Trend Micro Announces U.S. GAAP Financial Information for the First Half of 2001

Tokyo, Japan – October 22, 2001 – Trend Micro Inc. (Nasdaq: TMIC, TSE: 4704), a worldwide leader in network antivirus and Internet content security solutions, today announced its unaudited U.S. GAAP financial information for the first half of 2001. Financial Highlights for the first half of FY 2001 January 1, 2001 through June 30, 2001 

1. Consolidated Results of Operations (Unaudited except FY 00 (annual))

  Sales Growth rate Operating
income
Growth rate Net income before tax Growth rate
Millions of yen % Millions of yen % Millions of yen %
The first half of FY 01 12,939 38.7 1,007 (62.4) 1,224 (67.3)
The first half of FY 00 9,331 62.7 2,678 56.7 3,740 111.5
FY 00 (annual) 20,070   5,527   6,892  

 

  Net Income Growth rate Net income
per share
Net income
per share (diluted)
  Millions of yen % Yen Yen
The first half of FY01 554 (74.8) 4.22 4.14
The first half of FY00 2,194 162.7 16.88 16.40
FY 00 (annual) 3,675   28.18 27.53


2. Consolidated Financial Position (Unaudited except December 31, 2000)

  Total assets Shareholders' equity Shareholders' equity ratio Shareholders' equity
per share
As of: Millions of yen Millions of yen   Yen
June 30, 2001 52,993 26,891 50.7 204.21
June 30, 2000 38,519 20,999 54.5 161.10
December 31, 2000 44,574 24,344 54.6 185.66


3. Consolidated Cash Flow Position (Unaudited except December 31, 2000)

  Operating Cash Flow Investing Cash Flow Financing Cash Flow Ending balance of Cash and Cash equivalents
As of: Millions of yen Millions of yen Millions of yen Millions of yen
June 30, 2001 4,191 (1,364) 6,963 34,553
June 30, 2000 1,594 (1,772) 5,430 20,902
December 31, 2000 6,086 (4,141) 6,496 24,436

 

4. Basis of consolidation and application of equity method: 

The number of consolidated subsidiaries …………… 18 The number of unconsolidated subsidiaries …………… - The number of affiliated companies …………… 4

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…..… - The number of additional consolidated affiliated companies… 1 The number of excluded consolidated affiliated companies… - 

Previously, on August 3, 2001, Trend Micro announced its Japanese GAAP financial information for the same period. Significant differences between Japanese GAAP and U.S. GAAP applicable to Trend Micro are summarized below. Goodwill write-off (2,000 million yen), which is recognized as other expenses under Japanese GAAP, is recognized as operating expenses under U.S. GAAP. From the fiscal year ending December 31, 2001, Trend Micro and Trend Micro Incorporated (Taiwan) have adopted the deferred revenue accounting for their Post-contract Customer Support service for its Japanese GAAP financial reporting purposes. The cumulative effect of adopting the deferred revenue accounting of 3,009 million yen is recorded as other expenses under Japanese GAAP. For its U.S. GAAP reporting purposes, Trend Micro and Trend Micro Incorporated (Taiwan) have historically adopted the deferred revenue accounting for their Post-contract Customer Support service on a consistent basis.

TREND MICRO INCORPORATED
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Except December 31, 2000, all balances unaudited) 

  Thousands of yen

 

Thousands of U.S. dollars
June 30, 2000 December 31, 2000 June 30, 2001 June 30, 2001
Current assets:        
Cash and cash equivalents ¥20,901,860 ¥24,435,503 ¥34,553,234 $276,426
Time deposits - - 65,511 524
Marketable securities 3,262,862 1,893,475 2,505,717 20,046
Notes and accounts receivable, trade - less allowance for doubtful accounts and sales return of \419,776, \646,566 and \608,682 ($4,869) 6,812,271 8,133,700 7,058,799 56,471
Inventories 101,778 318,188 206,946 1,656
Deferred income taxes 940,866 2,687,913 2,798,031 22,384
Prepaid expenses and other current assets 1,749,301 607,142 994,108 7,952
33,768,938 38,075,921 48,182,346 385,459  
 
