CyberGuard Announces First Quarter Fiscal Year 2004 Results; Company Reports 27 Percent Revenue Growth for Q1 2004, Net Income of $1.16 Million.Business Editors FORT LAUDERDALE Fort Lauderdale (lô`dərdāl), residential, commercial, and resort city (1990 pop. 149,377), seat of Broward co., SE Fla., on the Atlantic coast; settled around a fort built (c.1837) in the Seminole War, inc. 1911. , Fla.--(BUSINESS WIRE)--Oct. 23, 2003 Leadership Transition Announced, President to Succeed 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. in 2004 CyberGuard Corporation (Nasdaq:CGFW), the technology leader in network security, today reported revenues of $9.02 million for the quarter ended September September: see month. 30, 2003. This represents an increase of $1.92 million, or 27 percent, over revenues of $7.1 million for the quarter ended September 30, 2002, and is the fifth consecutive quarter of sequential revenue growth for the company. Net income for the first quarter of fiscal year 2004 was $1.16 million compared to net income for the same quarter a year earlier of $931,000. Net income includes an income tax benefit of $268,000 as a result of the reversal of a portion of the deferred tax asset valuation allowance. The net income to common stock shareholders for the quarter was $0.04 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to net income for the same quarter of the previous fiscal year of $0.04 per diluted share. Scott Hammack, chairman and chief executive officer of CyberGuard Corporation, stated: "The company continues to enjoy strong revenue growth and we are investing in the two key areas that will contribute to long term success: development and sales and marketing. The new SL3200 security appliance Security appliances protect computer networks from unwanted data traffic, intruders, email spam, enforce policies, and may also be used to create and manage VPNs. There are a number of types of security appliances. , which we began shipping in July July: see month. , has not only earned praise from reviewers, but, more importantly, approval from customers in real-world environments. Within the next few weeks, we will begin shipping our next generation central management solution, Global Command Center. This innovative solution makes managing hundreds of firewalls and VPNs across an enterprise simple and straightforward. Our sales and marketing organization has made remarkable advances and we continue to invest there as well. We are moving into new areas and expect to realize results from this expansion as we reach customers who were previously unable to buy our products." In another announcement, Hammack stated that Patrick Clawson Patrick Lyell Clawson (born 1951-03-30[1]), is an American economist and Middle East scholar. He is currently the Deputy Director for Research of the Washington Institute for Near East Policy and senior editor of Middle East Quarterly. , president of the company, is being promoted to chief executive officer to take effect at the beginning of 2004. "This is an exciting time for our company," said Clawson Clawson, city (1990 pop. 13,874), Oakland co., SE Mich., a residential suburb between Pontiac and Detroit; settled c.1833, inc. 1920. . "CyberGuard has seen enormous progress over the past several years. The demand for top quality information security is strong. We have one of the world's most secure products, a great team of people, and our business is growing. We look forward to continuing to extend our product line, growing revenues, and gaining market share as we aggressively pursue a leadership role in this industry." Clawson and Hammack joined CyberGuard in January January: see month. 2001. Hammack became CEO and Clawson, president, assuming responsibility for marketing and sales. Together, along with chief financial officer Mike Matte, who joined the company in February February: see month. 2001, and Mike Wittig Wittig is a surname, and may refer to:
, CyberGuard's CTO (Chief Technical Officer) The executive responsible for the technical direction of an organization. See CIO and salary survey. and an engineer of its award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" firewall technology, the executives led a dramatic turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. at the network security company - restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). the organization, its operations and distribution strategy. The company achieved positive cash flows in 10 of 11 quarters, accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. six consecutive quarters of profitability, recorded its first profitable fiscal year, moved to NASDAQ, added new technology and new products, and reported 48 percent revenue growth for its most recent fiscal year which ended June June: see month. 