U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 333-10486
For the Month of February 2005
Trend Micro Incorporated
(Translation of registrant’s name into English)
Shinjuku MAYNDS Tower, 1-1, Yoyogi 2-chome,
Shibuya-ku, Tokyo 151-0053, Japan
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-
Information furnished on this form:
| 1. | Press release dated February 3, 2005, relating to the announcement of earnings results of the fourth quarter 2004 and annual earnings results for the year ended December 31, 2004. | |||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| TREND MICRO INCORPORATED | ||||||||
| Date: | February 8, 2005 |
By: | /s/ MAHENDRA NEGI | |||||
| Mahendra Negi Representative Director, Chief Financial Officer and Executive Vice President | ||||||||
Trend Micro Reports Record Fourth Quarter Results
And Consolidated Revenue for 2004
Growth fueled by continued momentum in both enterprise and consumer segments
Tokyo, Japan – February 3, 2005 – Trend Micro, Inc. (TSE: 4704, NASDAQ: TMIC), a leader in network antivirus and Internet content security software and services, today announced record revenue for the fourth quarter 2004 and record net sales results for the year ended December 31, 2004 (both U.S. GAAP).
For the fourth quarter, Trend Micro posted consolidated net sales of 17.7 billion Yen (or US $167.9 million, 105.63JPY = 1USD), operating income of 7.88 billion Yen (or US $74.6 million), and net income of 4.7 billion Yen (or US $44.9 million), marking a 32% growth in net sales and a 50% rise in operating income compared to the same period a year ago.
The strong global performance in the fourth quarter helped Trend Micro set an all-time high in annual net sales. For 2004, Trend Micro generated 62.05 billion Yen (or US $587.4 million) in net sales, reflecting an increase of 29% from 2003. Operating income was 26.08 billion Yen (or US $246.9 million) for the year, up 72% from 2003, and net income was 15.8 billion Yen (or US $150.3 million), also up 72% from the previous year.
“2004 was an exciting year for Trend Micro, and during this time we introduced many new innovations, such as Network VirusWall, and established agreements with leading industry providers like Cisco and MSN Hotmail that we believe will position us for continued success in 2005 and beyond,” said Eva Chen, CEO and co-founder of Trend Micro. “As our customers’ needs evolve, our focus remains unwavering – to deliver timely updates and protect our customers from malicious threats amid an increasingly unpredictable environment.”
Continued demand for comprehensive protection in the enterprise and consumer environments resulted in strong growth across the company’s various product lines. In 2004, gateway suite products grew 131% compared to the previous year, and consumer products experienced a 39% year-over-year increase. Enterprise products comprised 78% of total annual revenues for 2004, with consumer products comprising 22%.
Worldwide performance was strong throughout the year, highlighted by Japan, Europe, and the United States.
The company plans to pay cash dividends of 4.7 billion Yen, or 36 Yen per share, for 2004. The payout ratio is 30%.
Based on information currently available to the company, consolidated net sales for the first quarter ending March 31, 2005 is expected to be 16.3 billion Yen (or US $158 million, based on an exchange rate as of January 28, 2005 of 103JPY = 1USD). Operating income and net income are expected to be 6.2 billion Yen (or US $60 million) and 3.8 billion Yen (or US $36.9 million), respectively.
Fourth Quarter Business Highlights
| • | Hotmail & Trend Micro |
An agreement with MSN Hotmail was established in which Trend Micro’s technology will provide antivirus scanning and cleaning protection for its Web-based services. The agreement calls for Trend Micro to protect nearly 200 million email accounts from the latest viruses, Trojans, and worms that may be hidden in email attachments. MSN Hotmail’s Trend Micro-backed services commenced worldwide in December 2004.
| • | Awards & Recognition |
Trend Micro won the Frost and Sullivan Award for Competitive Strategy Leadership, an award based on Frost and Sullivan’s annual survey of key antivirus industry players. Trend Micro won the award based on its progress on several fronts: Revenue growth, market share gained, profitability, strategic alliances, customer service and support, and general market strength. Trend Micro was also named to the ranks of the Deloitte Technology Fast 500 Asia Pacific, which recognizes technology companies that have achieved certain rates of annual revenue growth in Asia Pacific during the past three years.
