Exhibit 99
NEWS RELEASE
Donna Smith, Manager Investor Relations | Dan Chmielewski | |
Rainbow Technologies, Inc. | Rainbow Technologies, Inc. | |
(949) 450-7350 | 949-450-7377 | |
f: (949) 753-9507 | dchm@rainbow.com | |
dsmith@rainbow.com |
Rainbow Technologies Announces Strong Q1-2003 Results
Company Reports Earnings Per Share of $0.11 and Five-Fold Improvement in Net Income
Quarter-Over-Quarter
IRVINE, California – April 23, 2003 —Rainbow Technologies, Inc. (Nasdaq:RNBO) today announced first quarter revenue of $33.9 million, up 9 percent quarter-over-quarter. Earnings per share from continuing operations were $0.11, up 120 percent quarter-over quarter.
First quarter net income was $3 million, up 422 percent quarter-over-quarter. Net income increased during the quarter due primarily to significant improvement in gross margins. First quarter operating income was $3.8 million, up 181 percent quarter-over-quarter.
Revenue for the first quarter for Secure Communications was $20.6 million, up 8 percent from the first quarter of 2002. The continued growth is attributed to increased demand for network link encryptors, voice and data security solutions, and high-assurance commercial security products.
Revenue for eSecurity was $13.3 million, up 10 percent from the first quarter of 2002. Sentinel software product and iKey sales remain strong, and NetSwift iGate sales are gaining momentum.
“In the first quarter, eSecurity grew 10 percent and reached profitability. Secure Communications is well positioned to address the growing demand for high assurance security. We are encouraged about the outlook for 2003 and are expecting increased profitability for our business,” said Walt Straub, president and CEO, Rainbow Technologies.
Business Outlook
• | The Company is optimistic about improvement in the security business environment for 2003 | ||
• | The Company is accelerating its development of new technologies and products | ||
• | The Company is expanding sales and marketing for all product lines and improving operating and manufacturing efficiencies |
Conference call information
Rainbow Technologies will hold its regularly scheduled Q1-2003 conference call and Web cast Wednesday, April 23, 2003, at 1:30 p.m. PDT (4:30 p.m. EDT). The dial-in number is (888) 261-2573. To access the live Web cast, go to the company’s Website at www.rainbow.com and select the Investor Relations navigation button. Click on the Web cast link.
About Rainbow Technologies, Inc.
Making security simple since 1979, Rainbow Technologies is a leading provider of proven information security solutions for mission-critical data and applications used in business, organization and government computing environments. Rainbow has been breaking the security paradigm by making complex security simple to implement and use for more than two decades. With headquarters in Irvine, Calif., Rainbow maintains offices and authorized distributors throughout the world. For more information, visit the Web site at http://www.rainbow.com.
# # #
Rainbow Technologies, Rainbow Mykotronx, NetSwift iGate and iKey are trademarks of Rainbow Technologies, Inc. All other company and product names are trademarks of their respective organizations.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements, certain of which are contained in this press release and include, but are not limited to, the outlook for business performance, new product development, demand for security products, and global business environment. These statements speak only as of the date of this press release and are subject to various risks and uncertainties that could impact actual results. These statements speak only as of the date of this press release and the company expressly does not undertake a duty to update forward-looking statements.
RAINBOW TECHNOLOGIES, INC.
Financial Highlights
Three months ended | |||||||||
March 31, 2003 | March 31, 2002 | ||||||||
Revenues | $ | 33,869 | $ | 31,185 | |||||
Net income | $ | 2,969 | $ | 569 | |||||
Basic income (loss) per share: | |||||||||
Continuing operations | $ | 0.11 | $ | 0.05 | |||||
Discontinued operations | (0.00 | ) | (0.03 | ) | |||||
Net income | $ | 0.11 | $ | 0.02 | |||||
Diluted income (loss) per share: | |||||||||
Continuing operations | $ | 0.11 | $ | 0.05 | |||||
Discontinued operations | (0.00 | ) | (0.03 | ) | |||||
Net income | $ | 0.11 | $ | 0.02 | |||||
Weighted average shares: | |||||||||
Basic | 26,460 | 26,405 | |||||||
Diluted | 27,735 | 27,998 |
Three months ended | |||||||||
By Business Segment | March 31, 2003 | March 31, 2002 | |||||||
Revenues: | |||||||||
eSecurity Products | $ | 13,257 | $ | 12,053 | |||||
Secure Communications Products | 20,612 | 19,132 | |||||||
Consolidated | $ | 33,869 | $ | 31,185 | |||||
Operating Income (Loss): | |||||||||
eSecurity Products | $ | 52 | $ | (2,020 | ) | ||||
Secure Communications Products | 3,787 | 3,385 | |||||||
Consolidated | $ | 3,839 | $ | 1,365 | |||||
