EXHIBIT INDEX
EXHIBIT DESCRIPTION
99.1 Press Release dated July 25, 2001
FOR IMMEDIATE RELEASE
CYLINK CORPORATION REPORTS RESULTS FOR SECOND QUARTER 2001
SANTA CLARA, Calif., July 25, 2001-Cylink Corporation (NASDAQ NMS: CYLK), a
leading developer of e-business security solutions, said today that it increased
second quarter revenues by eight percent over the first quarter of 2001, while
substantially maintaining cash reserves through diligent cost controls and
working capital management.
For the quarter ended July 1, 2001, the company had a net loss of $6.5 million,
or $0.20 per share, on revenues of $13.6 million. This compares with a net loss
of $7.1 million, or $0.22 per share, on revenues totaling $12.6 million in the
first quarter of 2001 and a net loss of $6.1 million, or $0.20 per share, on
revenues of $18.0 million in the second quarter last year. Included in second
quarter 2001 results was a non-cash, $2.5 million writedown of assets associated
with Cylink's previously announced windup of operations of its Algorithmic
Research Ltd. subsidiary. Nevertheless, as a result of stringent cash management
strategies implemented by the company, cash at the end of the second quarter
totaled $11.8 million, down only slightly from $11.9 million at April 1st.
"Despite the weak economy in the technology sector, we have successfully
maintained revenues from our core appliance product families, further reduced
our operating expenses, upgraded our sales operation and strategy, managed our
cash assets, and, we believe, established a realistic basis for targeting
cash-flow break-even in the fourth quarter this year and profitability next
year," said William P. Crowell, president and chief executive officer.
During the second quarter, sales of Cylink's ATM, IPSec VPN, Frame Relay and
Link encryption solutions performed well, with sales to both existing and new
customers strengthening -particularly in the financial services and corporate
banking sectors. A significant portion of the Company's second quarter revenues
and improved margins came from sales of Cylink's ATM encryption product
manufactured at the Cylink ATM Technology Center in Raleigh, North Carolina, a
business Cylink acquired in the second half of last year.
Earlier this year, the company announced it was focusing its business around
proven high-performance security appliances and bringing spending in line with
anticipated revenues. In the second quarter, Cylink divested its Virginia-based
security consulting company and announced that it will close its Israeli
subsidiary, ARL. Last week, the company initiated an additional reduction in
force involving approximately 28 percent of its employees which, together with
the previous restructuring actions, will reduce total headcount to approximately
195 employees by the end of the third quarter.
"Our restructuring strategy has focused our resources on the company's core
revenue generating business," Crowell said. "To that end, we have sufficient
resources to provide strong sales, customer and engineering support for our Wide
Area Network and IPSec products, and we have streamlined our management
structure. The Company's Public Key Infrastructure ("PKI") business has been
restructured in line with anticipated revenues, at a level that leaves us fully
committed to supporting our valued partnership with the United States Postal
Service." The company also obtained but has not drawn upon a $7.5 million credit
line
from Silicon Valley Bank in the second quarter to provide working capital if
needed to fund future growth.
"We believe in the long-term viability of the markets for our security products,
and in the high-value, high-performance solutions we have developed. With the
changes we have implemented over the past few months, we believe we have a
business model that will enable the company to capitalize on Cylink's multiple
strengths," Crowell said.
Six-Month Results
For the first six months of 2001, Cylink reported a net loss of $13.6 million,
or $0.42 per share, on revenues totaling $26.2 million. In the same period last
year, the company had a net loss of $12.3 million, or $0.41 per share, on
revenues of $35.4 million.
Investor Conference Call
As previously announced, Cylink will conduct a conference call for all
interested parties to review the company's results at 2 p.m. Pacific today. The
conference call may be accessed over the Internet via the company's website
www.cylink.com, at www.streetfusion.com or via telephone by dialing
212-896-6110. When asked, mention Cylink and Bill Crowell as the host of the
call. Those listening via the Internet should go to the site 15 minutes early to
register, download, and install any necessary audio software. For those who
cannot listen to the live broadcast, a replay will be available through 4 p.m.
Pacific on August 8 by dialing 800-633-8284 (domestic) or 858-812-6440
(overseas) and entering passcode 19388808.
About Cylink Corporation
Cylink Corporation develops, markets and supports a comprehensive family of
e-business security solutions. Founded in 1983, the company was the first to
market security solutions that protect communications with public key
cryptography. Cylink and its wholly owned subsidiaries serve Fortune 500
companies, multinational financial institutions, and government agencies
worldwide. To contact Cylink, call (408) 855-6000 or visit www.cylink.com.
Cylink is a registered trademark of Cylink Corp.
Some of the statements in this release are forward looking statements subject to
risks and uncertainties. Forward looking statements include predictions
regarding the impact of Cylink's current restructuring efforts on future
results, and about Cylink's success in reaching break even or profitability by a
specific date. Factors that could cause actual results to differ from the
Company's expectations include further weakening of the markets for our
products, lack of market acceptance for our products, pressure from competitors,
unforeseen technological or regulatory changes, loss of key personnel, and other
risk factors listed from time to time in Cylink's reports to the SEC, including
Cylink's Annual Report and Cylink's reports on Forms 10-K and 10-Q.