Network Associates Reports Record Fourth Quarter Revenue
Business Wire - January 20, 1998 08:32
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SANTA CLARA, Calif.--(BUSINESS WIRE)--Jan. 20,
1998--
Fourth Quarter Revenue Rises to $173,305,000; Fourth Quarter
Net Income Exclusive of Acquisition and Non-Recurring
Charges Rises to $36,115,000
Network Assoc. (NASDAQ:NETA), a leading supplier of
enterprise network security and management software, today
reported record revenue and earnings for the fourth quarter
and twelve months ended December 31, 1997 excluding costs
related to the previously announced acquisitions of Network
General Corporation and Pretty Good Privacy, Inc. which both
closed in December 1997.
Earnings Before Charges Associated with the Acquisitions of
Network General and PGP
Revenue for the fourth quarter reached $173,305,000, an
increase of 39 percent over revenues of $124,662,000(1) in the
same period a year ago, restated for the acquisition of Network
General, which was accounted for as a pooling of interests.
Net income exclusive of acquisition and non-recurring
charges for the fourth quarter increased 26 percent to
$36,115,000, or $0.49 per share, from $28,643,000(1), or $0.39
per share in the fourth quarter of 1996. Revenue for the twelve
months ended December 31, 1997 was $612,193,000, an
increase of 45 percent over revenue of $421,794,000(1)
reported for the previous fiscal year. Net income exclusive of
acquisition and non-recurring charges for the year ended
December 31, 1997 increased 43 percent to $131,584,000, or
$1.81 per share, compared to net income of $92,130,000(1), or
$1.28 per share excluding acquisition charges in the previous
year.
Three Months Ended December 31,
1997 1996
Revenues $173,305,000 $124,662,000
Income Before Taxes $58,250,000 $44,811,000
Net Income $36,115,000 $28,643,000
Earnings Per Share $0.49 $0.39
Twelve Months Ended December 31,
1997 1996(1)
Revenues $612,193,000 $421,794,000
Income Before Taxes $208,764,000 $146,063,000
Net Income $131,584,000 $92,130,000
Earnings Per Share $1.81 $1.28
Reported Earnings for the Fourth Quarter of 1997
In connection with the Network General and PGP acquisitions,
the Company incurred a one-time charge for acquisition and
non-recurring costs which resulted in a reported net loss for
the fourth quarter of 1997 of $80,896,000, or $1.16 per share,
compared to net income of $28,643,000, or $0.39 per share for
the fourth quarter of 1996. After giving effect to acquisition and
non-recurring charges incurred in each year, the reported net
loss for the year ended December 31, 1997 was $28,356,000,
or $0.41 per share, compared to net income of $64,110,000(1),
or $0.89 per share for the year ended December 31, 1996. "In
addition to closing the merger between McAfee and Network
General and the acquisition of PGP ahead of schedule in the
fourth quarter, Network Associates forged ahead to deliver
record revenue and earnings for the quarter and the year," said
Bill Larson, CEO and Chairman of Network Associates. "The
final month of the quarter demonstrates the promise of the
comprehensive McAfee, Network General and PGP product
offerings, encompassed in enterprise network security and
management solutions through an integrated suite strategy."