RAINBOW TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Three months ended | |||||||||||||||||||||
March 31, 2003 | % of Revenues | March 31, 2002 | % of Revenues | % Change | |||||||||||||||||
Revenues: | |||||||||||||||||||||
eSecurity Products | $ | 13,257 | 39 | % | $ | 12,053 | 39 | % | 10 | % | |||||||||||
Secure Communications Products | 20,612 | 61 | % | 19,132 | 61 | % | 8 | % | |||||||||||||
Total revenues | 33,869 | 100 | % | 31,185 | 100 | % | 9 | % | |||||||||||||
Operating expenses: | |||||||||||||||||||||
Cost of eSecurity Products | 4,981 | 15 | % | 6,137 | 20 | % | -19 | % | |||||||||||||
Cost of Secure Communications Products | 15,595 | 46 | % | 15,143 | 49 | % | 3 | % | |||||||||||||
Selling, general and administrative | 7,718 | 23 | % | 6,691 | 21 | % | 15 | % | |||||||||||||
Research and development | 1,736 | 5 | % | 1,849 | 6 | % | -6 | % | |||||||||||||
Total operating expenses | 30,030 | 89 | % | 29,820 | 96 | % | 1 | % | |||||||||||||
Operating income | 3,839 | 11 | % | 1,365 | 4 | % | 181 | % | |||||||||||||
Loss on marketable securities | (836 | ) | -2 | % | (31 | ) | 0 | % | 2597 | % | |||||||||||
Interest income | 114 | 0 | % | 88 | 0 | % | 30 | % | |||||||||||||
Interest expense | (18 | ) | 0 | % | (48 | ) | 0 | % | -63 | % | |||||||||||
Other income, net | 496 | 1 | % | 249 | 1 | % | 99 | % | |||||||||||||
Income from continuing operations before income taxes | 3,595 | 11 | % | 1,623 | 5 | % | 122 | % | |||||||||||||
Provision for income taxes | (540 | ) | -2 | % | (349 | ) | -1 | % | 55 | % | |||||||||||
Income from continuing operations | 3,055 | 9 | % | 1,274 | 4 | % | 140 | % | |||||||||||||
Loss from discontinued operations, net of applicable taxes | (86 | ) | 0 | % | (705 | ) | -2 | % | -88 | % | |||||||||||
Net income | $ | 2,969 | 9 | % | $ | 569 | 2 | % | 422 | % | |||||||||||
Basic income (loss) per share: | |||||||||||||||||||||
Continuing operations | $ | 0.11 | $ | 0.05 | |||||||||||||||||
Discontinued operations | (0.00 | ) | (0.03 | ) | |||||||||||||||||
Net income | $ | 0.11 | $ | 0.02 | |||||||||||||||||
Diluted income (loss) per share: | |||||||||||||||||||||
Continuing operations | $ | 0.11 | $ | 0.05 | |||||||||||||||||
Discontinued operations | (0.00 | ) | (0.03 | ) | |||||||||||||||||
Net income | $ | 0.11 | $ | 0.02 | |||||||||||||||||
Weighted average shares: | |||||||||||||||||||||
Basic | 26,460 | 26,405 | |||||||||||||||||||
Diluted | 27,735 | 27,998 | |||||||||||||||||||
RAINBOW TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
March 31, 2003 | December 31, 2002 | |||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 51,074 | $ | 50,922 | ||||||||||||
Marketable available-for-sale and trading securities | 794 | 301 | ||||||||||||||
Accounts receivable, net of allowance for doubtful accounts of $584 and $626 in 2003 and 2002, respectively | 20,773 | 19,221 | ||||||||||||||
Inventories | 7,452 | 9,308 | ||||||||||||||
Income tax receivable | 5,973 | 5,572 | ||||||||||||||
Prepaid expenses and other current assets | 1,968 | 1,765 | ||||||||||||||
Total current assets | 88,034 | 87,089 | ||||||||||||||
Property, plant and equipment, at cost: | ||||||||||||||||
Equipment | 22,495 | 21,981 | ||||||||||||||
Buildings | 8,006 | 7,769 | ||||||||||||||
Furniture | 2,952 | 2,909 | ||||||||||||||
Leasehold improvements | 3,001 | 2,889 | ||||||||||||||
36,454 | 35,548 | |||||||||||||||
Less accumulated depreciation and amortization | 22,688 | 21,628 | ||||||||||||||
Net property, plant and equipment | 13,766 | 13,920 | ||||||||||||||
Software development costs, net of accumulated amortization of $8,638 and $8,156 in 2003 and 2002, respectively | 3,571 | 3,775 | ||||||||||||||
Product licenses, net of accumulated amortization of $6,013 and $5,567 in 2003 and 2002, respectively | 3,330 | 3,726 | ||||||||||||||
Goodwill | 1,953 | 1,898 | ||||||||||||||
Other assets | 1,090 | 1,181 | ||||||||||||||
Total Assets | $ | 111,744 | $ | 111,589 | ||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 5,938 | $ | 8,138 | ||||||||||||
Accrued payroll and related expenses | 3,861 | 6,602 | ||||||||||||||
Warranty reserve | 1,992 | 1,844 | ||||||||||||||
Income taxes payable | 2,122 | 1,442 | ||||||||||||||
Other accrued liabilities | 5,183 | 6,908 | ||||||||||||||
Total current liabilities | 19,096 | 24,934 | ||||||||||||||
Long-term accrued restructuring costs | 2,248 | 2,349 | ||||||||||||||
Other liabilities | 1,556 | 1,926 | ||||||||||||||
Commitments and contingencies | ||||||||||||||||
Shareholders’ equity: | ||||||||||||||||
Common stock, $.001 par value, 55,000,000 shares authorized, 26,698,074 and 26,268,936 shares issued and outstanding in 2003 and 2002, respectively | 27 | 26 | ||||||||||||||
Additional paid-in capital | 60,463 | 58,313 | ||||||||||||||
Accumulated other comprehensive income | 1,692 | 348 | ||||||||||||||
Retained earnings | 26,662 | 23,693 | ||||||||||||||
Total shareholders’ equity | 88,844 | 82,380 | ||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 111,744 | $ | 111,589 | ||||||||||||