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Blue Coat Systems Inc (BCSI) SEC Filing 10-K Annual report for the fiscal year ending Saturday, April 30, 2005

Blue Coat Systems Inc

CIK: 1095600 Ticker: BCSI

EX-99.1
2
bc2873ex991.txt

                                                                    Exhibit 99.1

   BLUE COAT REPORTS FINANCIAL RESULTS FOR FOURTH QUARTER AND FISCAL YEAR 2005

                 Achieves 34% Year over Year Growth in Net Sales

    SUNNYVALE, Calif., June 2 /PRNewswire-FirstCall/ -- Blue Coat(R) Systems,
Inc. (Nasdaq: BCSI), a leading provider of proxy appliances, today announced
financial results for its fourth quarter and fiscal year ended April 30, 2005.
Net sales for the fourth quarter were $28.4 million, an increase of 34% compared
to net sales of $21.1 million for the same quarter last year and an increase of
15% compared to net sales of $24.7 million in the prior quarter. For the fiscal
year ended April 30, 2005, net sales were $96.2 million compared to net sales of
$66.1 million in the fiscal year ended April 30, 2004.

    On a GAAP basis, the Company reported net income of $2.8 million, or $0.21
per diluted share, in the fourth quarter of fiscal 2005 compared to net income
of $1.4 million, or $0.11 per diluted share, in the same quarter last year and
net income of $0.3 million, or $0.02 per diluted share, in the prior quarter.
GAAP net income for the fourth quarter of fiscal 2005 includes a benefit of $0.1
million from the reversal of restructuring reserves and a net benefit of
approximately $0.7 million from the reversal of stock compensation expense
recorded in the third quarter of fiscal 2005.

    GAAP net income for the fiscal year ended April 30, 2005 was $5.4 million,
or $0.41 per diluted share, compared to a GAAP net loss of $0.3 million, or
$0.03 per diluted share, for the fiscal year ended April 30, 2004.

    On a non-GAAP basis the Company reported net income of $2.3 million, or
$0.17 per diluted share, in the fourth quarter of fiscal 2005 compared to
non-GAAP net income of $2.6 million, or $0.20 per diluted share, in the same
quarter last year and non-GAAP net income of $1.6 million, or $0.12 per diluted
share, in the prior quarter.

    Non-GAAP net income for the fiscal year ended April 30, 2005 was $7.2
million, or $0.55 per diluted share, compared to $4.0 million, or $0.34 per
diluted share, for the fiscal year ended April 30, 2004.

    The non-GAAP financial measures presented above exclude the amortization of
intangible assets and stock compensation expense, as well as the benefits
associated with the aforementioned reversal of restructuring reserves and stock
compensation expense.

    Blue Coat ended the quarter with cash, cash equivalents, short-term
investments, and restricted investments totaling $49.1 million, an increase of
$3.3 million from the prior quarter.

    "Our strong performance in the fourth quarter is a result of our continued
investments in our infrastructure and successful execution in increasing our
presence," said Brian NeSmith, president and CEO of Blue Coat. "As such, we will
continue to make the appropriate investments in sales and marketing as we
continue to expand our market leadership."



    Operating Highlights

    -- New Customers -- Blue Coat signed on more than 300 new customers in the
quarter, and experienced strong growth in all geographic markets. New customers
include T-Mobile, Aon, Amtrak, and Micron Technology.

    -- New CFO Appointed -- Blue Coat strengthened its executive management team
in the quarter with the addition of Kevin Royal as the company's new chief
financial officer. Royal assumes leadership for Blue Coat's worldwide finance
organization, including accounting and reporting, strategic planning, treasury,
tax, audit, and investor relations. Royal comes to Blue Coat with exceptional
leadership, corporate finance and investor relations experience, having most
recently served as chief financial officer at Novellus Systems, a leader in
semiconductor capital equipment.

    -- Branch Office Proxy Appliance -- Blue Coat recently introduced the
ProxySG(TM) 200 Series appliance, a proxy appliance that extends Web security to
the branch office. The ProxySG 200 is the newest member of the Blue Coat family
of proxy appliances that allows the enterprise IT organization to extend the Web
policy controls in place at headquarters out to the branch. The appliance is
built upon Blue Coat's SGOS custom operating system designed for
high-performance Web object handling, and contains all the same powerful
features and functionality found in Blue Coat's 400, 800 and 8000 Series proxy
appliances.

