BindView Announces Financial Results for Second Quarter 2002.Business/Technology Editors HOUSTON--(BUSINESS WIRE)--July 25, 2002 BindView Corporation (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 : BVEW BVEW Binary View ), a leading provider of IT security management solutions, today announced results for the quarter and six months ended June 30, 2002. Revenues for the quarter were in line with the Company's revised expectations as set forth in its press release issued July 2, 2002. Net loss was higher than the revised expectations as the Company provided a full valuation allowance against its deferred tax assets. Revenues for the second quarter were $15.0 million, compared with $17.5 million in the second quarter of 2001. This reduction in revenues related primarily to a decline in license revenues. License revenues for the quarter were $7.6 million, compared with $10.3 million for the second quarter of 2001. This decline reflected a lengthening lengthening (lengkˑ·the·ning), n the use of various massage or muscle energy techniques to relax and stretch muscle and connective tissue. of the sales cycle for large enterprise transactions and lower than expected sales in Europe due to the difficult economic environment. Services revenues for the quarter were $7.4 million, up from $7.2 million in the second quarter of 2001. For the second quarter, the Company reported an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $2.8 million compared with $11.3 million in the second quarter of 2001. This improvement reflected a reduction in operating costs operating costs npl → gastos mpl operacionales and expenses of $10.3 million, most of which related to the Company's corporate reorganization and restructuring in the second half of 2001. Net loss for the quarter totaled $22.5 million, or $0.43 per share, compared with a net loss of $7.7 million, or $0.15 per share, in the second quarter of 2001. The majority of the net loss for the second quarter of 2002 related to a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $19.8 million, or $0.38 per share, to provide a full valuation allowance against the Company's deferred tax assets of $19.8 million. Excluding this non-cash charge, the Company's net loss for the quarter was $2.7 million, or $0.05 per share. "Although our financial performance during the second quarter was below our original expectations, we are encouraged by many of the accomplishments we achieved during the quarter," commented Eric Pulaski president and 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. . "Our continued emphasis on cost cutting efforts, the restructuring of our sales and marketing initiatives in the US and Europe, and our plans for product line expansion will help us to achieve our financial goals for the remainder of the year and will position BindView for future growth and profitability." The deferred tax assets, such as those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. , reflect the estimated benefit of using the net operating loss carry forward to reduce future taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. . As required by Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," the Company continued its assessments of the realization of its deferred tax assets and as a result, concluded that a full valuation allowance was appropriate at June 30, 2002. As in its prior assessments, BindView considered its current and previous performance and other relevant factors in determining the sufficiency of its valuation allowance. Objective factors, such as current and previous operating losses, were given substantially more weight than management's outlook for future profitability. Management remains optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the future prospects of the Company's business and the industry and continues to believe that over time, as the market improves, the Company should generate sufficient taxable income to utilize a substantial portion of its net operating loss carryforwards Net operating loss carryforwards Application of losses to offset earnings in future years. . Until such time as a consistent pattern of sufficient profitability is established, a full income tax provision will not be provided on any future pre-tax accounting income. Gross profit for the second quarter totaled $13.6 million, compared with $15.3 million for the second quarter of 2001, reflecting the decline in revenue partially offset by an improvement in gross margin. Gross margin for the quarter was 90.3 percent, up from 87.4 percent for the same period in the preceding year. The expansion in gross margin reflected the improvement in operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. of the Company's technical support and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. units. At June 30, 2002, the Company's cash and cash equivalents were $43.7 million, which excludes $4.5 million of restricted cash, compared with $45.4 million at the end of the first quarter. The decrease in the cash balance was in line with the Company's expectations and included capital expenditures to upgrade the Company's customer relationship management system to improve sales effectiveness. The Company had no outstanding debt. Corporate Reorganization and Restructuring. The Company approved a plan to improve operating efficiency that includes a reduction of R&D resources in Houston by shifting more of the development of certain products to its lower cost India development center, a streamlining of its sales management Sales Management Role and Goal Importance of sales management is critical for any commercial organization. Expanding business in not possible without increasing sales volumes, and effective sales management goal is to organize sales team work in such a manner that ensures a and various non-personnel related cuts. The restructuring includes eliminating the chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. position