Quarter Highlights
Network Associates was officially launched as the merger
between McAfee Associates and Network General closed
ahead of schedule on December 1, 1997. Network Associates
also extended its enterprise network security and management
software product lines with the acquisition of the leading
applied cryptographic security solution provider, privately-held
Pretty Good Privacy ("PGP"). Network Associates introduced
four new product suites aimed at new and existing corporate
customers: the McAfee Total Virus Defense Suite ("TVD"),
the PGP Total Network Security Suite ("TNS"), the Sniffer(R)
Total Network Visibility Suite ("TNV") and the McAfee Total
ServiceDesk Suite ("TSD"). The TVD Suite delivers a
multi-tiered approach to virus protection spanning client,
server and Internet gateway. In the fourth quarter, components
of the TVD Suite continued to accumulate industry awards and
honors, including Secure Computing Labs' Checkmark
certification, the latest of several benchmark tests where
VirusScan overcame the most rigorous standards for virus
detection, Windows NT Magazine's "Editor's Choice" award,
finalist in PC/Computing's MVP awards, leading anti-virus
technology for Windows NT by ENT magazine, top honors
from CNET and PC Today, PC World's "Best Buy", Secure
Computing's "Best Anti-Virus" and "Best Security Software",
HomePC's "Editor's Choice" and Window Sources' "Stellar
Award" for SecureCast. Further, the TVD Suite was named
the top performer in CNET's Net security suites review in a
head-to-head comparison against Symantec's Norton
AntiVirus 4.0 Deluxe, EMD's Armor97 Security Suite,
CyberMedia's GuardDog Deluxe and eSafe's Protect.
Extending its line of server and client virus protection, the TVD
Suite introduced GroupShield and GroupScan for Microsoft
Exchange Server version 5.5, offering the first native anti-virus
solution for Microsoft Exchange clients and servers.
GroupShield protects Microsoft Exchange servers with
around-the-clock virus-scanning, flexible alerting and
powerful "lights-out" administrative capabilities. GroupScan
intercepts and scans incoming messages at the client side,
allowing users to encrypt messages without sacrificing virus
security. The installed base of GroupShield for Microsoft
Exchange and Lotus Notes surpassed three million users in its
first twelve months on the market.
The TNV Suite expanded its product offerings during the fourth
quarter, including the Sniffer(R) Decode Server as a
cost-effective solution for network professionals who perform
technical support, training or development. The Sniffer(R)
Decode Server meets a critical need by making trace files
available to Technical Assistance Center ("TAC") engineers
for analysis through a Web Browser. The trace files document
hard-to-solve problems and can be captured at end user sites
by a portable Sniffer(R) Network Analyzer and submitted for
in-depth analysis to TAC engineers. Also during the quarter,
the HSSI Sniffer(R) Network Analyzer was launched, the only
Expert Analysis tool for High-Speed Serial Interface links. The
TSD Suite added a new web-based Self ServiceDesk, an
integration of diagnostic and help-desk software designed to
make desktop computers "help-desk-ready", giving PC's
"self-healing" capabilities which empower employees to solve
problems without calling the help desk. Self ServiceDesk is
designed exclusively for Microsoft(R) Internet Information
Server, Microsoft's comprehensive Web server solution, and
represents an addition to the seamless integration of
Microsoft's SQL Server with the latest release of McAfee
HelpDesk announced in the third quarter of 1997. The TNS
Suite was launched with the acquisition of PGP, incorporating
the PGP public-key infrastructure, including the PGP
Certificate Server, with the Cybercop, Webwall and
NetCrypto products, enabling confidential communications and
security across a corporate intranet, extranet or the public
Internet. With headquarters in Santa Clara, California,
Network Associates, Inc., formed by the merger of McAfee
Associates and Network General, is a leading supplier of
enterprise network security and management solutions.
Network Associates' product offering includes four individual
software suites, Total Virus Defense, Total Network Security,
Total Network Visibility and Total ServiceDesk, which can be
centrally managed from within the Network Associates'
NetTools unified management environment. For more
information, Network Associates can be reached at
408/988-3832 or on the Internet at
networkassociates.com .
(1) For purposes of the comparative operating data, Network
General's audited consolidated financial statements for the
fiscal year ended March 31, 1997 and for the twelve months
ended December 31, 1997 have been combined with
McAfee's audited consolidated financial statements for the
fiscal years ended December 31, 1996 and 1997, respectively.
As a result, Network General's results for the three month
period ended March 31, 1997 are included in the consolidated
statement of operations data for both the twelve months ended
December 31, 1996 and 1997. This information is not
necessarily indicative of the operating results or financial
position that would have occurred if the Merger had been
consummated at the beginning of the periods indicated, nor is it
necessarily indicative of future operating results or financial
position.
