Company Reports Revenue Growth of 19%; Revenues and EPS Within
Guidance BOCA RATON, Fla., Aug. 18 /PRNewswire-FirstCall/ --
CyberGuard Corporation (NASDAQ:CGFW), a global provider of security
solutions that protect the critical components of the largest and
most complex information networks for Global 2000 enterprises and
government organizations, today reported revenues of $17.2 million
for the quarter ended June 30, 2005, an increase of $2.7 million,
or 19%, over revenues of $14.5 million for the quarter ended June
30, 2004. This is the twelfth consecutive quarter of sequential
revenue growth. Revenues for the fiscal year ended June 30, 2005,
were $66.1 million, up $18.3 million, or 38%, compared to revenues
of $47.8 million for the fiscal year ended June 30, 2004. On a GAAP
basis, inclusive of acquisition related costs, the Company reported
a net loss of $464,000, or $0.02 per diluted share, for the fourth
quarter of fiscal 2005, compared to a net income of $375,000, or
$0.01 per diluted share, for the same quarter of the prior year.
Net income for the quarter ended June 30, 2004, included a $352,000
income tax benefit. For fiscal 2005, GAAP net income totaled
$761,000 versus GAAP net income of $1.8 million for the same period
of fiscal 2004. GAAP earnings per diluted share for fiscal 2005
were $0.02 compared to $0.06 for fiscal 2004. On a non-GAAP basis,
exclusive of acquisition-related costs, net income for the fourth
quarter of fiscal year 2005 was $887,000, or $0.03 per diluted
share, compared to $1.3 million, or $0.04 per diluted share, for
the fourth quarter of fiscal year 2004. For the fiscal year ended
June 30, 2005, non- GAAP net income totaled $5.3 million, or $0.16
per diluted share, versus $7.9 million, or $0.28 per diluted share,
for the same period a year ago. The attached table presents a
reconciliation of GAAP to non-GAAP income for the fourth quarter of
both years and for fiscal 2005 and 2004. According to Pat Clawson,
chairman and chief executive officer, "In the fourth quarter, we
continued to add new and prestigious customers around the world and
across both our firewall and content security product lines. We
achieved an exceptional level of Webwasher(R) bookings in the
fourth quarter, resulting in higher-than-anticipated sales
commissions. The result was generating revenues at the top of our
guidance range this quarter, but coming in at the lower end of our
guidance for earnings. We expect to continue to generate
exceptional Webwasher sales growth, with a new sales commission
structure in place that will more appropriately balance revenues
with commissions. "It is important to highlight the acceleration we
are seeing in Webwasher sales and the success of that product line.
Our products are resonating with enterprise security managers who
require easier-to-use, easier-to-manage solutions which can be
centrally managed to address more complex security issues. We took
a major step forward in meeting our customers' requirements when we
achieved Common Criteria EAL 4+ Certification from the National
Information Assurance Partnership for our TSP network security
appliances. EAL4+ is the highest mutually recognized certification
level and it assures our customers that CyberGuard's products have
gone through a long and rigorous testing process." Clawson
concluded, "Looking back on the year, I would characterize it as
one of strategic investment with a focus on enhancing and releasing
new products, strengthening our management team, signing new Global
2000 enterprise customers, adding strong channel partners and
increasing cross- selling of our product suites. We have delivered
on all of our key priorities, and the excellent Webwasher results
in the fourth quarter give me even greater confidence in our future
growth opportunities." New Business Highlights * Announced that
Deutsche Telekom, one of the world's largest telecommunications
firms, expanded its managed security services offering based on
CyberGuard's Total Stream Protection(TM) framework. * Signed a
significant deal with UBS, a global banking leader, to secure its
worldwide operations. UBS is standardizing its global content
security operations on CyberGuard's Webwasher Content Security
Management suite. * Finalized Webwasher agreements in France with
SCNF, the French Rail Company, and Groupama Insurance, a major
insurance company, where CyberGuard's solution replaced a
multi-vendor solution that had been in place for three years. *