and consolidating operations across all sales and marketing functions under two new positions that are being created for vice president of worldwide sales and vice president of worldwide marketing. Management believes that this restructuring will both reduce expenses and result in more effective sales and marketing operations. Most of the actions under the plan will be completed by the end of the third quarter and upon its full implementation, the Company expects to be able to generate positive operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. on quarterly revenues of approximately $16.7 million. The Company expects to take a charge of $1.5 million to $2.0 million in the third quarter for the costs of the restructuring. Management Changes. Early in the third quarter, William D. Miller, the Company's chief operating officer, resigned to accept a management position with another company. Mr. Miller's sales management responsibilities have been transferred to Kenneth D. Naumann, who has been promoted to vice president of worldwide sales. Mr. Naumann was formerly vice president of sales for the Americas. The company is actively searching for a senior vice president of worldwide marketing and expects to fill the position shortly. Board Change. Mr. Peter L. Bloom, one of the outside members of the Company's Board of Directors and member of the audit committee and compensation committee of the Board, has tendered his resignation from the Board to be effective August 1, 2002. Mr. Bloom is resigning as a result of his increased workload at General Atlantic Partners, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , a private equity investment firm where he serves as a managing member. The Board is actively seeking another outside director to replace Mr. Bloom and expects to name a new director in the coming weeks. Once the new Board member is in place, three of the five Board seats will be held by outside directors. Stock Buyback Stock buyback A corporation's purchase of its own outstanding stock, usually in order to raise the company's earnings per share. stock buyback See buyback. Program. During the second quarter, the Company repurchased 28,500 shares of its common stock at an average price of $1.41 per share. The Board of Directors has approved $4.0 million for stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. in the third quarter and the Company plans to resume the program once the trading window opens on Tuesday, July 30, 2002. Each quarter, the Board will evaluate the buyback program and determine the parameters for future stock repurchases. Outlook for Second Half of 2002. The Company expects revenues for the second half of 2002 to range between $35.0 million and $40.0 million. At these revenue levels, the Company expects to generate positive operating income and cash flows for the second half of 2002, before the effects of any restructuring charges the Company may incur in the third quarter related to actions to improve efficiency and operating leverage. Net income, excluding the restructuring charge the Company plans to take in the third quarter, is expected to range between $1.0 million, or $0.02 per share, and $4.0 million, or $0.08 per share, for the second half of 2002. The Company's ability to achieve or exceed these estimates will depend on the expected increase in IT security spending and continued improvement in sales execution and marketing effectiveness Marketing Effectiveness is the function of improving how marketers go to market with the goal of optimizing their marketing spend to achieve even better results for both the short-term and long-term. Also related to Marketing ROI and Return on Marketing Investment (ROMI). . Recent highlights: --New versions of both the bv-Admin and bv-Control product lines were shipped, further increasing the competitive standing of BindView's solutions. BindView also announced bv-Admin for Microsoft Exchange Messaging and groupware software for Windows from Microsoft. Exchange Server is an Internet-compliant e-mail system that runs under Windows NT/2000 and Windows Server 2003. It can be accessed by Web browsers, the Exchange client, versions of Outlook and the earlier Windows Inbox. Migration v7.0 to assist customers in their efforts to securely manage their migrations to Microsoft Exchange 2000. --BindView experienced significant growth in its bv-Admin for Windows product line. When the American Red Cross American Red Cross: see Red Cross. decided to migrate to the Windows 2000 platform, it chose BindView to assist in that process. --Eleven of BindView's security solutions received the important Security Technical Implementation Guide A Security Technical Implementation Guide or STIG is a methodology for standardized secure installation and maintenance of computer software and hardware. The term was coined by DISA who creates configuration documents in support of the United States Department of Defense (STIG) certification from the Joint Interoperability Test Command The Joint Interoperability Test Command (JITC) is a United States military organization that tests technology that pertains to multiple branches of the armed services and government. There is a facility in Fort Huachuca, Arizona and in Indian Head, Maryland. of the Department of Defense. STIG certification is granted to the most comprehensive and reliable security management solutions and helps government agencies to select and utilize these certified products to help secure their IT infrastructure. --Seventeen new partners including INS INS abbr. 1. Immigration and Naturalization Service 2. International News Service Noun 1. INS (formerly Lucent) have been brought into the Company's Elite Security Partnership Program in the first half of 2002, with 10 of those signed in the second quarter. These include partners that offer security consulting for the enterprise and compliance with federal privacy and security regulations, such as the Health Information Portability and Accountability Act There are a number of piece of legislation known as the Accountability Act:
