-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NHg8ftypb8q0dmPzFyb/cVkyCjme1kYtdfLIz0r1evGCltEgwZuzetvGHAUpMQNm /4PjsoUxaT0xerdygo6Zlg== 0000950005-99-000042.txt : 19990201 0000950005-99-000042.hdr.sgml : 19990201 ACCESSION NUMBER: 0000950005-99-000042 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990129 ITEM INFORMATION: FILED AS OF DATE: 19990129 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CYLINK CORP /CA/ CENTRAL INDEX KEY: 0001005230 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 953891600 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-27742 FILM NUMBER: 99516965 BUSINESS ADDRESS: STREET 1: 910 HERMOSA COURT CITY: SUNNYVALE STATE: CA ZIP: 94086-4103 BUSINESS PHONE: 4087355800 MAIL ADDRESS: STREET 1: 910 HERMOSA CT CITY: SUNNYVALE STATE: CA ZIP: 94086-4103 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) January 29, 1999. CYLINK CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) California 0-27742 95-3891600 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 910 Hermosa Court, Sunnyvale, California 94086 ------------------------------------------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (408) 735-5822 -------------- NONE ------------------------------------------------------ (Former name or former address, if changed since last report) Item 5. Other Events Cylink Corporation is filing this optional Report on Form 8-K to ensure that its restated financial results for the first and second quarters of 1998, the fourth quarter of 1997 and the year ended December 31, 1997, which were previously reported in a press release, are formally filed pursuant to the Securities Exchange Act of 1934. The press release, as well as restated financial statements for the periods referenced above, is attached to this Form 8-K as Exhibit 99.1 and is incorporated herein by reference. -2- Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Not applicable (b) Not applicable (c) Exhibits Exhibit 99.1 Cylink Corporation Press Release dated December 16, 1998 regarding restated financial results, and restated financial statements. -3- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CYLINK CORPORATION Date: January __, 1999 /s/ Robert B. Fougner ------------------------------ Robert B. Fougner General Counsel -4- EXHIBIT INDEX Exhibit Number Document Description ------ -------------------- 99.1 Cylink Corporation Press Release dated December 16, 1998 regarding restated financial results. EX-99.1 2 PRESS RELEASE FOR IMMEDIATE RELEASE Contacts: Roger Barnes Howard Kalt Cylink Corporation Kalt, Rosen & Associates 408-328-5125 415-397-2686 CYLINK CORP. REPORTS RESULTS FOR 3RD QUARTER, RESTATES RESULTS FOR PRIOR PERIODS SUNNYVALE, CA., December 16, 1998--Cylink Corporation (NASDAQ: CYLK, CYLKE) today reported financial results for the third quarter ended September 27, 1998, and restated results for both the first and second quarters of the current fiscal year as well as for 1997. On November 5, 1998, the company publicly announced that it and its independent accountants had initiated a review of revenue recognition practices which would result in a restatement of previously issued first and second quarter 1998 results and that all three quarters of 1998 were expected to show substantial operating losses. During the review, certain facts became known indicating errors had been made in the application of revenue recognition policies which also impacted the fourth quarter of 1997, and as a result, 1997 full-year results have been restated. For the third quarter of 1998, the company reported a net loss of $5.7 million, or $.20 per share (basic and diluted) on revenues totaling $12.1 million. In the same quarter a year ago, the company's net loss was $62.9 million, or $2.37 per share (basic and diluted), on revenues of $13.1 million. Results for the third quarter a year ago included net income from discontinued operations of $.8 million, or $.03 per share (basic and diluted) and a pretax, non-recurring purchased in-process technology charge of $63.9 million, or $2.41 per share (basic and diluted), for certain costs associated with the acquisition of Algorithmic Research. -more- Cylink Corp. Reports Earnings Results Page 2 The company's restated results for the second quarter of 1998 reflect a net loss of $1.7 million, or $0.06 per share (basic and diluted) on revenues of $12.4 million. This compares with previously reported net income of $1.7 million, or $0.06 per share (basic and diluted) on revenues of $18.0 million. In the same quarter a year ago, the company's net income was $1.2 million, or $.05 per share (basic and diluted), on revenues of $11.6 million. Results for the quarter a year ago included net income from discontinued operations of $1.0 