    -- Spyware Prevention Appliance -- Blue Coat introduced Spyware
Interceptor(TM), built to be the industry's most effective anti-spyware
appliance for networks with 1,000 users or less. Spyware Interceptor is built on
Blue Coat's proxy technology, and comes in an easy-to-deploy and affordable
appliance form-factor. The appliance utilizes SCOPE(TM) (Spyware Catching Object
Protection Engine) technology to prevent both known and unknown forms of spyware
at the gateway, which uniquely allows access to legitimate Web applications and
the ability to safely view spyware-laden Web sites without becoming infected.

    Financial Outlook
    For the first quarter of fiscal 2006 ending July 31, 2005, the Company
currently anticipates sequential growth in net sales of 12% - 15%. Non-GAAP net
income is expected to be $2.3 - $3.1 million, or $0.17 - $0.22 per diluted
share. Non-GAAP diluted earnings per share excludes the amortization of
intangible assets and stock compensation expense. Giving effect to these
exclusions, diluted earnings per share on a GAAP basis is expected to be in the
range of $0.15 - $0.20.

    Blue Coat historically uses the non-GAAP financial measures of income
discussed above for internal evaluation and to report the results of its
business. Blue Coat believes that these measures best allow its management,
board of directors and investors to understand its activities and business
results. The Company believes that inclusion of these non-GAAP financial
measures provide consistency and comparability with past reports of financial
results, as well as comparability to other companies in its industry, most of
whom present similar non-GAAP financial measures to investors.



    Conference Call & Webcast
    The company will host a conference call today at 2:00 p.m. Pacific Time
(5:00 p.m. Eastern Time) to discuss the quarterly results. Participants should
call 888-428-4479 (toll-free) or 612-332-0107 (toll call) with the passcode:
758619. A replay of the call will be available starting June 2, 2005 at 5:00
p.m. Pacific Time (8:00 p.m. Eastern Time), and can be accessed by calling
800-475-6701 (toll-free) or 320-365-3844 with the passcode: 758619. An audio
Webcast of the call will also be available at
http://www.bluecoat.com/aboutus/investor_relations .

    About Blue Coat Systems
    Blue Coat helps organizations make the Web safe and productive for business.
Blue Coat proxy appliances provide visibility and control of Web communications
to protect against risks from spyware, Web viruses, inappropriate Web surfing,
instant messaging (IM), video streaming and peer-to-peer (P2P) file sharing --
while actually improving Web performance. Trusted by many of the world's largest
organizations, Blue Coat has shipped more than 20,000 proxy appliances. Blue
Coat is headquartered in Sunnyvale, California, and can be reached at
408-220-2200 or www.bluecoat.com.

    FORWARD LOOKING STATEMENTS: The statements contained in this press release
that are not purely historical are forward-looking statements, including
statements regarding Blue Coat Systems' expectations, beliefs, intentions or
strategies regarding the future. All forward-looking statements included in this
press release are based upon information available to Blue Coat Systems as of
the date hereof, and Blue Coat Systems assumes no obligation to update any such
forward-looking statements. Forward-looking statements involve risks and
uncertainties, which could cause actual results to differ materially from those
projected. These and other risks relating to Blue Coat Systems' business are set
forth in Blue Coat Systems' most recently filed Form 10-Q for the quarter ended
January 31, 2005, and other reports filed from time to time with the Securities
and Exchange Commission.

    NOTE: All trademarks, trade names or service marks used or mentioned herein
belong to their respective owners.



                             BLUE COAT SYSTEMS, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (Amounts in thousands)

