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2004 Finance Info

Trend Micro Reports Q4 Earnings; Posts Record Consolidated Revenues and Earnings for 2003

2003 Revenues Hit 48.09 billion Yen (US$454 million); Fourth Quarter sales and net income up 14% and 58% respectively

Tokyo, Japan – February 4, 2004 – Trend Micro, Inc. (TSE: 4704, NASDAQ: TMIC), a leader in network antivirus and Internet content security software and services, today announced earnings results for the fourth quarter 2003, and consolidated annual earnings results for the year ended December 31, 2003 (both U.S. GAAP).

Trend Micro posted consolidated net sales of 13.39 billion Yen (or US $126 million, based on an exchange rate of 106 JPY=1USD) and operating income of 5.25 billion Yen (or US $50 million) for the fourth quarter of 2003. These figures reflect increases of 14% in net sales and 18% in operating income compared with the same period a year ago. Net income increased 58% in the fourth quarter compared to the same period a year ago. Growth for the quarter came mainly from Europe at 24%, Asia-Pacific at 20% and North America at 16%.

Net sales for 2003 surpassed previous years at 48.09 billion Yen (or US $454 million), reflecting an increase of 12% from 2002. Operating income was 15.2 billion Yen (or US $143 million), up 9% from 2002. Net income was 9.3 billion Yen (or US $87.3 million), up 20% from 2002. The company plans to pay cash dividends of 1.8 billion Yen, or 14 Yen per share, for 2003. All regions worldwide experienced growth in 2003 and enterprise products and solutions comprised almost 80% of total revenues for the year.

"In 2003 we delivered several new products and services, forged key alliances, and won many key endorsements making Enterprise Protection Strategy and outbreak prevention a reality for our customers,” said Steve Chang, CEO and co-founder of Trend Micro, Inc. "2004 will continue to be a year of growth for Trend Micro as we build on our expertise of threat knowledge and deliver new technologies that help customers more efficiently fend off threats to their networks.”

Based on information currently available to the company, consolidated net sales for the first quarter ending March 31, 2004 is expected to be 12.2 billion yen (or US $115 million). Operating income and net income are expected to be 3.6 billion yen (or US $34 million) and 2.1 billion yen (or US $20 million), respectively.

Fourth Quarter Business Highlights
  • During the fourth quarter, Trend Micro NeatSuite™ was awarded "Editor’s Choice” for 2003 by Network Computing Magazine; PC-cillin™ Internet Security 2004 desktop product was named CNET’s "Editor’s Choice”; and Spam Prevention Service was voted among "Products You Love” by readers of Microsoft Certified Professionals Magazine.
  • Trend Micro was also honored with the Porter Prize for 2003 for achievements in the implementation of unique strategies based on innovations in products, processes, and management methodologies. Trend Micro Japan’s consumer support center was also awarded the Helpdesk Institute Team Excellence Award 2003.
  • TrendLabs™ headquarters in the Philippines achieved COPC-2000 Standards certification from the international Customer Operations Performance Center organization, making Trend Micro the first antivirus software company to achieve this certification. The TrendLabs facility in Lake Forest, California, received Support Center Practices certification in recognition of world-class support and focus on customer satisfaction. Additionally, ScanMail™ for Microsoft Exchange 2000/2003 was the first Microsoft Exchange antivirus product to be certified on Microsoft Windows 2003 Standard Edition, Enterprise Edition, and Data Center Edition, running on Exchange 2003.
  • During this period, Trend Micro introduced several new products, including: Trend Micro GateLock™ 3000 and GateLock 5000 Remote Appliances, in a partnership with NetScreen Technologies, Inc.; PC-cillin Internet Security 2004; and several specialized products designed for the small and medium business customer (released in North America). In November 2003, Trend Micro announced its collaborative efforts with Cisco Network Admission Control Program to increase security within the enterprise.
  • Notable customers won during this quarter include: Brasil Telecom, Brazil’s largest telecommunications provider; Bital, Mexico’s largest retail bank; Kohl’s Department Stores, one of the fastest growing retailers in the United States; and EMI Music, the world’s leading music publisher, headquartered in the U.K. New business has also been established with Honeywell, the U.S.-based diversified technology and manufacturing leader.
  • In their December 2003 report "Local Vendors Gain in Regional Antivirus Markets” Gartner Dataquest called Trend Micro "most global” (as measured by license revenue earned outside a company’s home country.)

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

We assume no obligation to update any forward-looking statements.

For more details regarding risk factors relating to our future performance, please refer to our filings with the U.S. Securities and Exchange Commission.

Supplementary Information

1. Consolidated Balance Sheets

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2. Consolidated Statements of Income

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3. Comprehensive Income

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4. Consolidated Statement of Shareholders’ Equity

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5. Consolidated Statements of Cash Flows

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For Additional Information

Mr. Mahendra Negi
Chief Financial Officer/IR Officer
Phone: +81-3-5334-4899
Fax: +81-3-5334-4874
ir@trendmicro.co.jp

For Media and Industry Analysts Only

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.


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