EXHIBIT 99.1
VASCO Reports First Quarter Results
Fifth consecutive quarter of profitability and positive operating cash flow;
Revenue of $6,021,000, an increase of 18% over first quarter of prior year;
Operating income of $899,000 is best in the Company's history; 129 new customers
added, 18 banks and 111 corporate network access customers
OAKBROOK TERRACE, Ill., and BRUSSELS, Belgium, April 22, 2004 - VASCO Data
Security International, Inc. (Nasdaq: VDSI) (www.vasco.com), a global provider
of security products that enable e-business and e-commerce, today announced its
financial results for the first quarter ended March 31, 2004. Revenues for the
three months were $6,021,000, an increase of $903,000 or 18% over the first
quarter of 2003.
Operating income for the first quarter of 2004 was $899,000 compared with an
operating income of $17,000 for the first quarter of 2003. Gross margins for the
first quarter of 2004 were $4,446,000 or 73.8% of revenues compared to
$2,959,000 or 57.8% of revenues for the same period in 2003. Operating expenses
for the first quarter of 2004 were $3,547,000, an increase of 21% from
$2,942,000 in the first quarter of 2003.
Net income from continuing operations for the first quarter of 2004 was $583,000
compared with $168,000 for the same period of 2003. Net income from total
operations for the first three months of 2004 was $583,000 compared with
$481,000 for the first three months of 2003. Net income from total operations in
2003 included the results of its VACMAN Enterprise business of $313,000. The
VACMAN Enterprise business was sold in the third quarter of 2003.
Income per basic and diluted common share from total operations was $0.02 for
the first quarter of 2004 and compares to income per basic and diluted common
share of $0.01 for the first quarter of 2003.
Earnings before interest, taxes, depreciation and amortization (EBITDA) from
continuing operations was $1,143,000 for the first quarter of 2004 compared with
earnings before these items of $490,000 in the first quarter of 2003. Cash
balances at March 31, 2004 were $4,167,000 compared to $4,817,000 at December
31, 2003.
"I am pleased with the results of the first quarter of 2004," said Ken Hunt,
VASCO's CEO, and Chairman. "The increase in revenue was particularly satisfying
as it appears our strategy to expand our customer base is working. The increase
in gross margins, as a percentage of revenue, indicates that the revenue growth
came from our new customers in the Banking segment and in the Corporate Network
Access market segment, both of which have lower volumes and higher margins than
our larger strategic banking customers."
"The first quarter of 2004 was one of the best first quarters in our history,"
stated Jan Valcke, VASCO's President, and COO. "Revenue in the first quarter,
which is generally weaker than the preceding fourth quarter, was strong and
reflected the benefit of our productive reseller channel. As our reseller
channel has grown, we have seen an increase in both the market's knowledge of
our products and in the number of new accounts. We were able to add 129 new
customers, 18 banks and 111 corporate network access, in the first quarter of
2004. While our large banking customers are and will continue to be important,
the gross margin in the first quarter is a reflection of new customers being
added. New customers typically order small quantities of our products and
generate higher margins. As the new customers learn more about the benefits of
strong user authentication and the ease with which our products can be deployed,
their orders increase. As we start the second quarter, we have a backlog of firm
orders to be shipped in the second quarter of $4.9 million and we are seeing a
high level of interest in our authentication products."
Cliff Bown, Executive Vice President and CFO added, "Our balance sheet continues
to strengthen as a result of the strong operating performance. Our working
capital increased by 15% in the first quarter, from $5.2 million at December 31,
2003 to $6.0 million at March 31, 2004. Operating cash flow, or EBITDA, for the
first quarter of 2004 increased $650,000 thousand or 133% compared to the first
quarter of 2003. Days Sales Outstanding (DSO) in net accounts receivable,
however, increased to approximately 66 days at March 31, 2004 from 37 days at
December 31, 2003. DSO at March 31, 2004 was 8 days, or 12% lower than at the
end of the first quarter in 2003. The increase in the DSO from the end of the
year reflects the buying pattern within the first quarter with more of the
revenues coming in the last month of the quarter. Revenues in the first quarter
generally increase each month as businesses start executing their plans in the
new year."