Investments and other assets:        
Securities investments 980,801 1,335,849 1,256,501 10,052
Investment in and advances to affiliated Companies 246,628 182,473 109,623 877
Goodwill and other intangible assets 1,586,609 2,740,827 979,528 7,836
Deferred income taxes 398,019 446,004 150,447 1,204
Other 539,415 570,742 795,721 6,366
3,751,472 5,275,895 3,291,820 26,335  
 
Property and equipment:        
Office furniture and equipment 1,308,853 1,536,444 1,921,112 15,369
Other properties 357,362 443,102 597,089 4,776
1,666,215 1,979,546 2,518,201 20,145  
Less: Accumulated depreciation (667,128) (756,898) (999,550) (7,996)
999,087 1,222,648 1,518,651 12,149  
 
 
¥38,519,497 ¥44,574,464 ¥52,992,817 $423,943  

TREND MICRO INCORPORATED
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Except December 31, 2000, all balances unaudited) 

LIABILITIES AND SHAREHOLDERS' EQUITY
Thousands of yen Thousands of U.S. dollars  
June 30, 2000 December 31, 2000 June 30, 2001 June 30, 2001  
Current liabilities:        
Current portion of long-term debt - ¥ 57,200 ¥ 57,200 $458
Notes payable, trade ¥148,182 132,499 81,140 649
Accounts payable, trade 472,072 796,782 627,547 5,020
Accounts payable, other 591,154 517,247 637,700 5,102
Withholding income taxes 145,999 120,994 172,648 1,381
Accrued expenses 476,950 615,850 981,643 7,853
Accrued income and other taxes 946,855 2,014,589 606,682 4,853
Deferred revenue 2,898,887 5,043,425 6,311,197 50,490
Other 349,417 415,372 273,278 2,187
6,029,516 9,713,958 9,749,035 77,993  
 
Long-term liabilities:        
Long-term debt 10,865,760 9,799,900 15,471,300 123,770
Deferred revenue 330,544 548,225 655,291 5,242
Accrued pension and severance costs 143,590 168,032 226,315 1,811
11,339,894 10,516,157 16,352,906 130,823  
         
Minority interest in consolidated subsidiary 151,468 - - -
 
Shareholders' equity:        
Common stock, ¥50 par value -        
Authorized – 250,000,000 shares        
Issued and outstanding        
- June 30, 2000 130,345,338 shares 5,620,192      
- December 31, 2000 131,120,842 shares   6,183,266    
- June 30, 2001 131,681,887 shares     6,799,374 54,395
Additional paid-in capital 10,101,923 11,631,591 12,313,160 98,505
Legal reserve 149,991 149,991 149,991 1,200
Deferred compensation related to stock options (50,764) - - -
Retained earnings 5,276,722 6,745,769 7,279,920 58,239
Accumulated other comprehensive income        
Net unrealized gain on debt and equity securities 503,255 (168,277) 118,721 950
Cumulative translation adjustments (580,279) (169,616) 240,701 1,926
(77,024) (337,893) 359,422 2,876  
Treasury stock, at cost (22,421) (28,375) (10,991) (88)
20,998,619 24,344,349 26,890,876 215,127  
Commitments and contingent liabilities - - - -
¥38,519,497 ¥44,574,464 ¥52,992,817 $423,943  


TREND MICRO INCORPORATED

AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

( Unaudited ) 

Thousands of yen Thousands of U.S. dollars  
For the six months
ended June 30,
For the six months ended
June 30,
 
2000 2001 2001  
 
Net sales ¥9,330,979 ¥12,939,355 $103,515
Cost of sales 603,879 732,229 5,858
Gross profit 8,727,100 12,207,126 97,657
 
Operating expenses:      
Selling 1,068,155 3,224,430 25,795
Research and development 850,858 1,481,962 11,856
General and administrative 4,034,058 4,240,357 33,923
Goodwill amortization 95,797 - -
Goodwill write-off - 2,253,559 18,028
6,048,868 11,200,308 89,602  
 
