TRUSTED INFO SY TISX Earnings -0.31(b) Estimates 0.04 last year -0.10(a)
Trusted Information Systems Announces 1997 Results, Posts Record Revenues
GLENWOOD, MD - March 3, 1998 -- Trusted Information Systems, Inc. (NASDAQ: TISX) announced record revenues for the fourth quarter and year ended December 26, 1997, resulting in its first quarterly operating profit (excluding acquisition costs) since the Company's IPO in October 1996. On Monday, February 23, 1998, the Company and Network Associates, Inc. announced that Network Associates had agreed to acquire Trusted Information Systems for approximately $305 million.
Total revenues for the fiscal year ended December 26, 1997, were $42,222,683, an increase of 54.2% over revenues of $27,375,268 for the year ended December 27, 1996. Chairman and CEO Stephen T. Walker said that revenue growth of 97.1% for sales of the company's commercial products and 128.6% for sales of its commercial consulting services were accompanied by a planned decrease (13.4%) of revenues from government contract research. Commercial product revenues for fiscal 1997 were $28,782,406 compared to revenues of $14,602,736 for the same period of 1996. Commercial consulting services revenues for 1997 were $3,834,400 versus $1,677,285 for the same period of 1996. Government contract research revenues declined from $11,095,247 in fiscal 1996 to $9,605,877 for fiscal 1997.
Total revenues for the fourth quarter of 1997 were $12,432,382, an increase of 25.8% over revenues of $9,881,405 for the same period of 1996. Commercial product revenues for the fourth quarter of 1997 were $8,802,342, an increase of 38.0% over commercial product revenues of $6,380,599 for the same period of 1996, and commercial consulting services revenues for the quarter were $1,192,579, an increase of 86.8% over commercial consulting services revenues of $638,373 for the same period of 1996, while government contract research revenues declined 14.8% for the quarter to $2,437,461 from $2,862,433 for 1996.
Including non-recurring restructuring and acquisition costs of $3,534,957 incurred as a result of its acquisition of Haystack Laboratories, Inc. in October, 1997 and a tax valuation allowance of approximately $1,200,000, the company posted a net loss for the fourth quarter and year. The net loss for fiscal 1997 was $8,564,170, or $0.63 per share on weighted average shares outstanding of 13,531,876, compared to a net loss of $3,211,121, or $0.32 per share on weighted average shares outstanding of 9,952,120 for fiscal 1996. The net loss for the quarter ended December 26, 1997, was $4,280,343, or $0.31 per share, on weighted average shares outstanding of 13,657,621, compared to a net loss of $1,221,189, or $0.10 per share, on weighted average shares outstanding of 12,663,117 for the quarter ended December 27, 1996.
"While the most significant news about TIS in 1998 is our definitive agreement to merge with Network Associates, Inc., we are very excited that we returned to profitability in the third quarter of 1997 and achieved a fourth quarter profit excluding Haystack Labs acquisition costs," said Mr. Walker. "I am pleased to say that we have once again met and exceeded our expectations and those of our investors."
"1997 was indeed a remarkable time in TIS' fifteen year history," continued Mr. Walker. "In the course of a year, we delivered more product firsts than ever and concurrently upheld our promise to show operating profitability. Gauntletr Firewalls ranked first in the application gateway market for both Unix and NT. TIS also developed the first anti-spam solution for countering electronic junk-mail and took part in the first demonstration of interoperable virtual private networks with our Gauntlet Global VPN product.
"As part of the Company's growing intrusion detection business, TIS' acquisition of Haystack Labs enabled us to develop ProxyStalkerT, the first product built specifically for securing Microsoft's (NASDAQ: MSFT) ProxyServer. On the key recovery front, our RecoverKeyT technology was the first to enable globally deployable, strong encryption products with no export restrictions whatsoever.
"These firsts, and our commitment to serious security, have enabled TIS to establish a leadership position in high-end security that remains untouched. Our record revenues in both firewall and intrusion detection sales speak volumes to the customers and resellers around the world who look to TIS products and services for a total security solution," concluded Mr. Walker.
In addition to statements of historical fact, this release contains forward-looking statements which are inherently subject to change, based on known and unknown risks, including but not limited to changes in the market, changes in the industry, and changes in relevant legislation. Please refer to the company's prospectus for additional information on factors that could materially affect the company's financial results.
