IRE Reports Record Revenue and Profitability.Business/Technology Editors BALTIMORE--(BUSINESS WIRE)--Oct 17, 2000 Quarterly Revenue Doubles--Growth Drives Net Income of $.26/share Information Resource Engineering, Inc. (IRE) (Nasdaq: IREG IREG International Roaming Expert Group (Global System for Mobile Communication Association) IREG ITU-T Recommendation Experiment Group ), a leading provider of Virtual Private 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. ) technology and solutions for secure business communications, today reported financial results for the three months ended September September: see month. 30, 2000. Revenues for the three-month period grew by 102% to $7.6 million, compared to $3.8 million for the same period in 1999. Net income for the three-month period was $1,873,000, or $0.26 per share on a 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. basis, compared to a loss of ($1,593,000), or ($0.29) per share, in 1999. The revenue increase was spurred by growth in sales of VPN products, which increased 395% this quarter compared to the same period in 1999. The Company's sales reflect a shift to higher-margin software and license products through OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and partners resulting in a significant improvement in gross margins from 61% in the third quarter of 1999 to 74% in the third quarter of 2000. Revenues for the first nine months totaling $19.9 million were 38% higher than revenues in the first nine months of 1999, and resulted in earnings per share of $.43 per share on a diluted basis compared to a loss of ($.45) per share for the first nine months of 1999. Sales of VPN products increased by 193% for the nine months ended September 30, 2000 compared to the nine months ended September 30, 1999. Gross margins for the nine months ended September 30, 2000 increased to 73% from 64% for the comparable period in 1999 due to increased sales of VPN software and license products through OEM partners. Anthony Caputo Caputo is a common Italian surname, specially in the area of Campania. It defives from the latin root of caput or head. Persons with that name include:
VPN product revenues grew through both end user and OEM channels during the quarter. In the end user segment, new customers include a U.S. Government agency, which placed a significant order for SafeNet VPN products. The U.S. Department of Defense also formally approved SafeNet products for use in battlefield applications. In the OEM segment, new OEM customers include a major Internet Service Provider Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. who has licensed SafeNet/Soft-PK to be used by each of its VPN service customers. In addition, several network security companies, including VPN product manufacturers, licensed SafeNet/Soft-PK so that they may provide IRE's industry-leading VPN software to their customers. A new hardware implementation of SafeNet technology, SafeNet/PCI was introduced during the quarter. Two major networking companies began to order this product in OEM quantities, also contributing to revenue growth in the quarter. The Company's SafeNet/Soft-PK VPN software received top recommendations for its technology offering in product reviews from two leading technical publications, InfoWorld InfoWorld is an information technology online media and events business operating under the umbrella of InfoWorld Media Group, a division of IDG (International Data Group). and SC Magazine. InfoWorld highlighted the product's interoperability The capability of two or more hardware devices or two or more software routines to work harmoniously together. For example, in an Ethernet network, display adapters, hubs, switches and routers from different vendors must conform to the Ethernet standard and interoperate with each other. , compatibility and advanced features. SC Magazine gave SafeNet/Soft-PK its Recommended Award in a review of twelve VPN solutions for demonstrating outstanding performance, rich features and ease-of-use. "I'm I'm Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in also pleased to announce that our company name will officially change to SafeNet, Inc. on November November: see month. 1, 2000, reflecting our commitment to 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. as well as the success of SafeNet products in the marketplace," said Anthony Caputo. Effective November 1, 2000, the new 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 for SafeNet, Inc. will be SFNT. Effective the same date, the SafeNet Web site will be www.safenet-inc.com . IRE's current Web site, www.ire.com will be linked directly to the new site. About SafeNet/IRE SafeNet/IRE (Nasdaq: IREG) delivers cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. Virtual Private Network (VPN) solutions that enable organizations to use the 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 and other shared networks for private communications. SafeNet/IRE, the developer of the first commercial VPN in 1989 and the first Internet VPN solution in 1995, specializes in offering integrated, standards-based VPN technology and products as part of its SafeNet(tm) product family. The SafeNet DSP (1) (Digital Signal Processor) A special-purpose CPU used for digital signal processing applications (see definition #2 below). It provides ultra-fast instruction sequences, such as shift and add, and multiply and add, which are commonly used in math-intensive (tm) "Internet Security System on a Chip," with over ten patents pending, is a breakthrough addition, not only to IRE's family of SafeNet products, but for all network and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. equipment manufacturers who have been searching for a way to increase the performance and decrease the cost of implementing and embedding 1. (mathematics) embedding - One instance of some mathematical object contained with in another instance, e.g. a group which is a subgroup. 2. (theory) embedding - (domain theory) A complete partial order F in [X -> Y] is an embedding if a VPN solution. A publicly held company since 1989, SafeNet/IRE has been providing industry-leading network security solutions around the world for over 15 years. Our global client list includes companies from the leading Fortune 1000 companies, financial institutions, and governments. Our commitment to providing leading-edge technology, quality design and manufacture, and around-the-clock a·round-the-clock adj. Variant of round-the-clock. Adj. 1. around-the-clock - at all times; "around-the-clock nursing care" day-and-night, round-the-clock, nonstop customer support is unsurpassed in the network security industry. For more information, please visit us at www.ire.com. "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. " Statement under 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 Statements in this release concerning IRE'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. " under the Federal securities laws. There can be no assurance that future results will be achieved, and actual results could differ materially from forecasts, estimates, and summary information contained in this news release. Important factors that could cause actual results to differ materially are included but are not limited to those listed in IRE's periodic reports and registration statements filed with the Securities and Exchange Commission. SafeNet is a trademark of Information Resource Engineering, Inc. All other product and company names mentioned herein may be the trademarks of their respective companies.