million, or $.04 per share (basic and diluted). The company's restated results for the first quarter of 1998 reflect net income of $19.1 million, or $0.66 per share (basic and diluted) on revenues of $8.1 million. Restated net income for the first quarter of 1998 includes a loss from discontinued operations of $0.3 million, and an after tax gain on disposal of discontinued operations of $22.8 million, or $0.78 per share (basic and diluted). These results compare with previously reported net income of $23.7 million, or $0.82 per share (basic and diluted) on revenues of $15.8 million. In the same quarter a year ago, the company's net income was $1.1 million, or $0.04 per share, on revenues of $9.4 million. Net income for the quarter a year ago included net income from discontinued operations of $1.2 million, or $.04 per share (basic and diluted). Results for the fourth quarter of 1997 were also restated when certain facts became known that affected the application of the company's revenue recognition policies during that period. The company's restated results for the forth quarter of 1997 reflect a net loss of $1.2 million, or $0.04 per share (basic and diluted) on revenues of $13.6 million. Restated results for the fourth quarter, 1997 included net income from discontinued operations of $.3 million or $.01 per share (basic and diluted). Restated results for the fiscal year ended December 31, 1997 reflected a net loss of $61.7 million, or $2.31 per share, which includes net income from discontinued operations of $3.2 million, or $0.12 per share. Previously reported results for the fiscal year 1997 reflected a net loss of $58.8 million, or $2.20 per share (basic and diluted) on revenues of $49.3 million. Previously reported results included net income from discontinued operations of $4.5 million, or $.17 per share (basic and diluted) and a pretax, non-recurring purchase in-process technology charge of $63.9 million, or $2.39 per share (basic and diluted), for certain costs associated with the acquisition of Algorithmic Research. -more- Cylink Corp. Reports Earnings Results Page 3 The company has recently repriced employee stock options with reset vesting periods to ensure Cylink's ability to retain essential employee and managerial talent. The timing of the repricing was influenced by the retroactive deadline imposed by a recent Financial Standards Accounting Board (FASB) proposal. The proposal could require a significant change to operations had options been repriced after the December 15, 1998 deadline. The company repriced employee options for approximately two million shares, and cancelled options covering approximately 1.25 million shares held by prior members of the senior management team. Neither William P. Crowell, Cylink's president and acting chief executive officer, nor Roger A. Barnes, the company's new chief financial officer, are participating in the repricing, but Crowell has received additional new options to reflect expanded responsibilities when the board appointed him president and acting chief executing officer. In a statement, Crowell said, "In the past six weeks the company has completed realignment of organizational responsibilities, made corresponding adjustments in management, and put additional focus on customer service. In addition, I have met with virtually all employees at our Sunnyvale, Tel Aviv, U.K., New Jersey and Washington D.C. facilities to review past issues and to elicit their support of our future plans. Product plan reviews have also been completed and budgets to support new activities are now being developed. We are actively engaged with customers in reviewing their major needs for security products in the future." "These review have demonstrated that Cylink continues to have a loyal customer base that is the envy of the security industry, excellent and motivated employees, excellent products--with more in development, and a solid balance sheet. We believe that these strengths will enable the new management team to move forward in realizing the potential of the company, "Crowell added. About Cylink Cylink Corporation, and its wholly owned subsidiary, Algorithmic Research, is a leading provider of encryption-based network security solutions. Their products enable the secure transmission of data over networks, including local-area networks (LANs), wide-area networks (WANs), and public packet-switched networks such as the Internet. Cylink and Algorithmic Research serve Fortune 500 companies, multinational financial institutions, and government agencies worldwide. Attached: Financial Schedules CYLINK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data; unaudited)
