales and marketing 13,656 9,141
Research and development 6,294 4,158
General and administrative 2,702 1,482
Acquisition related charges 3,753(a) 17,422(a)
Total operating expenses 26,405 32,203
Loss before royalties,
interest and taxes (8,255)(a) (13,990)(a)
Royalty income -- 569
Interest income 1,068 1,063
Gain on sale of marketable
securities -- 389(a)
Income tax benefit (provision) 1,119 2,105
Net loss $(6,068)(a) $(9,864)(a)
Basic net loss per common share: $(0.23) $(0.40)
Basic shares outstanding (000's) 26,292 24,404
Diluted net loss per common share: $(0.23) $(0.40)
Diluted shares outstanding (000's): 26,292 24,404
-0- (a) For the three months ended March 31, 1999, AXENT incurred charges of approximately $1,753 associated with the acquisition of Internet Tools, Inc. and in-process research and development of approximately $2,000 associated with the acquisition of PassGo, completed on March 31, 1999. The estimate for the in-process research and development charge is based on preliminary results of an independent third-party valuation analysis of PassGo and is subject to adjustment and review by the Company's auditors. The final accounting for the PassGo transaction is expected to be reflected in AXENT's financial statements, to be filed with the SEC on Form 10Q on or about May 15, 1999. Results for the three months ended March 31, 1998 include a one-time charge of $17,422 ($13,322 net of taxes) related to the acquisition of Raptor Systems, Inc. and a gain from the sale of residual MTI MTI Ministry of Trade and Industry (Singapore) MTI Metal Treating Institute MTI Moving Target Indicator (radar) MTI Magyar Távirati Iroda (news agency in Budapest, Hungary) marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has of $389 ($233 net of taxes). Excluding non-recurring items, results for the three months ended March 31, 1999 and 1998, respectively, are: -0-
For the Three Months
Ended March 31,
1999 1998
Income (loss) before royalties,
interest, and taxes $(4,502) $3,432
Net income (loss) $(2,315) $3,225
Basic net income (loss)
per common share $(0.09) $0.13
Basic shares outstanding (000's) 26,292 24,404
Diluted net income (loss)
per common share $(0.09) $0.12
Diluted number of
common shares (000's) 26,292 26,295
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