2003 Finance Info

Trend Micro Announces Second Quarter Consolidated Results

• Trend Micro Enterprise Protection Strategy received Network Magazine’s 2003 Product of the Year Award in the antivirus category for corporate antivirus software. The company was also honored with e-Pro Magazine’s Apex Award for ScanMail for IBM Lotus Notes. Trend Micro ServerProtect for Linux was rated best performing solution in Virus Bulletin’s Red Hat Linux Comparative Review.
  
• Trend Micro earned certification from the National Information Assurance Partnership (NIAP) for InterScan VirusWall 3.5 for NT and InterScan VirusWall 3.6 for Solaris, HP-UX, and Linux. Trend Micro is the only vendor to earn NIAP certification for antivirus products, thereby meeting the rigorous global standards laid down in the new Government Guidelines, which specify that IT products be NIAP-certified for high security installations.
  
• In Japan, Trend Micro reached a milestone of 2.5 million users of VirusBuster, Trend Micro’s consumer antivirus solution in Japan. Other major customer additions during the quarter included a 1.1 million-user deal with the U.S. Army Chief Technology Office. Worldwide, new revenues were primarily comprised of customers from the banking, finance, government and healthcare sectors.
  
• The company announced that it is expanding its alliance with NetScreen to deliver the industry's first best-of-breed antivirus, firewall, VPN and intrusion prevention appliance designed to help enterprise customers secure remote sites, branch offices and telecommuters.

1 $1 US = 119 Japanese Yen

Notice Regarding Forward Looking Statements
Certain statements that we make in this release are forward-looking statements. These forward-looking statements are based upon management’s current assumptions and beliefs in light of the information currently available to it, but involve known and unknown risks and uncertainties.
Many important factors could cause our actual results to differ materially from those expressed in our forward-looking statements. These factors include:

• Difficulties in addressing new virus and other computer security problems;
• Timing of new product introductions and lack of market acceptance for our new products;
• The level of continuing demand for , and timing of sales of , our existing products;
• Rapid technological change within the anti-virus software industry;
• Changes in customer needs for anti-virus software;
• Existing products and new product introductions by our competitors and the pricing of those products;
• Declining prices for our products and services;
• The effect of future acquisitions on our financial condition and results of operations;
• The effect of adverse economic trends on our principal markets;
• The effect of foreign exchange fluctuations on our results of operations;
• An increase in the incidence of product returns;
• The potential lack of attractive investment targets; and
• Difficulties in successfully executing our investment strategy.

(1) Consolidated Results of Operations

(All figures except for per share information are rounded to millions of yen.)

(Note)

(2) Consolidated Financial Position

(Note)

(3) Consolidated Cash Flow Position

(4) Basis of consolidation and application of equity method:
The number of consolidated subsidiaries …………… 17
The number of unconsolidated subsidiaries accounted by equity method …………… 0
The number of affiliated companies …………… 3
(5) Change in the basis of consolidation and application of equity method:
The number of additional consolidated subsidiaries ……………… 2
The number of excluded consolidated subsidiaries ……………… 0
The number of additional consolidated affiliated companies ……… 0
The number of excluded consolidated affiliated companies ……… 1

2. Projected consolidated earnings

(Note)
Since the business environment surrounding Trend Micro Group tends to fluctuate in the short run, it is difficult to make the highly reliable projection figures on a yearly basis. We, therefore, decided to announce the earnings on a quarterly basis in the fiscal year ending in December 2003 as well as earnings projection of the succeeding quarter.
If we found through our calculation conducted from time to time that the net sales fluctuate from the most recent quarterly projection by more than 10%, or operating income or net income fluctuates by more than 30%, we will announce the revision of the earnings projection.

3. CONSOLIDATED BALANCE SHEETS

(Thousands of yen)
<><>

(Thousands of yen)

Account	June 30, 2002	December 31, 2002	June 30, 2003
<Liabilities and shareholders' equity>
Current liabilities: Current portion of long-term debt Notes payable, trade Accounts payable, trade Accounts payable, other Withholding income taxes Accrued expenses Accrued income and other taxes Deferred revenue Other Total current liabilities	8,000,000 388,051 918,963 1,112,339 171,992 1,873,023 2,131,466 11,159,665 466,106 26,221,605	<><> <><><><><><><><><><><><><><><><><><> 5,000,000 85,035 1,014,215 1,201,675 183,663 1,807,241 4,089,169 13,484,252 573,068 27,438,318	6,500,000 94,611 986,193 1,286,402 437,663 1,941,800 3,232,548 15,067,937 220,188 29,767,342
Long-term liabilities: Long term debt Deferred revenue Accrued pension and severance costs Other Total long-term liabilities	6,500,000 857,572 306,631 163,180 7,827,383	6,500,000 2,188,460 356,044 210,947 9,255,451	- 3,061,910 437,021 255,113 3,754,044
Shareholders' equity: Common stock Authorized -June 30,2002 250,000,000 shares (no par value) -December 31,2002 250,000,000 shares (no par value) -June 30,2003 250,000,000 shares (no par value) Issued -June 30,2002 132,492,510 shares -December 31,2002 132,503,417 shares -June 30,2003 132,503,417 shares Additional paid-in capital Retained earnings Accumulated other comprehensive income Net unrealized gain (loss) on debt and equity securities Cumulative translation adjustments	<><> <><> <><> <><> <><> <><>     7,240,080 13,036,859 14,920,479 (396,267) 190,795 (205,472)	<><> <><> <><> 7,257,060 13,021,554 18,986,701 (83,877) 285,079 201,202	<><> <><> 7,257,060 12,936,584 22,294,463 66,163 531,776 597,939
Treasury stock, at cost -June 30,2002 72,654 shares -December 31,2002 820,442 shares -June 30,2003 1,456,770 shares Total shareholders' equity	<><> (249,455) 34,742,491	(2,322,287) 37,144,230	(3,449,873) 39,636,173
Total liabilities and shareholders' equity	68,791,479	73,837,999	73,157,559

4. CONSOLIDATED STATEMENTS OF INCOME

(Thousands of yen)

(Thousands of yen)

About Trend Micro:

Trend Micro Incorporated (TSE: 4704), a global cloud security leader, creates a world safe for exchanging digital information with its Internet content security and threat management solutions for businesses and consumers. A pioneer in server security with over 20 years' experience, we deliver top-ranked client, server and cloud-based security that fits our customers' and partners' needs, stops new threats faster, and protects data in physical, virtualized and cloud environments. Powered by the Trend Micro™ Smart Protection Network™ cloud security infrastructure, our industry-leading cloud-computing security technology, products and services stop threats where they emerge, on the Internet, and are supported by 1,000+ threat intelligence experts around the globe.

Additional information about Trend Micro Incorporated and the products and services are available at Trend Micro.com This Trend Micro news release and other announcements are available at http://trendmicro.mediaroom.com/ and as part of an RSS feed at www.trendmicro.com/rss Or follow our news on Twitter at @TrendMicro.