NETWORK ASSOCIATES, INC.
Consolidated Balance Sheets
(In thousands)
December 31, December 31,
1997 1996(1)
Assets
Cash and investments $ 356,560 $ 305,653
Accounts receivable, net 125,284 77,391
Inventories 8,379 5,307
Prepaid expenses and current deferred
taxes 52,774 26,113
Fixed assets, net 28,570 28,363
Long-term deferred taxes 7,247 7,719
Intangible and other assets, net 23,117 7,210
---------- ------------
Total Assets $ 601,931 $ 457,756
========== ============
Liabilities
Accounts payable $18,439 $33,552
Accrued liabilities 141,083 36,360
Deferred revenue and taxes 82,650 58,921
---------- ------------
Total liabilities 242,172 128,833
Stockholders' Equity
Common stock 690 668
Additional paid in capital 191,431 139,583
Retained earnings 167,638 188,672
---------- ------------
Total stockholders' equity 359,759 328,923
---------- ------------
Total Liabilities and Stockholders' Equity $ 601,931 $ 457,756
========== ============
(1) For purposes of the comparative operating data, Network General's
audited consolidated financial statements for the fiscal year ended
March 31, 1997 and for the twelve months ended December 31, 1997 have
been combined with McAfee's audited consolidated financial statements
for the fiscal years ended ended December 31, 1996 and 1997,
respectively. As a result, Network General's results for the three
month period ended March 31, 1997 are included in the consolidated
statement of operations data for both the twelve months ended
December 31, 1996 and 1997. This information is not necessarily
indicative of the operating results or financial position that would
have occurred if the Merger had been consummated at the beginning of
the periods indicated, nor is it necessarily indicative of future
operating results or financial position.
NETWORK ASSOCIATES, INC.
Consolidated Income Statements
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1997 1996 1997 1996(1)
(unaudited)
Net Revenues $173,305 $124,662 $612,193 $421,794
Operating Costs & Expenses:
Cost of net revenues 31,967 21,972 108,216 76,913
Research & development 24,048 15,532 85,021 52,244
Marketing & sales 50,474 35,170 181,017 122,638
General & administrative 11,945 9,126 43,060 30,315
Amortization of
intangibles 270 874 858 3,169
Acquisition and
non-recurring charges 132,608 -- 175,800 30,669
--------- --------- --------- ---------
Total operating
costs and expenses 251,312 82,674 593,972 315,948
--------- --------- --------- ---------
Income (loss) from
operations (78,007) 41,988 18,221 105,846
Other Income 3,649 2,823 14,743 9,548
--------- --------- --------- ---------
Income (loss) before
provision for income
taxes (74,358) 44,811 32,964 115,394
Provision for Income Taxes 6,538 16,168 61,320 51,284
========= ========= ========= =========
Net Income (Loss) $(80,896) $ 28,643 $(28,356) $ 64,110
========= ========= ========= =========
Fully Diluted Earnings
(Loss) Per Share $ (1.16) $ 0.39 $ (0.41) $ 0.89
========= ========= ========= =========
Shares Used 69,714 73,480 68,748 72,221
========= ========= ========= =========
(1) For purposes of the comparative operating data, Network General's
audited consolidated financial statements for the fiscal year ended
March 31, 1997 and for the twelve months ended December 31, 1997 have
been combined with McAfee's audited consolidated financial statements
for the fiscal years ended ended December 31, 1996 and 1997,
respectively. As a result, Network General's results for the three
month period ended March 31, 1997 are included in the consolidated
statement of operations data for both the twelve months ended
December 31, 1996 and 1997. This information is not necessarily
indicative of the operating results or financial position that would
have occurred if the Merger had been consummated at the beginning of
the periods indicated, nor is it necessarily indicative of future
operating results or financial position. |