Three Months Ended Nine Months Ended ------------------------ ------------------------ Sept. 27, Sept. 26, Sept. 27, Sept. 26, 1998 1997 1998 1997 -------- -------- -------- -------- Revenue $ 12,130 $ 13,129 $ 32,555 $ 34,065 Cost of revenue 5,924 3,826 12,545 10,021 -------- -------- -------- -------- Gross profit 6,206 9,303 20,010 24,044 -------- -------- -------- -------- Operating expenses: Research and development, net 6,222 3,394 12,037 9,365 Selling and marketing 6,170 4,006 17,950 10,720 General and administrative 2,452 2,268 5,782 6,291 Purchased in-process technology -- 63,920 -- 63,920 Amortization of purchased intangibles 679 133 2,038 133 -------- -------- -------- -------- Total operating expenses 15,523 73,721 37,807 90,429 -------- -------- -------- -------- Loss from operations (9,317) (64,418) (17,797) (66,385) Other income 574 739 1,298 2,881 -------- -------- -------- -------- Loss from continuing operations before income taxes (8,743) (63,679) (16,499) (63,504) Benefit for income taxes 3,060 -- 5,774 -- -------- -------- -------- -------- Loss from continuing operations (5,683) (63,679) (10,725) (63,504) Income (loss) from discontinued operations, net of tax -- 796 (259) 2,951 Gain on disposal of discontinued operations, net of tax -- -- 22,776 -- -------- -------- -------- -------- Net income (loss) $ (5,683) $(62,883) $ 11,792 $(60,553) ======== ======== ======== ======== Earnings (loss) per share - basic: Continuing operations $ (0.20) $ (2.40) $ (0.37) $ (2.44) Discontinued operations -- 0.03 0.78 0.12 -------- -------- -------- -------- Net income (loss) $ (0.20) $ (2.37) $ 0.41 $ (2.32) ======== ======== ======== ======== Earnings (loss) per share - diluted: Continuing operations $ (0.20) $ (2.40) $ (0.37) $ (2.44) Discontinued operations -- 0.03 0.78 0.12 -------- -------- -------- -------- Net income (loss) $ (0.20) $ (2.37) $ 0.41 $ (2.32) ======== ======== ======== ======== Shares used in per share calculation - basic 29,082 26,514 28,971 26,046 ======== ======== ======== ======== Shares used in per share calculation - diluted 29,082 26,514 28,971 26,046 ======== ======== ======== ========
CYLINK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data; unaudited)
Three Months Ended Six Months Ended ----------------------- ----------------------- June 28, June 27, June 28, June 27, 1998 1997 1998 1997 -------- -------- -------- -------- Restated Restated Revenue $ 12,363 $ 11,584 $ 20,425 $ 20,936 Cost of revenue 3,990 3,385 6,621 6,195 -------- -------- -------- -------- Gross profit 8,373 8,199 13,804 14,741 -------- -------- -------- -------- Operating expenses: Research and development, net 2,770 2,953 5,815 5,971 Selling and marketing 6,207 3,932 11,780 6,714 General and administrative 1,852 2,123 3,330 4,023 Amortization of purchased intangibles 680 -- 1,359 -- -------- -------- -------- -------- Total operating expenses 11,509 9,008 22,284 16,708 -------- -------- -------- -------- Loss from operations (3,136) (809) (8,480) (1,967) Other income 572 1,069 724 2,142 -------- -------- -------- -------- Income (loss) from continuing operations before income taxes (2,564) 260 (7,756) 175 Benefit for income taxes 897 -- 2,714 -- -------- -------- -------- -------- Loss from continuing operations (1,667) 260 (5,042) 175 Income (loss) from discontinued operations, net of tax -- 963 (259) 2,155 Gain on disposal of discontinued operations, net of tax -- -- 22,776 -- -------- -------- -------- -------- Net income (loss) $ (1,667) $ 1,223 $ 17,475 $ 2,330 ======== ======== ======== ======== Earnings (loss) per share - basic: Continuing operations $ (0.06) $ 0.01 $ (0.17) $ 0.01 Discontinued operations -- 0.04 0.77 0.08 -------- -------- -------- -------- Net income (loss) $ (0.06) $ 0.05 $ 0.60 $ 0.09 ======== ======== ======== ======== Earnings (loss) per share - diluted: Continuing operations $ (0.06) $ 0.01 $ (0.17) $ 0.01 Discontinued operations -- 0.04 0.77 0.08 -------- -------- -------- -------- Net income (loss) $ (0.06) $ 0.05 $ 0.60 $ 0.09 ======== ======== ======== ======== Shares used in per share calculation - basic 29,011 25,921 28,916 25,811 ======== ======== ======== ======== Shares used in per share calculation - diluted 29,011 26,609 28,916 26,155 ======== ======== ======== ========
