Banyan Systems Announces Third-Quarter Profit.

WESTBORO, Mass.--(BUSINESS WIRE)--Oct. 20, 1997--

Company's Financial Performance Demonstrates Continued Progress in

Rebuilding Initiatives

Banyan Systems Incorporated (NASDAQ:BNYN), today announced its financial results for the third quarter and nine-month period ended September 30, 1997.

For the third quarter of 1997, Banyan reported net income of $769,000, or $0.04 per share, compared with a net loss of $783,000, or $0.05 per share, for the same period last year. Banyan's achievement of profitability marks the first time since the second quarter of 1996 that the Company has been profitable. Revenues for the third quarter of 1997 were $18.8 million, compared with $28.1 million for the third quarter of 1996.

For the nine-month period ended September 30, 1997, Banyan reported a net loss of $19,288,000, or $1.12 per share, compared with a net loss of $228,000, or $0.01 per share, for the same period of 1996. Revenues for the first nine months of 1997 were $55.9 million versus $88.3 million for the same period one year ago. Banyan's financial results for the first nine months of 1997 include restructuring and other related charges of $9.7 million, or $0.56 per share, of which approximately $3 million was cash-related, for severance costs associated with a reduction in the Company's work force, as well as charges related to facility and product line consolidations.

William P. Ferry, Banyan's president and chief executive officer, stated, "I am pleased with the progress we have made with our rebuilding initiatives as evidenced by our third-quarter operating performance. During the quarter, the Company expanded its business with Telefonica, Spain's largest telecommunications company, and received orders from other major Banyan customers such as Siemens, C. N. Rail and the United States Air Force Academy. While sales in the Asia/Pacific region were less than anticipated, we have taken steps to address this situation by strengthening that region's management team."

Ferry continued, "Our stabilization efforts have achieved an improved balance between revenues and expenses. Operating costs have been reduced substantially, while our cash position remains healthy at $11.0 million, despite our restructuring initiatives. In addition, we recently secured a three-year, $15 million credit facility from Foothill Capital Corporation, which provides us with additional financial resources to facilitate our efforts to strengthen the business."

Ferry commented, "We also have made progress in meeting our customer's needs for enhanced capabilities and greater functionality in our current product offerings, as well as new and innovative Internet-related solutions that support open standards. We began shipping BeyondMail 3.0 for Intelligent Messaging, the much-anticipated upgrade of our rules-based electronic mail offering, andotect, a web server software solution that enables organizations to easily protect and share intranet information. Demonstrating our commitment to support industry standards, we delivered LDAP (Lightweight Directory Access Protocol) Support for StreetTalk, which provides Banyan's StreetTalk directory services to all LDAP-enabled applications."

"The third quarter also was marked by continued progress in our strategy to grow Switchboard's web traffic and expand its base of advertisers," Ferry added. "Switchboard enhanced its capabilities with the addition of AdStudio, a tool that enables local businesses to create customized advertisements. This offering was introduced in July and has been well received. The expansion of Switchboard's sales force has resulted in notable progress with the addition of prominent companies such as Barnes and Noble, Intel and Sprint to our advertiser base."

Commenting on Banyan's outlook, Ferry concluded, "While we are pleased with our accomplishments, there is still much work to be done. To build on our progress, we remain focused on generating consistent operating performance by providing our customers with solutions that add value to their networking environments, as well as by delivering the highest levels of support and service."

Banyan is also continuing its discussions with Nasdaq concerning the continued listing of the Company's Common Stock on the Nasdaq National Market ("Nasdaq"). The Company believes it is in compliance with Nasdaq's continued listing criteria at September 30, 1997 and is proceeding with the compliance process. In addition, certain iEC, which are incorporated herein by reference. der in enterprise directory and messaging servcom . Banyan, and StreetTalk are registered te owners.

   Banyan Systems Incorpora                  1997       1996        1997        3,795      10,865
  12,159
  Hardware   ,492

Gross margin               14,927      2 - -
     Total operating
      expenses             138        602

Income/(loss) before
   ($19,288)     ($228)


Net (loss)/income p87


-0-


Condensed Consolidated Balance ted)
ASSETS

Cash and marketable securities             $10,983         $19,188
Accounts receivable, net                    12,070          19,754
Other current assets                         4,032           9,247
Property, equipment and other assets        12,098          21,343
     Total assets                          $39,183         $69,532

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabiliity                $39,183         $69,532

CONTACT: Banyan Systems IncorporaL: http://www.businesswire.com