Company to Discuss Results and Guidance in Conference Call at 4:30 p.m. E.D.T.
Bedford, MA— RSA Security Inc. (Nasdaq: RSAS) today reported financial results for the third quarter ended September 30, 2001. Revenue for the third quarter of 2001 was $62.6 million, compared to $72.0 million for the third quarter of 2000. The Company reported a net loss for the third quarter of 2001, including the operations of RSA Capital and other corporate charges, of $15.5 million (a loss of $0.28 per share on a diluted basis) compared to net income of $40.0 million ($0.62 per share on a diluted basis) for the third quarter of 2000. Net income for the third quarter of 2001 includes pre-tax gains of $7.4 million from investing activities, RSA Capital expenses of $3.5 million and non-cash charges totaling $18.2 million from various restructuring, acquisition and other activities. The Company reported a net loss for the third quarter of 2001 from its core operating business of $5.4 million (a loss of $0.10 per share on a diluted basis) compared to net income of $10.2 million ($0.16 per share on a diluted basis) for the same period in 2000.
Revenue for the nine months ended September 30, 2001 was $219.7 million, an 8.7% increase over the same period last year. Reported net income for the first nine months of 2001, including the operations of RSA Capital and other non-cash charges, was $7.6 million ($0.13 per share on a diluted basis) compared to $101.8 million ($1.56 per share on a diluted basis) for the same period in 2000. Reported net income for the first nine months of 2001 includes pre-tax gains of $37.3 million from investing activities. Net income from the Company's core operating business for the first nine months of 2001 was $14.3 million ($0.24 per diluted share) compared to $28.1 million ($0.43 per diluted share) in the first nine months of 2000.
"The weakening global economy and the aftermath of September 11th had a dramatic impact on our results," said Art Coviello, CEO and president of RSA Security. "The product enhancements and the acquisitions we have made over the past year have better positioned us strategically than at any other time in our history. Whether the current economic conditions persist for an additional quarter or more, we believe we are taking the steps necessary to navigate through these difficult times and position our company to grow when the economy begins to rebound."
RSA Security will hold a conference call today to discuss its final third quarter of 2001 results and financial guidance at approximately 4:30 p.m. E.D.T. The dial-in number for this conference call in the United States is 888-592-9608, the number for international calls is 712-257-2277; both numbers have a pass code of 1011 RSAS. A replay of this conference call will be available for two days at 402-344-6821. In addition, a live Webcast of this conference call will be available on the "Investor" page of the company's Web site. Webcast participants should register approximately 15 minutes before the event to download and install any necessary software. A replay of this Webcast will be available for two business days.
Business Outlook
The Company's guidance for revenue is in the following ranges:
- $63 to $65 million in Q4 2001
- $285 to $295 million in 2002
The Company's guidance on reported net income (loss), including the operations of RSA Capital and other charges, is in the following ranges:
- $(0.15) to $(0.17) per share in Q4 2001
- $0.09 to $0.19 per share in 2002
The Company's guidance for net income from its core operating business is in the following ranges:
- $0.00 to $0.02 per share in Q4 2001
- $0.25 to $0.34 per share in 2002
The Company also announced today that it plans to take a number of steps to realign its cost structure to fit these revenue expectations, including:
- Reducing staffing by up to 15%
- Cutting discretionary program spending
- Winding down its RSA Capital segment, which consists of the New and Emerging Security Technologies ("NEST") group and the RSA Ventures fund. Over the next three quarters, the Company will merge NEST into its core operating business. Effective immediately, the Company has a moratorium on any further investments in the RSA Ventures fund.
- Cutting salaries by 10% for all salaried employees in the US.
The Company expects to take a restructuring charge of approximately $10 to $11 million in Q4 2001 to cover employee severance and other costs in connection with these efforts.
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About RSA Security
RSA Security Inc., the most trusted name in e-security™, helps organizations build secure, trusted foundations for e-business through its RSA SecurID® two-factor authentication, RSA ClearTrust® authorization, RSA BSAFE® encryption and RSA Keon® digital certificate management systems. With more than one billion RSA BSAFE-enabled applications in use worldwide, more than ten million RSA SecurID authentication users and almost 20 years of industry experience, RSA Security has the proven leadership and innovative technology to address the changing security needs of e-business and bring trust to the online economy. RSA Security can be reached at www.rsasecurity.com.
