Cyberguard (NASDAQ:CGFW)
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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
$17.4 million for the quarter ended September 30, 2005. This
represents an increase of $1.8 million, or 11.2 percent, over revenues
of $15.6 million for the quarter ended September 30, 2004, and is the
thirteenth consecutive quarter of sequential revenue growth for the
company.
On a GAAP basis the Company reported net income of $341,000 for
the first quarter of fiscal year 2006 or $0.01 earnings per diluted
share to common stock shareholders. That compares to net loss of
$59,000 for the same quarter a year earlier or $0.00 earnings per
diluted share.
On a non-GAAP or pro forma basis (exclusive of acquisition-related
costs and option expense) net income for the first quarter of fiscal
year 2006 was $2.5 million compared to $1.0 million for the first
quarter of the fiscal year ending September 30, 2004. On a pro forma
basis, the net income to common stock shareholders for the first
quarter of fiscal year 2006 was $0.08 per diluted share compared to
$0.03 per diluted share for the quarter ending September 30, 2004.
"By any measure, the first quarter of FY '06 was an outstanding
quarter for CyberGuard," said CyberGuard chairman and CEO, Pat
Clawson. "Revenues were at record levels, and, through a combination
of improved operating efficiencies and our ability to fully leverage
previous acquisitions, we were able to post exceptionally strong
results."
"Most importantly, however, is that, despite the inevitable
uncertainty surrounding the pending acquisition by Secure Computing,
buying behavior remained largely unaffected. This is a strong
endorsement of our products and a tribute to the faith our customers
have in our products. We did lose some business this quarter as a
result of the announcement of the acquisition because some customers
decided to postpone their buying decisions. This was more than offset,
however, by strong demand from other customers."
Clawson added that CyberGuard's services revenue doubled from last
year's levels and that the company has also seen a 100 percent
increase in its SG Appliance revenue from Q4 '05 levels.
New Business Highlights:
-- CyberGuard was notified by the U.S. Veteran's Administration
that our Webwasher 1000 product has been selected to provide
content security management as part of a major $10M IT
upgrade. This award is expected to be worth approximately
$2.3M to CyberGuard over the life of the contract.
-- In Q1 CyberGuard sold to over 140 customers in central Europe
with more than half of these being new customers. Of
particular note were Webwasher wins with Wincor Nixdorf and
the German Army, and the signing of an agreement with PSP in
Germany for the distribution of the SG Appliance family. PSP
had been a Sonicwall distributor.
-- We continue to gain traction in the Middle East with Saudi
Telecom choosing CyberGuard for a 15 site firewall
implementation.
-- In Japan we made major inroads with Webwasher, resulting in
major contracts in the energy sector and government.
-- For the fourth year in a row, we were selected as one of two
approved firewall appliance vendors by the InfoComm
Development Authority (IDA) of Singapore.
-- CyberGuard extended its reach to sub-Saharan Africa with the
sale of a Webwasher license to MWEB, the area's largest
digital TV service provider.
-- In the UK we sold our firewall products to a large British
service provider, the British government and a global
financial services company based in the UK.
-- In Eastern Europe CyberGuard was awarded a 56 unit SG
appliance contract with the Romanian National Environmental
Agency.
-- We have regained momentum with OEM business, having received a
major order in Q1 and completing the initial phase of our VoIP
implementation for an important OEM customer. We also signed a
new OEM Partner.
About CyberGuard Corporation
CyberGuard Corporation (NASDAQ:CGFW) is a global provider of
security solutions that protect business-critical information assets
at Global 2,000 organizations and government entities. The company's
firewall/VPN, TSP(TM), Global Command Center(TM) and Webwasher(R)
product suites comprise a comprehensive, integrated security system,
which offers highly adaptive, scalable solutions that intelligently
guard against network intrusion and content-based vulnerabilities,
detecting and eliminating security threats in real-time for
performance optimization. CyberGuard has deployed more than 250,000
products in organizations around the world to maintain the health and
integrity of their enterprises. Headquartered near Boca Raton,
Florida, the company has branch offices and training centers around
the globe and can be located on the World Wide Web at
www.CyberGuard.com.
Forward-Looking Statements
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, 2005, 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.