April 30, April 30, 2005 2004 ------------- ------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 47,184 $ 39,424 Short-term investments 80 80 Accounts receivable, net 11,541 10,441 Inventories 350 1,228 Prepaid expenses and other current assets 3,460 1,829 Total current assets 62,615 53,002 Property and equipment, net 3,763 2,490 Restricted investments 1,855 1,991 Goodwill 24,753 7,456 Identifiable intangible assets, net 3,993 1,849 Purchased software 411 -- Other assets 472 881 Total assets $ 97,862 $ 67,669 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,743 $ 2,890 Accrued payroll and related benefits 3,468 2,564 Deferred revenue 13,592 10,147 Accrued acquisition costs 19 4,991 Accrued restructuring reserve 2,729 3,100 Accrued royalty expense 703 432 Other accrued liabilities 3,127 2,141 Total current liabilities 27,381 26,265 Accrued restructuring reserve, less current portion 914 3,504 Deferred revenue, less current portion 3,318 1,785 Total liabilities 31,613 31,554 Commitments and Contingencies Stockholders' equity: Preferred stock -- -- Common stock 1 1 Additional paid-in capital 927,184 903,141 Treasury stock (903) (903) Deferred stock compensation (10) (727) Accumulated deficit (860,024) (865,399) Accumulated other comprehensive income (loss) 1 2 Total stockholders' equity 66,249 36,115 Total liabilities and stockholders' equity $ 97,862 $ 67,669
BLUE COAT SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share amounts)
Three Months Ended Twelve Months Ended April 30, April 30, ------------------------------ ------------------------------ 2005 2004 2005 2004 ------------- ------------- ------------- ------------- (Unaudited) (Unaudited) (Unaudited) Net sales: Products $ 23,316 $ 17,278 $ 78,495 $ 52,251 Services 5,069 3,848 17,691 13,817 Total net sales 28,385 21,126 96,186 66,068 Cost of goods sold: Products 7,239 5,681 25,589 17,141 Services 1,691 1,285 5,713 4,097 Total cost of goods sold 8,930 6,966 31,302 21,238 Gross profit 19,455 14,160 64,884 44,830 Operating expenses: Research and development 4,636 3,415 16,179 11,507 Sales and marketing 10,336 6,930 33,560 24,536 General and administrative 2,517 1,457 8,784 5,127 Legal settlement -- -- -- 1,100 Write-off of in-process technology -- -- -- 151 Amortization of intangible assets 174 153 648 305 Restructuring (96) 680 (96) 1,536 Stock compensation (745) 402 991 1,213 Total operating expenses 16,822 13,037 60,066 45,475 Operating income (loss) 2,633 1,123 4,818 (645) Interest income 255 76 700 295 Other income (expense) (11) 195 (26) 126 Net income (loss) before income taxes 2,877 1,394 5,492 (224) Provision for income taxes (56) (4) (117) (124) Net income (loss) $ 2,821 $ 1,390 $ 5,375 $ (348) Basic net income (loss) per common share $ 0.23 $ 0.13 $ 0.46 $ (0.03) Diluted net income (loss) per common share $ 0.21 $ 0.11 $ 0.41 $ (0.03) Shares used in computing basic net income (loss) per common share 12,259 10,818 11,628 9,956 Shares used in computing diluted net income (loss) per common share 13,565 13,072 12,977 9,956
BLUE COAT SYSTEMS, INC. RECONCILIATION OF NON-GAAP TO GAAP NET INCOME AND EPS (Amounts in thousands, except per share amounts)
Three Months Ended Twelve Months Ended April 30, April 30, ------------------------------ ------------------------------ 2005 2004 2005 2004 ------------- ------------- ------------- ------------- (Unaudited) (Unaudited) (Unaudited) Net income excluding certain charges and benefits (Non-GAAP) $ 2,284 $ 2,624 $ 7,156 $ 3,956 Amortization of intangible assets (304) (152) (886) (1,555) Restructuring 96 (680) 96 (1,536) Stock compensation 745 (402) (991) (1,213) Net income (loss) $ 2,821 $ 1,390 $ 5,375 $ (348) Net income per common share excluding certain charges and benefits (Non-GAAP) $ 0.17 $ 0.20 $ 0.55 $ 0.34 Amortization of intangible assets (0.02) (0.01) (0.07) (0.13) Restructuring 0.01 (0.05) 0.01 (0.13) Stock compensation 0.05 (0.03) (0.08) (0.10) Net income (loss) per share $ 0.21 $ 0.11 $ 0.41 $ (0.03) Shares used in computing basic net income (loss) per common share 12,259 10,818 11,628 9,956 Shares used in computing diluted net income (loss) per common share 13,565 13,072 12,977 11,574
SOURCE Blue Coat Systems, Inc. -0- 06/02/2005 /CONTACT: media, Tony Thompson of Blue Coat Systems, +1-408-220-2305, or tony.thompson@bluecoat.com; or investors, JoAnn Horne of Market Street Partners, +1-415-445-3235, or maria@marketstreetpartners.com, for Blue Coat Systems, Inc./ /Web site: http://www.bluecoat.com /

The following information was filed by Blue Coat Systems Inc (BCSI) on Thursday, June 2, 2005 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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