About Trusted Information Systems
Trusted Information Systems, Inc. provides comprehensive security solutions for protection of enterprise-wide networks. Focusing on full service security that enables organizations to take advantage of secure networking, TIS develops, markets, licenses and supports the Gauntletr family of network security solutions - the market leader in application gateway firewalls; RecoverKey user-controlled key recovery systems; and the Stalkerr family of intrusion and misuse detection products. TIS products provide multi-dimensional security -- prevention, detection, and response -- for enabling the enterprise to operate securely from the perimeter to the server to the desktop. The Gauntlet Advantage Plus (A+) Program works with select partners to provide users with highly integrated, easy-to-use security solutions for maximizing productivity and minimizing total cost of ownership. TIS performs comprehensive services in the areas of cryptography, security policy management, penetration testing, training, and custom engineering for commercial and government customers. Through TIS' Advanced Research and Engineering (AR&E) initiatives, a constant flow of innovative technology is incorporated into practical IT security applications. For more information, contact TIS at 301-527-9500, or for investor information contact 1-888-854-TISX. Visit the TIS web page at tis.com.
Financial information
Condensed Consolidated Unaudited Statements Of Operations
Trusted Information Systems Inc.
Three months ended Twelve months ended
December 27, December 26, December 27, December 26,
1996 1997 1996 1997
Revenues:
Government contracts $2,862,433 $2,437,461 $11,095,247 $9,605,877
Commercial products 6,380,599 8,802,342 14,602,736 28,782,406
Commercial consulting services 638,373 1,192,579 1,677,285 3,834,400
9,881,405 12,432,382 27,375,268 42,222,683
Costs of Revenues:
Government contracts 2,021,387 1,592,651 7,864, 862 6,557,171
Commercial products 1,259,406 1,173,530 3,450,754 4,231,051
Commercial consulting services 391,260 787,689 987,694 2,246,646
3,672,053 3,553,870 12,303,310 13,034,868
Gross profit 6,209,352 8,878,512 15,071,958 29,187,815
Operating Expenses:
Selling, general and administrative 6,274,392 6,658,057 15,472,859 28,641,944
Research and development 1,885,707 2,138,183 4,309,891 8,532,987
Non-recurring restructuring and
transaction costs -- 3,534,957 -- 3,534,957
8,160,099 12,331,197 19,782,750 40,709,888
Loss from operations (1,950,747) (3,452,685) (4,710,792) (11,522,073)
Other income (expense):
Interest and other income 454,488 430,190 518,404 1,901,561
Interest expense (80,363) (81,320) (415,243) (259,750)
Non-recurring gain on sale of
marketable securities -- -- -- 1,670,377
374,125 348,870 103,161 3,312,188
Loss before income taxes (1,576,622) (3,103,815) (4,607,631) (8,209,885)
Income tax provision (benefit) (355,433) 1,176,528 (1,396,510) 354,285
Net Loss ($1,221,189) ($4,280,343) ($3,211,121) ($8,564,170)
Net Loss per share ($0.10) ($0.31) ($0.32) ($0.63)
Weighted average shares
outstanding 12,663,117 13,657,621 9,952,120 13,531,876
Condensed Consolidated Unaudited Balance Sheet
Trusted Information Systems Inc.
As of
December 27, December 26,
1996 1997
Assets
Cash and cash equivalents $3,237,147 $1,290,075
Marketable securities 39,008,760 27,160,179
Accounts receivable, net of allowance 6,208,367 11,365,888
Other current assets 4,236,722 5,125,840
Total current assets 52,690,996 44,941,982
Property and equipment, net 6,928,506 8,161,497
Other assets 355,593 664,962
Total assets $59,975,095 $53,768,441
Liabilities and shareholders' equity
Accounts payable $1,044,914 $568,425
Other accrued expenses 4,905,660 6,515,196
Deferred revenues 2,280,126 3,446,422
Notes payable, current portion 173,541 152,811
Total current liabilities 8,404,241 10,682,854
Notes payable, net of current portion 2,424,355 2,276,345
Other non-current liabilities 47,365 76,607
Total liabilities 10,875,961 13,035,806
Commitments
Preferred stock, $0.01 par value per share,
5,000,000 shares authorized -- --
Common stock, $0.01 par value per share,
40,000,000 shares authorized, 13,228,828 and
13,792,762 shares outstanding at December 27,
1996 and December 26, 1997, respectively 132,288 137,928
Additional paid-in-capital 49,702,188 51,152,383
Unrealized gains, net of taxes 1,495,162 --
Foreign currency translation adjustment 12,663 (26,712)
Retained deficit (1,298,884) (9,863,054)
Deferred stock compensation (944,283) (667,910)
Total shareholders' equity 49,099,134 40,732,635
Total liabilities and shareholders' equity $ 59,975,095 $53,768,441
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For more information, please contact:
Contact
Ron Kaiser
voice: (301) 854-5717
fax: (301) 527-0482
email: kaiser@tis.com
Investor Contact
Doug Poretz
(703) 506-1778 x222
email: doug@poretz.com
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