Current Outlook for Fourth Quarter and Full Year 2005, and Full Year 2006
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not reflect the potential impact of any mergers, acquisitions or other business combinations that may be completed after the date of this release.
-- For the quarter ending December 31, 2005, SafeNet currently
expects to achieve revenues in the range of $78 to $82
million. The non-GAAP net income is expected to be in the
range of $0.55 to $0.60 per diluted share. Non-GAAP guidance
excludes various integration expenses and non-recurring
charges, which are expected to be approximately $1 million.
GAAP net income is expected to be in the range of $0.33 to
$0.38 per diluted share.
-- The Company expects to ship approximately $18 million from
the $150 million Indefinite Delivery Indefinite Quantity
(IDIQ) contract awarded by the Department of Defense for
the KIV-7M link encryptor product, announced on September
29, 2005.
-- Approximately 40% of this $18 million replaces revenue
from the legacy KIV-7 link encryptor. Therefore, the
company expects approximately $10 million net increase
from Third Quarter 2005 in the KIV-7 family product
area of its Classified Government business.
-- For the year ending December 31, 2005, the Company's guidance
for revenue is expected to be in the range of $255 to $275
million. Non-GAAP net income guidance for 2005 is expected to
be between $1.45 and $1.55 per diluted share. Non-GAAP
guidance excludes various integration expenses and
non-recurring charges. GAAP net income expected to be between
$0.25 and $0.35 per diluted share.
-- For the year ending December 31, 2006, the Company's guidance
for revenue is expected to be in a range of $295 to $315
million, and non-GAAP net income guidance range of $1.70 and
$1.90 per diluted share. GAAP net income is expected to be
between $1.20 and $1.40 per diluted share. The expected GAAP
net income excludes the impact of FASB Statement No. 123(R),
Share Based Payment, as the Company is assessing the impact of
the Statement.
-- The Company expects approximately $15 - $20 million of net
revenue increase from the Classified Government business
line for FY 2006. This increase does not include any
additional revenue from the HAIPE version of the KIV-7M,
expected to be available at mid year FY 2006. There are a
few main factors affecting the revenue increase:
-- In 2006, the Company expects to ship approximately $65
million of KIV-7M versus approximately $40 million of
KIV-7 product in 2005. The majority of this 2006
revenue replaces revenue from the legacy KIV-7 link
encryptor, for a net increase of approximately $25
million.
-- The Company indicated that a new $20 million
development project order for the Satellite product
was signed in Third Quarter 2005. The Company expects
the revenue to be recognized over approximately 2 1/2
years. This revenue will replace other 2005
development projects that have been completed, for no
net change.
-- The Company expects a decline from 2005 of
approximately $10 million from legacy products that
are coming to the end of their life, for a decrease of
approximately $10 million.
-- The Company has estimated that revenue from the HAIPE
KIV-7M will range from approximately $240 to
approximately $300 million between 2006 and 2011. This
revenue will be all incremental since there is no
legacy product.
-- Gross margins are expected to be between 55% and 57%.
-- The Company expects a reduction of approximately $2.5
million of start up costs associated with the release
of the KIV-7M product which should result in improved
margins from this business line. The company is also
focused on a program to continue improving gross
margins over time.
About SafeNet, Inc.
SafeNet is a global leader in information security. Founded more than 20 years ago, the company provides complete security utilizing its encryption technologies to protect communications, intellectual property and digital identities, and offers a full spectrum of products including hardware, software, and chips. ARM, Bank of America, Cisco Systems, the Departments of Defense and Homeland Security, Adobe, Samsung, Texas Instruments, the U.S. Internal Revenue Service and scores of other customers entrust their security needs to SafeNet. For more information, visit www.safenet-inc.com .
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