ARCHIVE 2005

CyberGuard Reports Second Quarter Financial Results.

CyberGuard Corporation (Nasdaq: CGFW), a global provider of security solutions that protect the business-critical information assets of Global 2,000 enterprises and government organizations, today reported revenues of $16.5 million for the quarter ended December 31, 2004, representing an increase of $5.3 million, or 47%, over revenues of $11.2 million for the quarter ended December 31, 2003. This is the tenth consecutive quarter of sequential revenue growth for the Company. For the first six months of fiscal year 2005, revenues were $32.2 million, an increase of $11.9 million, or 59%, over revenues of $20.3 million for the first six months of last year.On a GAAP basis, inclusive of acquisition-related costs, the company reported a net income of $1.0 million, or $0.03 per diluted share, for the second quarter of fiscal 2005, which compares to a net income of $2.3 million, or $0.08 earnings per diluted share, for the same quarter of the prior year. For the first six months of fiscal 2005, GAAP net income totaled $1.0 million compared to GAAP net income of $3.5 million for the first six months of fiscal 2004. GAAP earnings per diluted share for the first six months of fiscal 2005 were $0.03, as compared to earnings per diluted share of $0.12 for the first six months of fiscal 2004.On a non-GAAP or pro forma basis (net of acquisition charges as outlined in the attached financial statement that reconciles GAAP and pro forma numbers), net income for the second quarter of fiscal year 2005 was $2.0 million, or $0.06 per diluted share, as compared to $2.6 million, or $0.09 per diluted share, for the second quarter of fiscal year 2004. For the first six months of fiscal year 2005, pro forma net income totaled $3.1 million, or $0.09 per diluted share, compared to pro forma net income of $3.9 million, or $0.14 per diluted share, for the first six months of fiscal year 2004.According to Pat Clawson, chairman and chief executive officer, "Investments in our products, sales channels, global infrastructure and strategic acquisitions are starting to gain real traction, and the impact is evident in our results for the second quarter. With the Webwasher acquisition we are successfully cross-selling products throughout the world, most notably in Germany, where our Webwasher channels have allowed us to significantly increase firewall sales year-to-date."Clawson added, "As CyberGuard continues to establish our enterprise security leadership position, we'll be focused on accelerating our firewall and Webwasher cross-selling efforts, not only in Europe but throughout the world, adding strong channel partners, and increasing sales of our new TSP firewall product line. The combination of the TSP firewall appliances with our new Global Command Center gave us the edge over two key competitors in a major win during the quarter."We'll be introducing a new firewall appliance in the third quarter, a further enhancement to our TSP product line that will offer application layer security at breakthrough speeds," he added. "This will specifically address a major challenge for IT security professionals: the slowdown that networks experience when more robust security is added. You'll also see us aggressively moving to offer security to the VoIP market, which we consider to be a major opportunity. We'll continue to improve our Asia / Pacific (APAC) management, replicating the success we've had in the Middle East and Europe.Concluded Clawson, "Our total stream protection framework and core-to-edge product strategy are clear differentiators as we expand more aggressively as a comprehensive, enterprise security solutions player. Our core-to-edge strategy heightens the value of our product suite and will continue to set ourselves apart from the commodity players and position the Company in the highest realm of value-added security."