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- Tables Follow -
CYBERGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
September 30, June 30,
2005 2005
------------- ----------
ASSETS
Cash and cash equivalents $ 13,837 $ 15,003
Restricted cash 243 298
Accounts receivable, less allowance for
uncollectible accounts of $1,391 at
September 30, 2005 and $480 at June 30,
2005 20,251 19,456
Inventories, net 1,864 1,753
Other current assets 4,035 3,248
------------------------
Total current assets 40,230 39,758
Property and equipment at cost, less
accumulated depreciation of $5,904 at
September 30, 2005 and $5,562 at June 30,
2005 3,225 3,366
Capitalized software, less accumulated
amortization of $2,716 at September 30,
2005 and $2,547 at June 30, 2005 3,084 2,521
Intangible assets, less accumulated
amortization of $7,696 at September 30,
2005 and $6,452 at June 30, 2005 19,072 20,316
Other assets 210 241
Goodwill 45,339 45,339
Deferred tax asset, net 3,864 3,864
------------------------
Total assets $ 115,024 $115,405
========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 2,449 $ 3,769
Deferred revenue, current portion 16,954 16,500
Note payable 488 974
Accrued expenses and other liabilities 7,734 8,813
------------------------
Total current liabilities 27,625 30,056
Deferred tax liability 5,755 5,755
Deferred revenue, less current portion 6,257 6,310
------------------------
Total long-term liabilities 12,012 12,065
------------------------
Total liabilities 39,637 42,121
------------------------
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
31,390 at September 30, 2005 and 31,082
at June 30, 2005 314 311
Additional paid-in capital 152,683 150,995
Accumulated deficit (77,670) (78,011)
Accumulated other comprehensive income 60 (11)
------------------------
Total shareholders' equity 75,387 73,284
------------------------
Total liabilities and shareholders'
equity $ 115,024 $115,405
========================
CYBERGUARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended
September 30, 2005
------------------------------------------
GAAP Proforma Proforma
Presentation Adjustments Presentation
------------- ------------ -------------
Revenues:
Products $ 12,170 $ - $ 12,170
Services 5,266 - 5,266
------------- ------------ -------------
Total revenues 17,436 - 17,436
Cost of revenues:
Products 3,835 (508)(1) 3,327
Services 1,332 - 1,332
------------- ------------ -------------
Total cost of revenues 5,167 (508) 4,659
------------- ------------ -------------
Gross profit 12,269 508 12,777
------------- ------------ -------------
Operating expenses:
Research and development 2,146 - 2,146
Selling, general and
administrative 9,639 (1,676)(2) 7,963
------------- ------------ -------------
Total operating expenses 11,785 (1,676) 10,109
------------- ------------ -------------
Operating income / (loss) 484 2,184 2,668
------------- ------------ -------------
Other income
Interest income, net 59 - 59
Other (expense) / income (120) - (120)
------------- ------------ -------------
Total other (expense) /
income (61) - (61)
------------- ------------ -------------
Income / (loss) before
income taxes 423 2,184 2,607
------------- ------------ -------------
Income tax (expense) /
benefit (82) - (82)
------------- ------------ -------------
Net income / (loss) $ 341 $ 2,184 $ 2,525
============= ============ =============
Basic earnings per common
share $ 0.01 $ 0.08
============= ============ =============
Basic weighted average
number of common shares
outstanding 31,568 31,568
============= ============ =============
Diluted earnings per common
share $ 0.01 $ 0.08
============= ============ =============
Diluted weighted average
number of common shares
outstanding 33,491 33,491
============= ============ =============
Three Months Ended
September 30, 2004
------------------------------------------
GAAP Proforma Proforma
Presentation Adjustments Presentation
------------- ------------ -------------
Revenues:
Products $ 12,475 $ - $ 12,475
Services 3,204 - 3,204
------------- ------------ -------------
Total revenues 15,679 - 15,679
Cost of revenues:
Products 4,155 (541)(1) 3,614
Services 996 - 996
------------ ----------- ------------
Total cost of revenues 5,151 (541) 4,610
------------- ------------ -------------
Gross profit 10,528 541 11,069
------------- ------------ -------------
Operating expenses:
Research and development 2,589 - 2,589
Selling, general and
administrative 8,064 (538)(1) 7,526
------------- ------------ -------------
Total operating expenses 10,653 (538) 10,115
------------- ------------ -------------
Operating income / (loss) (125) 1,079 954
------------- ------------ -------------
Other income
Interest income, net 46 - 46
Other (expense) / income 8 - 8
------------- ------------ -------------
Total other (expense) /
income 54 - 54
------------- ------------ -------------
Income / (loss) before
income taxes (71) 1,079 1,008
------------- ------------ -------------
Income tax (expense) /
benefit 12 - 12
------------- ------------ -------------
Net income / (loss) $ (59) $ 1,079 $ 1,020
============= ============ =============
Basic earnings per common
share $ - $ 0.03
============= ============ =============
Basic weighted average
number of common shares
outstanding 29,172 29,172
============= ============ =============
Diluted earnings per common
share $ - $ 0.03
============= ============ =============
Diluted weighted average
number of common shares
outstanding 29,172 32,028
============= ============ =============
Note 1 - The proforma adjustment relates to amortization of
acquisition related intangible assets and costs.
Note 2 - The proforma adjustment relates to stock compensation expense
in accordance with SFAS 123(R) and amortization of acquisition
related intangible assets and costs.
CYBERGUARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
Three Months Ended
September 30, September 30,
2005 2004
------------- -------------
Cash flows from operating activities:
Net income / (loss) $ 341 $ (59)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 342 184
Amortization 1,414 1,178
Provision for inventory - 127
Deferred tax benefit - (12)
Provision for uncollectible accounts
receivable 808 348
Stock based compensation expense 964 126
Changes in assets and liabilities
Increase in accounts receivable (1,603) (2,140)
(Increase) / decrease in other current
assets (777) 8
Increase in inventories (111) (507)
Decrease / (increase) in other, net 21 (288)
Decrease in accounts payable (1,320) (239)
Increase / (decrease) in accrued expenses
and other liabilities (1,080) 1,287
Increase / (decrease) in deferred revenue 402 (128)
---------------------------
Net cash used in operating activities (599) (115)
---------------------------
Cash flows used in investing activities
Decrease / (increase) in restricted cash 55 (3)
Capitalized software costs (732) -
Purchase of property & equipment (201) (799)
---------------------------
Net cash used in investing activities (878) (802)
---------------------------
Cash flows provided by financing activities:
Proceeds from stock options exercised 529 52
Payment on note (486) -
Proceeds from warrants exercised - 3,169
Proceeds from issuance of common stock in
stock purchase plan 197 -
---------------------------
Net cash provided by financing
activities 240 3,221
---------------------------
Effect of exchange rate changes on cash 71 (130)
Net (decrease) / increase in cash (1,166) 2,174
Cash and cash equivalents at beginning of
period 15,003 12,447
---------------------------
Cash and cash equivalents at end of period $ 13,837 $ 14,621
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Supplemental disclosure of cash flow information
Cash paid for interest $ 12 $ -
===========================
Cash paid for income taxes $ - $ -
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