Signed additional deals in Europe, including a contract with the
Delta Bank in Serbia, along with Webwasher deals with ERGO, a large
Norwegian managed service provider, and Fiducia, a German-based top
ten IT full service provider. * Added several major U.S. customers
including Caterpillar, Inc. and the Pepsi Bottling Group, both of
which standardized on the Webwasher Content Security Management
suite. In addition, the U.S. Marine Corps continued to migrate from
the Classic Family of firewalls to the new TSP line. * Added
several government agencies in Japan as customers, including the
National Printing Bureau and the National Tax Agency. * Signed
contracts with various Sub-Saharan African companies and government
agencies, including deals with the Intercontinental Bank in Nigeria
and the European Aeronautic Defence & Space Company (EADS) in
South Africa. Other Highlights * Released Webwasher Content
Security Management Suite 5.2, which delivers a unique 'One-Click
Lockdown' feature enabling organizations to weather heavy attacks
by triggering a lockdown of vulnerable areas of the network while
allowing necessary applications to run uninterrupted. * Partnered
with Blue Coat(R) Systems, a leading provider of proxy appliances,
to deliver CyberGuard's Webwasher URL Filter on the high-
performance Blue Coat ProxySG(TM) appliances. * Released CyberGuard
SG565, a new all-in-one wireless workgroup security and data access
appliance, designed to secure the wireless and wired local area
networks of small and medium-sized enterprises. * Announced that
Trusonic's newest MBOX Media Player is powered by CyberGuard's
technology. Trusonic provides custom business music and messaging
services and maintains licensing relationships with major record
labels and over 200,000 Independent Artists representing over 1.5
million songs. Financial Highlights * Revenues grew 19% over the
same three month period of the previous year, and both revenue and
EPS results were within guidance. * Non-GAAP gross profit for the
quarter increased to $12.5 million, or 73% of fiscal fourth quarter
2005 revenues, versus $9.7 million, or 67% of revenues for the same
quarter a year ago. On a sequential basis, non- GAAP gross profit
increased 2% from 71% of revenues. * Non-GAAP gross profit for the
2005 fiscal year increased to $47.2 million, or 71% of revenues,
versus $33.1 million, or 69% of revenues for the year ended June
30, 2004. * Cash related balances were $15.0 million, and total
current assets were $39.8 million as of June 30, 2005. * Current
and long-term liabilities were $43.9 million as of June 30, 2005.
The investor conference call will take place today at 10.00 a.m.
Eastern Daylight Time via live web cast on CyberGuard's web site at
http://www.cyberguard.com/. To participate by telephone, the
dial-in number is 877-560-3200 and the conference ID number is
7895959; the international dial- in is 706-645-9750 and the
conference ID number is 7895959. Investors are advised to dial-in
at least five minutes prior to the call to register. The web cast
will be archived for seven days: from 12:00 p.m. Thursday, August
18, until 12.00 p.m. Thursday, August 25, 2005. The archived
recording may also be accessed by dialing 800-642-1687 or
706-645-9291 (international) and requesting conference ID number
7895959. Additional financial information can be found at
http://www.cyberguard.com/investors/reports.cfm. About CyberGuard
Corporation CyberGuard Corporation (NASDAQ:CGFW) delivers a suite
of integrated information security solutions to provide Global 2000
enterprises and government organizations with the confidence that
their critical information assets are protected. Based on the
company's Total Stream Protection framework and managed via its
Global Command Center, CyberGuard's products go beyond
network-level security to provide protection against the most
dangerous application-layer vulnerabilities and avoid potential
damage, securing the entire data stream. With a growing and
satisfied number of brand-name customers, CyberGuard has deployed
more than 250,000 products across the globe. Headquartered near
Boca Raton, FL., the company has offices and training centers
around the world. For more information visit
http://www.cyberguard.com/. Forward-Looking Statement 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, 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 and to integrate recent acquisitions;
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 litigation 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 for the fiscal year