30, 2003. Noting that he would be stepping down as CEO at his three-year anniversary with the company, Hammack stated: "CyberGuard is in the best position in its history. The outlook is positive and the challenges facing the company in January 2001 are resolved. CyberGuard has positive momentum, tremendous opportunities, and a great team in place to leverage those opportunities. Much of the credit for the success of the past three years is attributable to the turnaround in sales and marketing that Pat engineered. While I am stepping down for personal reasons, I would not be making a change at this time if I didn't did·n't Contraction of did not. didn't did not didn't do feel very good about the company's future prospects and the team that will continue forward." Significant events since the start of the first quarter include: -- July 1 - The Frank Russell Frank Russell may refer to the following people:
reconstituted Russell Russell, English noble family. It first appeared prominently in the reign of Henry VIII when John Russell, 1st earl of Bedford, 1486?–1555, rose to military and diplomatic importance. 3000(R) Index. -- July 8 - CyberGuard begins trading on The NASDAQ Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. and ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors changes to CGFW. -- July 9 - CyberGuard unveils new SL3200, multi-gigabit firewall/VPN appliance A stand-alone hardware device or software environment dedicated to a specific task. See hardware appliance and software appliance. , the most powerful yet in CyberGuard's line of security appliances. -- July 11 - CyberGuard announces resolution of class-action lawsuit lawsuit: see procedure; tort. . -- July 14 - CyberGuard executives appear live on NASDAQ MarketSite as NASDAQ president officially welcomes CGFW to the exchange. -- July 17 - Major Mideast energy corporation selects CyberGuard firewall/VPN appliances for its network security solution. -- August 27 - CyberGuard's new SL3200 firewall/VPN appliance wins "Best in Test" award from Business Communications Review magazine, the second time a CyberGuard product has earned that level of recognition. -- September 4 - Continuing its leadership role in supporting international certification standards for information security, CyberGuard sponsors the 4th Annual International Common Criteria (Common Criteria for Information Technology Security) An international standard process for defining security objectives and for evaluating compliance with those objectives. The Common Criteria have largely replaced the Trusted Computer Security Evaluation Criteria (TCSEC), the Canadian Conference in Stockholm Stockholm (stŏk`hôlm'), city (1995 pop. 692,954), capital of Sweden and of Stockholm co., E Sweden, situated where Lake Mälaren flows into the Baltic Sea. , Sweden Sweden, Swed. Sverige, officially Kingdom of Sweden, constitutional monarchy (2005 est. pop. 9,002,000), 173,648 sq mi (449,750 sq km), N Europe, occupying the eastern part of the Scandinavian peninsula. . -- September 9 - Companies worldwide seek to defend against an onslaught of worm worm, common name for various unrelated invertebrate animals with soft, often long and slender bodies. Members of the phylum Platyhelminthes, or the flatworms, are the most primitive; they are generally small and flat-bodied and include the free-living planarians (of attacks. CyberGuard offers protection against new breed of worms Worms (vôrms), city (1994 pop. 79,155), Rhineland-Palatinate, SW Germany, on the Rhine River. It is an industrial city and a leading wine trade center. with intrinsic intrinsic /in·trin·sic/ (in-trin´sik) situated entirely within or pertaining exclusively to a part. in·trin·sic adj. 1. Of or relating to the essential nature of a thing. 2. intrusion prevention See IPS and IDS. and protocol anomaly A deviation from the standard protocol. An intrusion detection system (IDS) may look for protocol anomalies in order to identify attacks without a signature. Protocol anomalies reduce false positives with well-understood protocols, but may cause false positives with poorly understood or detection. -- October October: see month. 