Operating income 2,678,232 1,006,818 8,055
 
Other income (expenses):      
Interest income 76,561 202,267 1,618
Interest expense (85,521) (135,172) (1,081)
Gain on sales of marketable securities 65,377 - -
Foreign exchange gain, net 31,191 256,830 2,055
Other income (expense), net 974,227 (107,200) (859)
1,061,835 216,725 1,733  
 
Income before income taxes, minority interest and equity in loss of affiliated companies 3,740,067 1,223,543 9,788
Income taxes (benefit):      
Current 1,790,174 491,658 3,933
Deferred (340,689) 73,174 585
1,449,485 564,832 4,518  
Income before minority interest and equity in loss of affiliated companies 2,290,582 658,711 5,270
Minority interest in income of a consolidated subsidiary 72,645 - -
Income from consolidated companies 2,217,937 658,711 5,270
Equity in losses of affiliated companies 23,517 104,850 839
 
Net income ¥2,194,420 ¥553,861 $4,431
 
 
\ \ U.S. dollars  
Per share data:      
Net income - basic ¥16.88 ¥4.22 $0.03
- diluted 16.40 4.14 0.03
Cash dividends - - -


TREND MICRO INCORPORATED
AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) 

Thousands of yen Thousands of U.S. dollars  
For the six months
ended June 30,
For the six months ended
June 30,
 
2000 2001 2001  
Cash flows from operating activities:      
Net income ¥2,194,420 ¥553,861 $4,431
Adjustments to reconcile net income to net cash provided by operating activities -      
Amortization of deferred compensation related to stock options 46,114 - -
Depreciation and amortization 466,243 2,728,584 21,829
Pension and severance costs, less payments 30,833 56,660 453
Loss on disposal of fixed assets 2,739 - -
Deferred income taxes (340,688) 73,174 585
Gain on sales of marketable securities (65,377) - -
Minority interest in income of a consolidated subsidiary 72,645 - -
Changes in assets and liabilities:      
Increase in deferred revenue 800,107 1,197,419 9,579
(Increase) decrease in notes and accounts receivable, trade, net of allowances (915,342) 1,323,967 10,592
Decrease (increase) in inventories (26,987) 113,719 910
(Decrease) in notes and accounts payable, trade (187,070) (261,766) (2,094)
(Decrease) increase in accrued corporate taxes and other 76,529 (1,413,131) (11,305)
Increase in other current assets (726,786) (103,212) (826)
Increase (decrease) in other current liabilities (6,101) 40,311 322
Other 172,974 (118,669) (949)
Net cash provided by operating activities 1,594,253 4,190,917 33,527
 
Cash flows from investing activities:      
Payments for purchases of fixed assets (412,227) (1,228,759) (9,830)
Proceeds from sales of marketable securities 150,814 2,611,426 20,891
Payments for purchases of marketable securities (2,736) (2,648,926) (21,191)
Acquisitions of businesses, net of cash acquired (1,308,248) - -
Increase in investments in affiliated companies (200,000) (32,000) (256)
Payments for time deposits - (65,511) (524)
Net cash used in investing activities (1,772,397) (1,363,770) (10,910)
 
Cash flows from financing activities:      
Issuance of common stock pursuant to exercise of stock options 359,273 870,797 6,966
Tax benefit from exercise of non-qualified stock options 621,555 411,301 3,290
Proceeds from long-term debt 5,000,000 6,500,000 52,000
Repayment of long-term debt (325,056) (828,600) (6,629)
Decrease in short-term borrowings (198,000) - -
Other (27,555) 9,525 77
Net cash provided by financing activities 5,430,217 6,963,023 55,704
Effect of exchange rate changes on cash and cash equivalents 906 327,561 2,621
Net increase in cash and cash equivalents 5,252,979 10,117,731 80,942
Cash and cash equivalents at beginning of period 15,648,881 24,435,503 195,484
Cash and cash equivalents at end of period ¥20,901,860 ¥34,553,234 $276,426


Notes:

  1. Balance sheet and income statement of fiscal year 2000 and the related numbers are retroactively restated by the effect of stock split on March 31, 2001(1:2 stock split). 
  2. US dollar amounts in the financial statements are calculated by the approximate exchange rate as of June 29, 2001 (\125.00=U.S.$1) and are for reference 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.

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