ended June 30, 2004, and other information filed with the
Commission. CyberGuard(R) and Webwasher(R) are registered
trademarks and Total Stream Protection(TM) and Global Command
Center(TM) are trademarks of CyberGuard Corporation. All other
trademarks are property of their respective owners. CYBERGUARD
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands, except per share data) Three Months Ended
(Unaudited) June 30, June 30, 2005 2004 GAAP Proforma Proforma GAAP
Proforma Proforma Presenta- Adjust- Presenta- Presenta- Adjust-
Presenta- tion ments tion tion ments tion Revenues: Products
$11,829 $- $11,829 $11,299 $- $11,299 Services 5,381 - 5,381 3,221
- 3,221 Total revenues 17,210 - 17,210 14,520 - 14,520 Cost of
revenues: Products 3,938 (508)(1) 3,430 4,092 (470)(1) 3,622
Services 1,285 - 1,285 1,203 - 1,203 Total cost of revenues 5,223
(508) 4,715 5,295 (470) 4,825 Gross profit 11,987 508 12,495 9,225
470 9,695 Operating expenses: Research and development 2,281 -
2,281 2,311 - 2,311 Selling, general and administrative 10,199
(843)(1) 9,356 6,944 (460)(1) 6,484 Total operating expenses 12,480
(843) 11,637 9,255 (460) 8,795 Operating income / (loss) (493)
1,351 858 (30) 930 900 Other income Interest income, net 51 - 51 35
- 35 Other (expense) / income (33) - (33) 18 - 18 Total other
(expense) / income 18 - 18 53 - 53 Income / (loss) before income
taxes (475) 1,351 876 23 930 953 Income tax (expense) / benefit 11
- 11 352 - 352 Net income / (loss) $(464) $1,351 $887 $375 $930
$1,305 Basic earnings per common share $(0.02) $0.03 $0.01 $0.05
Basic weighted average number of common shares outstanding 30,912
30,912 27,656 27,656 Diluted earnings per common share $(0.02)
$0.03 $0.01 $0.04 Diluted weighted average number of common shares
outstanding 30,912 32,709 31,241 31,241 Note 1 - The proforma
adjustment relates to amortization of acquisition related
intangible assets and costs. CYBERGUARD CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Amounts in
thousands, except per share data) Year Ended (Unaudited) June 30,
2005 GAAP Proforma Proforma Presentation Adjustments Presentation
Revenues: Products $49,677 $- $49,677 Services 16,421 - 16,421
Total revenues 66,098 - 66,098 Cost of revenues: Products 16,668
(2,066)(1) 14,602 Services 4,277 - 4,277 Total cost of revenues
20,945 (2,066) 18,879 Gross profit 45,153 2,066 47,219 Operating
expenses: Research and development 9,791 - 9,791 Selling, general
and administrative 34,641 (2,463)(1) 32,178 Compensation expense
related to unearned restricted stock in the SnapGear acquisition -
- - Total operating expenses 44,432 (2,463) 41,969 Operating income
/ (loss) 721 4,529 5,250 Other income Interest income, net 202 -
202 Other (expense) / income (50) - (50) Total other income 152 -
152 Income before income taxes 873 4,529 5,402 Income tax (expense)
/ benefit (112) - (112) Net income $761 $4,529 $5,290 Basic
earnings per common share $0.03 $0.17 Basic weighted average number
of common shares outstanding 30,270 30,270 Diluted earnings per
common share $0.02 $0.16 Diluted weighted average number of common
shares outstanding 32,087 32,087 Note 1 - The proforma adjustment
relates to amortization of acquisition related intangible assets
and costs. Year Ended June 30, 2004 GAAP Proforma Proforma
Presentation Adjustments Presentation Revenues: Products $35,796 $-
$35,796 Services 12,016 - 12,016 Total revenues 47,812 - 47,812
Cost of revenues: Products 11,743 (905)(1) 10,838 Services 3,919 -
3,919 Total cost of revenues 15,662 (905) 14,757 Gross profit
32,150 905 33,055 Operating expenses: Research and development
7,420 - 7,420 Selling, general and administrative 20,797 (844)(1)
19,953 Compensation expense related to unearned restricted stock in
the SnapGear acquisition 4,387 (4,387) - Total operating expenses
32,604 (5,231) 27,373 Operating income / (loss) (454) 6,136 5,682
Other income Interest income, net 148 - 148 Other (expense) /
income 376 - 376 Total other income 524 - 524 Income before income
taxes 70 6,136 6,206 Income tax (expense) / benefit 1,700 - 1,700
Net income $1,770 $6,136 $7,906 Basic earnings per common share
$0.07 $0.33 Basic weighted average number of common shares
outstanding 23,829 23,829 Diluted earnings per common share $0.06
$0.28 Diluted weighted average number of common shares outstanding
28,363 28,363 Note 1 - The proforma adjustment relates to
amortization of acquisition related intangible assets and costs.
CYBERGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED
BALANCE SHEETS (Amounts in thousands) (Unaudited) June 30, June 30,
2005 2004 ASSETS Cash and cash equivalents $15,003 $12,447
Restricted cash 298 197 Accounts receivable, less allowance for
uncollectible accounts of $481 at June 30, 2005 and $365 at June
30, 2004 19,456 9,461 Inventories, net 1,753 2,063 Other current
assets 3,248 2,790 Total current assets 39,758 26,958 Property and
equipment at cost, less accumulated depreciation of $5,562 at June
30, 2005 and $4,619 at June 30, 2004 3,366 1,673 Capitalized
software, less accumulated amortization of $2,547 at June 30, 2005
and $2,166 at June 30, 2004 2,521 1,530 Intangible assets, less
accumulated amortization of $6,452 at June 30, 2005 and $2,055 at
June 30, 2004 20,316 20,262 Other assets 241 104 Goodwill 45,454
40,625 Deferred tax asset, net 5,575 5,575 Total assets $117,231
$96,727 LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable
$3,769 $2,951 Deferred revenue, current portion 16,500 10,760 Note
payable 974 - Accrued expenses and other liabilities 8,928 5,750
Total current liabilities 30,171 19,461 Deferred tax liability
7,466 7,466 Deferred revenue, less current portion 6,310 3,758
Total long-term liabilities 13,776 11,224 Total liabilities 43,947
30,685 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 31,082 at June 30, 2005 and 28,528 at June
30, 2004 311 285 Additional paid-in capital 150,995 144,569
Accumulated deficit (78,011) (78,772) Accumulated other
comprehensive income (11) (40) Total shareholders' equity 73,284
66,042 Total liabilities and shareholders' equity $117,231 $96,727
CYBERGUARD CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in thousands) Year
Ended June 30, June 30, 2005 2004 Cash flows from operating
activities: Net income $761 $1,770 Adjustments to reconcile net
income to net cash provided by operating activities: Depreciation
943 1,245 Amortization 4,778 1,930 Compensation expense related to
unearned restricted stock in the SnapGear acquisition - 4,387
Provision for inventory 47 - Deferred tax benefit - (1,700)
Provision for uncollectible accounts receivable 116 231 Stock based
compensation expense 725 453 Changes in assets and liabilities
(excluding the effect of acquisitions) Increase in accounts
receivable (10,111) (1,275) Increase in other current assets (536)
(710) Decrease in inventories 263 720 Decrease in other, net 83 179
Increase in accounts payable 818 839 Increase / (decrease) in
accrued expenses and other liabilities 1,956 (1,339) Increase in
deferred revenue 6,714 1,925 Decrease in litigation receivable -
6,500 Decrease in litigation payable - (10,400) Net cash provided
by operating activities 6,557 4,755 Cash flows used in investing
activities Increase / (decrease) in restricted cash (101) 284
Increase in intangible assets (750) - Acquisition of SnapGear, net
of cash acquired - (35) Acquisition of webwasher AG, net of cash
acquired - (8,166) Acquisition of certain assets of Zix Corporation
(2,310) - Capitalized software costs (1,372) (1,550) Purchase of
property & equipment (2,604) (660) Net cash used in investing
activities (7,137) (10,127) Cash flows provided by financing
activities: Proceeds from stock options exercised 421 4,819 Payment
on note (483) - Proceeds from warrants exercised 3,169 857 Proceeds
from issuance of common stock in stock purchase plan - 167 Net cash
provided by financing activities 3,107 5,843 Effect of exchange
rate changes on cash 29 (119) Net increase in cash 2,556 352 Cash
and cash equivalents at beginning of period 12,447 12,095 Cash and
cash equivalents at end of period $15,003 $12,447 Supplemental
disclosure of cash flow information Cash paid for interest $17 $-
Cash paid for income taxes $- $28 Supplemental disclosure of
non-cash information In connection with the acquisition of certain
assets from Zix Corporation, the Company paid Zix $2,126 in cash
and signed a promissory note for $1,500. The following assets and
liabilities were acquired: Current assets Other current assets $142
Total current assets 142 Non-current assets Property and equipment
32 Customer base 3,700 Goodwill 1,302 Total non-current assets
5,034 Current liabilities Deferred revenue 1,387 Total current
liabilities 1,387 Deferred revenue, less current portion 190 Total
assets acquired $3,599 In connection with the acquisition of
SnapGear, 1,651 shares valued at $14,414 were issued and a
contingent purchase consideration of $800 was accrued for during
the quarter ended December 31, 2003. During the quarter ended
December 31, 2004, 342 shares valued at $2,137 (which includes the
$800 of contingent consideration previously recorded), were issued
based on the attainment of revenues during the 12 months following
the acquisition. In accordance with the price protection clause of
the Stock Purchase and Sale agreement related to the acquisition of
webwasher AG, 334 shares were issued to the sellers of webwasher AG
during the quarter ended June 30, 2005. On June 30, 2005, the
issuance of 340 shares valued at $2,022, was accrued based on the
attainment of certain revenue criteria by the webwasher subsidiary
in accordance with the webwasher AG Stock Purchase and Sale
Agreement. As of June 30, 2005 these shares had not been issued.
DATASOURCE: CyberGuard Corporation CONTACT: Sally L. Beerbower of
Qorvis Communications, +1-703-744-7803, , for CyberGuard
Corporation Web site: http://www.cyberguard.com/
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