2 - CyberGuard expands presence in Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). market, signing distribution agreement with key Japanese Japanese (jăp'ənēz`), language of uncertain origin that is spoken by more than 125 million people, most of whom live in Japan. There are also many speakers of Japanese in the Ryukyu Islands, Korea, Taiwan, parts of the United States, and partner, Canon System Solutions. -- October 15 - Large government integrated communications and computer network in Asia selects CyberGuard firewall/VPN appliances and will deploy them over two-year period. Conference Call Information CyberGuard will hold a conference call to review its fiscal year 2004 first quarter results on Thursday Thursday: see week. , October 23, 2003, at 10:00 a.m. Eastern Time (7:00 a.m. Pacific Time). Participants should dial 1-706-645-9750 and ask for conference ID number 3430905. A recording of the conference call proceedings will be available from two hours after the call's conclusion on October 23 until midnight Eastern Time on October 30, 2003. Both U.S. and international callers may listen to the recording by dialing 1-706-645-9291 and requesting conference ID number 3430905. Additional financial information can be found at http://www.cyberguard.com/investors/reports.cfm. About CyberGuard Corporation CyberGuard Corporation, the technology leader in network security, provides enterprise and electronic commerce security solutions to Global 2000 companies and governments worldwide. CyberGuard's award winning, industrial-strength in·dus·tri·al-strength adj. Extremely strong, durable, or concentrated: industrial-strength cardboard; industrial-strength detergent. Adj. 1. firewall/VPN products and services protect the integrity of data and applications from unauthorized access. CyberGuard's appliances, which include SL, KS, FS and LX models, hold Common Criteria Evaluation Assurance Level The Evaluation Assurance Level (EAL1 through EAL7) of an IT product or system is a numerical grade assigned following the completion of a Common Criteria security evaluation, an international standard in effect since 1999. 4+ (EAL EAL English as an Additional Language EAL Evaluation Assurance Level EAL Eastern Airlines EAL Emergency Action Level EAL Environmental Analysis Laboratory EAL Evidence Analysis Library (American Dietetic Association) 4+) certification, the most prestigious and rigorous IT security evaluation available. The company has world headquarters in Ft. Lauderdale Lauderdale is the name of various places:
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. Statements regarding estimates, expectations and future prospects contained in this press release are forward-looking statements. These statements are based upon assumptions and analyses made by the Company in light of current conditions, future developments, and other factors the Company believes are appropriate in the circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , or information obtained from third parties, and are subject to a number of assumptions, risks and uncertainties. Readers are cautioned that forward-looking statements are not guarantees and that actual results might differ materially from those suggested in the forward-looking statements. Some of the factors that might cause future actual events to differ from those predicted or assumed include: future advances in technologies and computer security; the Company's history of losses; the Company's ability to execute on its business plans; the Company's dependence on outside parties such as its key customers and alliance partners; competition from major computer hardware, software, and networking companies; uncertainties in availability of expansion capital in the future and other risks associated with capital markets; overall network security spending; global economic conditions; and the outcome of a class action lawsuit class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax against the Company. For a more complete discussion regarding forward-looking statements, the reader is referred to the Company's periodic reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, including the 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 the fiscal year ended June 30, 2003, and other information filed with the Commission. -- Tables Follow -
CYBERGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
Three Months Ended
Sept. 30, Sept. 30,
2003 2002
------------ -----------
Revenues:
Products $6,172 $4,874
Services 2,848 2,226
------------ -----------
Total revenues 9,020 7,100
Cost of revenues:
Products 1,518 1,291
Services 837 552
------------ -----------
Total cost of revenues 2,355 1,843
------------ -----------
Gross profit 6,665 5,257
------------ -----------
Operating expenses:
Research and development 1,832 1,047
Selling, general and administrative 3,999 3,255
------------ -----------
Total operating expenses 5,831 4,302
------------ -----------
Operating income 834 955
------------ -----------
Other income (expense)
Interest income 33 28
Loss on sale of assets 0 (36)
Other income (expense) 25 (16)
------------ -----------
Total other income (expense) 58 (24)