CYLINK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data; unaudited) Three Months Ended -------------------- March 29, March 28, 1998 1997 -------- -------- Restated Revenue $ 8,062 $ 9,352 Cost of revenue 2,631 2,810 -------- -------- Gross profit 5,431 6,542 -------- -------- Operating expenses: Research and development, net 3,045 3,018 Selling and marketing 5,573 2,782 General and administrative 1,478 1,900 Amortization of purchased intangibles 679 -- -------- -------- Total operating expenses 10,775 7,700 -------- -------- Loss from operations (5,344) (1,158) Other income (expense) 152 1,073 -------- -------- Loss from continuing operations before income taxes (5,192) (85) Benefit for income taxes 1,817 -- -------- -------- Loss from continuing operations (3,375) (85) Income (loss) from discontinued operations, net of tax (259) 1,192 Gain on disposal of discontinued operations, net of tax 22,776 -- -------- -------- Net income $ 19,142 $ 1,107 ======== ======== Earnings (loss) per share - basic: Continuing operations $ (0.12) $ -- Discontinued operations 0.78 0.04 -------- -------- Net income (loss) $ 0.66 $ 0.04 ======== ======== Earnings (loss) per share - diluted: Continuing operations $ (0.12) $ -- Discontinued operations 0.78 0.04 -------- -------- Net income $ 0.66 $ 0.04 ======== ======== Shares used in per share calculation - basic 28,820 25,701 ======== ======== Shares used in per share calculation - diluted 28,820 25,701 ======== ======== CYLINK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data; unaudited) Year Ended December 31, ---------------------- 1997 1996 --------- --------- Restated Revenue $ 47,690 $ 25,793 Cost of revenue 13,986 9,731 --------- --------- Gross profit 33,704 16,062 --------- --------- Operating expenses: Research and development, net 12,488 8,198 Selling and marketing 16,036 9,475 General and administrative 8,422 5,963 Purchased in-process technology 63,920 -- Amortization of purchased intangibles 807 -- Employee severance costs -- 634 --------- --------- Total operating expenses 101,673 24,270 --------- --------- Loss from operations (67,969) (8,208) Other income 3,014 2,686 --------- --------- Loss from continuing operations before income taxes (64,955) (5,522) Provision for income taxes -- -- --------- --------- Loss from continuing operations (64,955) (5,522) Income from discontinued operations, net of tax 3,210 6,719 --------- --------- Net income (loss) $ (61,745) $ 1,197 ========= ========= Earnings (loss) per share - basic: Continuing operations $ (2.43) $ (0.23) Discontinued operations 0.12 0.28 --------- --------- Net income (loss) $ (2.31) $ 0.05 ========= ========= Earnings (loss) per share - diluted: Continuing operations $ (2.43) $ (0.23) Discontinued operations 0.12 0.28 --------- --------- Net income (loss) $ (2.31) $ 0.05 ========= ========= Shares used in per share calculation - basic 26,703 24,412 ========= ========= Shares used in per share calculation - diluted 26,703 24,412 ========= ========= CYLINK CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands; unaudited)
Restated ----------------------------------------- Sept. 27, June 28, March 29, Dec. 31, 1998 1998 1998 1997 --------- --------- --------- --------- Assets Current assets: Cash and cash equivalents $ 49,241 $ 46,052 $ 58,078 $ 22,977 Accounts receivable, net 13,483 13,990 12,756 13,914 Note receivable 3,545 12,424 -- -- Inventories 9,826 8,419 6,935 6,224 Net assets of discontinued operations -- -- 12,424 11,299 Deferred income taxes 1,629 1,640 1,760 1,533 Other current assets 2,432 2,464 2,323 2,190 --------- --------- --------- --------- Total current assets 80,156 84,989 94,276 58,137 Property and equipment, net 5,884 6,105 6,041 6,003 Acquired technology, goodwill and other intangibles 5,979 6,659 7,338 8,017 Notes receivable from employees 5,562 5,703 4,318 3,473 Other assets 411 3,469 3,989 925 --------- --------- --------- --------- $ 97,992 $ 106,925 $ 115,962 $ 76,555 ========= ========= ========= ========= Liabilities and Shareholders' Equity Current liabilities: Current portion of lease obligations and long-term debt $ 156 $ 194 $ 196 $ 210 Accounts payable 3,163 1,958 2,936 2,238 Accrued liabilities 8,984 8,542 6,505 6,194 Accrued liabilities related to discontinued operations 3,634 3,850 6,773 -- Income taxes payable -- 4,604 11,361 1,304 Deferred revenue 1,378 1,581 1,165 206 --------- --------- --------- --------- Total current liabilities 17,315 20,729 28,936 10,152 --------- --------- --------- --------- Capital lease obligations and long-term debt 164 178 215 256 --------- --------- --------- --------- Deferred income taxes 13 13 13 13 --------- --------- --------- --------- Shareholders' equity: Preferred stock -- -- -- -- Common stock 291 290 289 287 Additional paid-in capital 122,564 122,442 121,575 120,092 Deferred compensation related to stock options (188) (208) (229) (250) Cumulative translation adjustment (27) (62) (47) (63) Retained earnings (accumulated deficit) (42,140) (36,457) (34,790) (53,932) --------- --------- --------- --------- Total shareholders' equity 80,500 86,005 86,798 66,134 --------- --------- --------- --------- $ 97,992 $ 106,925 $ 115,962 $ 76,555 ========= ========= ========= =========
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