INFORMATION RESOURCE ENGINEERING, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues
VPN Products
and Technology $ 7,162 $ 1,447 $ 17,959 $ 6,120
Legacy Networks 471 2,336 1,982 8,300
Total revenues 7,633 3,783 19,941 14,420
Cost of revenues 2,019 1,476 5,348 5,200
Gross profit 5,614 2,307 14,593 9,220
Research and
development expenses 1,737 1,650 5,408 4,365
Sales and
marketing expenses 1,504 1,434 4,515 5,045
General and
administrative expense 876 868 2,744 2,000
Amortization of
acquired intangible
assets 22 23 64 69
Recovery of
CyberGuard advance -- (238) (275) (238)
Total operating
expenses 4,139 3,737 12,456 11,241
Operating income
(loss) 1,475 (1,430) 2,137 (2,021)
Interest income, net 398 25 934 71
Income (loss)
before income taxes 1,873 (1,405) 3,071 (1,950)
Income tax
expense (Note 1) -- 188 -- 468
Net income (loss) $ 1,873 $ (1,593) $ 3,071 $ (2,418)
Income (loss) per
common share -
basic and diluted
Basic $ 0.28 $ (0.29) $ 0.46 $ (0.45)
Diluted $ 0.26 $ (0.29) $ 0.43 $ (0.45)
Weighted average
number of common
shares outstanding:
Basic 6,802 5,514 6,694 5,411
Diluted 7,249 5,514 7,201 5,411
(1) Income tax expense for the nine month ended September 30, 2000 has
been restated due to a change in accounting method for income taxes.
INFORMATION RESOURCE ENGINEERING, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2000 1999
(unaudited)
Assets
Current Assets:
Cash and cash equivalents $ 26,731 $ 19,161
Short term investments -- 501
Accounts receivable, net
of allowance for doubtful
accounts of $214 and $251 5,740 4,405
Inventories 2,361 2,946
Prepaid expenses 391 282
Total current assets 35,223 27,295
Equipment and leasehold
improvements, net of
accumulated depreciation
of $2,807 and $2,347 1,134 1,424
Computer software development
costs, net of accumulated
amortization of $2,157
and $1,227 1,550 2,107
Goodwill, net of accumulated
amortization of $545 and $481 422 486
Prepaid license fees
and other assets 879 584
$ 39,208 $ 31,896
Liabilities and
Stockholders' Equity
Current liabilities:
Accounts payable $ 1,831 $ 1,154
Accrued expenses 2,140 1,634
Advance payments and
deferred revenue 868 1,472
Total liabilities 4,839 4,260
Stockholders' equity:
Preferred stock, $.01
par value per share
Authorized 500,000 shares,
none issued and outstanding -- --
Common stock, $.01 par
value per share
Authorized 15,000,000 shares,
issued 6,877,009 shares
in 2000 and
6,541,483 shares
in 1999 69 65
Additional paid-in capital 50,240 46,547
Accumulated deficit (14,610) (17,681)
Accumulated other
comprehensive loss (1,330) (1,295)
Net stockholders' equity 34,369 27,636
$ 39,208 $ 31,896
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