VASCO DATA SECURITY INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
MARCH 31,
---------------------------
2004 2003
------------ ------------
Net revenues $ 6,021 $ 5,118
Cost of goods sold 1,575 2,159
------------ ------------
Gross profit 4,446 2,959
Operating costs:
Sales and marketing 2,093 1,677
Research and development 708 523
General and administrative 746 740
Non-cash compensation -- 2
------------ ------------
Total operating costs 3,547 2,942
------------ ------------
Operating income from continuing operations 899 17
Interest income (expense), net 29 (49)
Other income, net 77 200
------------ ------------
Income from continuing operations before income taxes 1,005 168
Provision for income taxes 422 --
------------ ------------
Net income from continuing operations 583 168
Income from discontinued operations -- 313
------------ ------------
Net income 583 481
Preferred stock accretion and dividends (81) (291)
------------ ------------
Net income available to common shareholders $ 502 $ 190
============ ============
Basic and diluted net income per common share:
Income from continuing operations $ 0.02 $ --
Income from discontinued operations -- 0.01
------------ ------------
Net income $ 0.02 $ 0.01
============ ============
Weighted average common shares outstanding:
Basic 31,168 30,392
============ ============
Diluted 31,898 31,222
============ ============
VASCO DATA SECURITY INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
March 31, December 31,
2004 2003
------------ ------------
ASSETS
CURRENT ASSETS:
Cash $ 4,167 $ 4,817
Accounts receivable, net of allowance for doubtful accounts 4,394 2,523
Inventories, net 1,186 1,075
Prepaid expenses 404 476
Deferred income taxes 70 70
Foreign sales tax receivable 558 362
Other current assets 373 335
------------ ------------
Total current assets 11,152 9,658
Property and equipment
Furniture and fixtures 1,903 1,940
Office equipment 2,191 2,221
------------ ------------
4,094 4,161
Accumulated depreciation (3,296) (3,280)
------------ ------------
Net property and equipment 798 881
Intangible assets, net 1,297 1,378
Goodwill 250 250
Note receivable and investment in SSI 1,021 1,132
Other assets 83 83
------------ ------------
TOTAL ASSETS $ 14,601 $ 13,382
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,446 $ 1,698
Deferred revenue 1,169 386
Accrued wages and payroll taxes 1,399 1,515
Income taxes payable 219 (197)
Other accrued expenses 906 1,038
------------ ------------
Total current liabilities 5,139 4,440
------------ ------------
STOCKHOLDERS' EQUITY:
Series D Convertible Preferred Stock 4,043 5,786
Common stock 32 30
Additional paid-in capital 49,066 47,167
Accumulated deficit (43,192) (43,693)
Accumulated other comprehensive income (loss) -
cumulative translation adjustment (487) (347)
------------ ------------
Total stockholders' equity 9,462 8,943
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,601 $ 13,383
============ ============
Reconciliation of EBITDA from continuing operations to net income from
continuing operations:
THREE MONTHS ENDED (UNAUDITED),
----------------------------------------------------------------------
MARCH 31, 2004 DECEMBER 31, 2003 MARCH 31, 2003
------------------- ------------------------ -------------------
EBITDA from continuing operations $ 1,143,000 $ 348,000 $ 490,000
Interest (income) expense, net (29,000) (39,000) 49,000
Tax provision 422,000 (92,000) --
Depreciaton and amortization 167,000 244,000 273,000
------------------- ------------------------ -------------------
Net income from continuing operations $ 583,000 $ 235,000 $ 168,000
=================== ======================== ===================
Highlights of the Quarter - VASCO:
o VASCO Strengthens Presence in US by Opening North American Sales and
Support Headquarters in Boston
o VASCO Prominently Present with 3 Booths at CeBIT 2004
o VASCO Showcases Digipass Pack for Novell at CeBIT 2004
o VASCO and Netilla Announce Joint Product
o VASCO Recognizes MasterCard Germany, DG Verlag, SRC and Otto as First
VASCO EMV Award Winners
o VASCO Presents Anti-Phishing Platform for E-Commerce in Collaboration With
Banksys, STMicroelectronics and Element
Please join us during our upcoming conference call on April 22, 2004, at 10:00
a.m. EDT - 16:00h CET.
During the Conference Call, Mr. Ken Hunt, Chairman & CEO, Mr. Jan Valcke,
President and COO, and Mr Cliff Bown, CFO, will discuss VASCO's Results for the
First Quarter of 2004. To participate in this Conference Call, please dial one
of the following numbers:
USA/Canada: +1 888-424-5801
International: +1 973-409-9258
And mention access code: VASCO to be connected to the Conference Call.
The Conference Call is also available in listen-only mode on www.vasco.com.
Please log on 15 minutes before the start of the Conference Call in order to
download and install any necessary software. The recorded version of the
Conference Call will be available on the VASCO website 24 hours a day.
ABOUT VASCO: VASCO designs, develops, markets and supports patented "Identity
Authentication" products for e-business and e-commerce. VASCO's Identity
Authentication software is delivered via its Digipass security products, small
"calculator" hardware devices carried by an end user, or in a software format on
mobile phones, other portable devices, and PCs. For user access control, VASCO's
VACMAN products guarantee that only designated Digipass users get access to the
application. VASCO's target markets are the applications and their several
hundred million users that utilize fixed passwords as security. VASCO's
time-based system generates a "one-time" password that changes with every use,
and is virtually impossible to hack, or break. With over 10 million Digipass
products sold and ordered, VASCO has established itself as a world-leader for
strong Identity Authentication with 270 international financial institutions,
approximately 1400 blue-chip corporations, and governments in more than 60
countries.
Forward Looking Statements
Statements made in this news release that relate to future plans, events or
performances are forward-looking statements. Any statement containing words such
as "believes," "anticipates," "plans," "expects," and similar words, is
forward-looking, and these statements involve risks and uncertainties and are
based on current expectations. Consequently, actual results could differ
materially from the expectations expressed in these forward-looking statements.
Reference is made to the Company's public filings with the US Securities and
Exchange Commission for further information regarding the Company and its
operations.
For more information contact:
Jochem Binst, +32 2 456 9810, jbinst@vasco.com