------------ -----------
Net income before income tax benefit 892 931
------------ -----------
Income tax benefit 268 -
------------ -----------
Net income $1,160 $931
============ ===========
============ ===========
Basic earnings per common share $0.05 $0.05
============ ===========
Weighted average number of common
shares outstanding 21,312 19,181
============ ===========
Diluted earnings per common share $0.04 $0.04
Weighted average number of common
shares outstanding 26,928 22,172
============ ===========
CYBERGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
Sept. 30, June 30,
2003 2003
--------- --------
ASSETS
Cash and cash equivalents $15,469 $12,095
Restricted cash 340 379
Accounts receivable, less allowance for
uncollectible accounts of $663 at
Sep 30, 2003 and $707 at June 30, 2003 7,472 7,608
Inventories, net 342 359
Other current assets 894 967
Receivable from insurance company - 6,500
--------- --------
Total current assets 24,517 27,908
Property and equipment at cost, less accumulated
depreciation of $3,676 at Sep 30, 2003 and
$3,373 at June 30, 2003 1,604 1,762
Capitalized software, less accumulated
amortization of $2,032 at Sep 30, 2003 and
$1,988 at June 30, 2003 189 158
Intangibles, less accumulated amortization of
$488 at Sep 30, 2003 and $304 at June 30, 2003 615 799
Other assets 130 283
Deferred tax asset, net 4,517 4,249
--------- --------
Total assets $31,572 $35,159
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 1,153 1,215
Deferred revenue 6,244 5,697
Litigation payable 3,000 10,400
Accrued expenses and other liabilities 3,159 3,176
--------- --------
Total liabilities $13,556 $20,488
--------- --------
Commitments and Contingencies - -
Shareholders' equity
Preferred stock par value $0.01; authorized 5,000
shares; none issued - -
Common stock par value $0.01; authorized 50,000
shares; issued and outstanding 21,760 at
Sep 30, 2003 and 20,953 at June 30, 2003 218 210
Additional paid-in capital 97,113 94,924
Accumulated deficit (79,382) (80,542)
Accumulated other comprehensive income 67 79
--------- --------
Total shareholders' equity 18,016 14,671
--------- --------
Total liabilities and shareholders'
equity $31,572 $35,159
========= ========
CYBERGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Three Months Ended
Sept. 30, Sept. 30,
2003 2002
---------- ----------
Cash flows from operating activities:
Net income $1,160 $931
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 302 219
Amortization 228 66
Loss on disposal of property & equipment - 36
Deferred tax benefit (268) -
Provision for uncollectible accounts receivable (44) 173
Provision for inventory reserve - 20
Compensation expense related to stock options 5 50
Non cash expense for company 401(k) match 112 41
Translation adjustment (11) (20)
Changes in assets and liabilities:
Decrease in restricted cash 39 13
Decrease/(Increase) in accounts receivable 179 (74)
Decrease/(Increase) in other current assets 73 (401)
(Increase) in inventories (12) (2)
Decrease in other, net 154 24
(Decrease)/Increase in accounts payable (62) 286
Increase in accrued expenses and other
liabilities (18) 130
Increase/(Decrease) in deferred revenue 547 (307)
Decrease in litigation receivable 6,500 -
(Decrease) in litigation payable (7,400) -
---------- ----------
Net cash provided by operating activities 1,484 1,185
---------- ----------
Cash flows used in investing activities
Capitalized software costs (75) (103)
Purchase of property & equipment (116) (236)
---------- ----------
Net cash used in investing activities (191) (339)
---------- ----------
Cash flows provided by financing activities:
Repayment of notes payable - (62)
Proceeds from stock options exercised 2,017 168
Proceeds from sale of common stock in stock
purchase plan 64 36
---------- ----------
Net cash provided by financing activities 2,081 142
---------- ----------
Net increase in cash 3,374 988
Cash and cash equivalents at beginning of
period 12,095 6,166
---------- ----------
Cash and cash equivalents at end of period $15,469 $7,154
========== ==========
12,095 6,166
Supplemental disclosure of cash flow
information
Cash paid for interest $- $2
========== ==========
Cash paid for income taxes $- $-
========== ==========
Supplemental disclosure of non-cash information:
During fiscal year 2002, the Company's CEO, Scott Hammack,
participated in a special option program which required the Company
to record compensation expense of $45.
Approximately 310 options to purchase shares of the Company's common
stock were issued at a below market price, which required the
Company to record approximately $5 in compensation expense during
fiscal year 2003 and 2002.
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