(operating system) Microsoft Windows - Microsoft's proprietary window system and user interface software released in 1985 to run on top of MS-DOS. Widely criticised for being too slow (hence "Windoze", "Microsloth Windows") on the machines available then. 2000 and Active Directory. --The Company announced its Microsoft .NET See .NET. Web Services (1) Loosely, any online service delivered over the Web. Such usage appears in articles from non-technical sources, but not in IT-oriented publications, because definition #2 below describes the correct use of the term. Security Strategy, a software initiative that leverages Microsoft's .NET technology to secure Web Services and the Microsoft platforms and applications on which they run. BindView's first security product designed for .Net Web Services will be shipping later this year. Scheduled Conference. The Company has scheduled a conference call today at 4:00 p.m. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT to discuss details of the second quarter financial results. Interested parties should call (800) 238-9007, passcode 239343. A Webcast also will be provided live at: www.bindview.com/com/about/ir.cfm. The conference will be available for replay at (888) 203-1112, passcode 239343 from July 25 to August 2, 2002. About BindView Corporation BindView Corporation, the worldwide leader in providing host-based 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. software, delivers proactive security management solutions to help safeguard computer systems and networks from security breaches before they occur. Unlike traditional approaches, the company's solutions work from the inside out to help protect business systems from both internal and external threats, thus reducing business risks. BindView's suite of cross-platform software and associated services help secure, automate and reduce the costs of managing information technology infrastructures. More than 20 million licenses of our solutions have been shipped worldwide to approximately 5,000 companies, including more than 80 of the Fortune 100 and 24 of the largest 25 U.S. banks. Contact BindView via e-mail at info@bindview.com or visit BindView's World Wide Web Site at http://www.bindview.com. BindView can also be reached at (800) 749-8439 or at (713) 561-4000. Statements in this news release not based on historical fact are "forward-looking" statements pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Actual results could differ materially because of factors such as, for example, the expected increase in IT security spending and continued improvement in sales execution and marketing effectiveness, risks associated with: competition within the network management software industry; rapid technological change; BindView's ability to execute its revenue- and cost-related strategies; possible customer deferrals of significant purchases in view of uncertainties in the domestic and global economy and factors effecting "execution and marketing effectiveness". Other such factors include the risk factors and other matters described from time to time in BindView'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. filings, Form 10-Q Form 10-Q See 10-Q. filings, and other periodic filings with the Securities and Exchange Commission. Editors Note: BindView(R), the BindView logo, and the BindView product names used in this document are trademarks of BindView Development Corporation, which may be registered in one or more jurisdictions. The names of products of other companies mentioned in this document, if any, may be the registered or unregistered trademarks of the owners of the products. -O-
BindView Development Corporation
Consolidated Statements of Operations (unaudited)
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
Revenues:
Licenses $ 7,623 $ 10,296 $ 17,165 $ 20,049
Services 7,380 7,222 14,643 14,486
15,003 17,518 31,808 34,535
Cost of revenues:
Licenses 93 301 249 636
Services 1,358 1,908 2,928 3,420
1,451 2,209 3,177 4,056
Gross profit 13,552 15,309 28,631 30,479
Operating costs and
expenses:
Sales and marketing 9,515 14,836 19,878 27,794
Research and
development 4,949 5,974 9,968 11,904
General and
administrative 1,909 5,844 3,818 8,524
Transaction and
restructuring -- -- -- 594
16,373 26,654 33,664 48,816
Operating loss (2,821) (11,345) (5,033) (18,337)
Other income 146 464 1,705 1,349
Loss before income
taxes (2,675) (10,881) (3,328) (16,988)
Provision (benefit)
for income taxes 19,791 (3,167) 19,562 (4,999)
Net loss $(22,466) $ (7,714) $(22,890) $(11,989)
Loss per share -
basic and diluted $ (0.43) $ (0.15) $ (0.44) $ (0.23)
Number of shares used
to calculate per
share amounts:
Basic 51,719 51,632 51,653 51,577
Diluted 51,719 51,632 51,653 51,577
BindView Development Corporation
Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2002 2001
(unaudited)
Cash and cash equivalents $ 43,662 $ 39,791
Short-term investments -- 3,253
Accounts receivable, net 8,295 10,344
Other 1,041 1,180
Total current assets 52,998 54,568
Property and equipment, net 9,159 9,221
Investments and other 4,752 4,770
Deferred income taxes -- 19,562
Total assets $ 66,909 $ 88,121
Accounts payable $ 3,549 $ 1,763
Accrued liabilities 4,301 4,954
Accrued compensation 2,999 4,051
Deferred revenues 12,237 10,350
Total current liabilities 23,086 21,118
Deferred revenues 2,188 2,618
Other 148 576
Common stock 1 1
Treasury stock (40) (12,738)
Additional paid-in capital 109,519 121,884
Accumulated deficit (66,855) (43,965)
Notes receivable from shareholders (927) (1,188)
Accumulated other comprehensive loss (211) (185)
Total shareholders' equity 41,487 63,809
Total liabilities and
shareholders' equity $ 66,909 $ 88,121
Common shares outstanding 51,700 51,377
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