Trend Micro products received several honors, including the Editor’s Choice award from Technology and Business magazine for Trend Micro InterScan™ Web Security Suite version 2.0, and the CNET Editors’ Choice Award 2004 for Trend Micro PC-cillin™ Internet Security 2005. PC-cillin Internet Security 2005 was also named to the Computer Shopper Top 100 list.
| • | Support & Service |
Trend Micro’s TrendLabs headquarters (Manila, Philippines) was awarded certification for British Standards 7799 for meeting requirements of the British Standards Institute for information management systems. Satisfying these standards helps ensure that Trend Micro’s customers are supported by TrendLabs in the midst of day-to-day security risks, computer intrusion, power outages, physical disasters, and other threats.
| • | Products & Innovation |
In the fourth quarter, Trend Micro’s family of revolutionary outbreak prevention appliances was extended with the introduction of Trend Micro Network VirusWall™ 2500 and 300. These appliance-based products introduced greater flexibility in enforcing network security policies to help stop the damaging effects of network worms - from globally distributed enterprise environments to single, mission-critical devices. The company also introduced Trend Micro Mobile Security, which provides antivirus and anti-spam protection for SMS messaging customers using data-centric mobile phones and PDAs.
| • | Enterprise Segment |
New customers and new business gained during the quarter included Nextel, Inc., a provider of fully integrated wireless communications services in the United States. In Japan, Trend Micro began providing threat lifecycle management services to Information and Telecommunication Systems of Hitachi, Ltd. and Hitachi Electronics Services Co., Ltd.
| • | Consumer Segment |
Distribution for Trend Micro PC-cillin Internet Security 2005 was expanded to include major national retailers in North America, including Best Buy and CompUSA.
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 antivirus software industry |
| • | Changes in customer needs for antivirus software |
| • | Existing products and new product introductions by our competitors and the pricing of those products |
| • | Declining prices for 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.
About Trend Micro
Trend Micro, Inc. is a leader in network antivirus and Internet content security software and services. The Tokyo-based corporation has business units worldwide. Trend Micro products are sold through corporate and value-added resellers and managed service providers. For additional information and evaluation copies of all Trend Micro products, visit our Web site, www.trendmicro.com.
# # #
Trend Micro, the t-ball logo, InterScan, PC-cillin, and VirusWall are trademarks or registered
trademarks of Trend Micro Incorporated. TrendLabs is a service mark of Trend Micro
Incorporated. All other company or product names may be trademarks or registered trademarks
of their owners.
For additional Information
Mr. Mahendra Negi
Chief Financial Officer / IR Officer
Phone: +81-5334-4899
Fax: +81-5334-4874
ir@trendmicro.co.jp
Supplementary Information
1. CONSOLIDATED BALANCE SHEETS
| Account |
December 31, 2003 |
December 31, 2004 |
||||
| <Assets> |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
46,718,940 | 52,908,357 | ||||
| Time deposits |
440,323 | 383,276 | ||||
| Marketable securities |
4,769,935 | 15,288,575 | ||||
| Notes and accounts receivable, trade –less allowance for doubtful accounts and sales returns of |
11,681,457 | 15,245,213 | ||||
| Inventories |
77,950 | 201,243 | ||||
| Deferred income taxes |
4,894,387 | 6,224,972 | ||||
| Prepaid expenses and other current assets |
1,397,821 | 1,560,058 | ||||
| Total current assets |
69,980,813 | 91,811,694 | ||||
| Investments and other assets: |
||||||
| Securities investments |
6,107,872 | 9,831,913 | ||||
| Investment in and advances to affiliated companies |
119,591 | 175,281 | ||||
| Software development costs |
505,616 | 438,464 | ||||
| Other intangibles |
311,756 | 296,368 | ||||
| Deferred income taxes |
1,806,760 | 1,695,771 | ||||
| Other |
734,533 | 636,009 | ||||
| Total investments and other assets |
9,586,128 | 13,073,806 | ||||
| Property and equipment: |
||||||
| Office furniture and equipment |
2,823,506 | 3,323,526 | ||||
| Other properties |
1,038,524 | 1,165,173 | ||||
| 3,862,030 | 4,488,699 | |||||
| Less: Accumulated depreciation |
(2,157,884 | ) | (2,640,288 | ) | ||
| Total property and equipment |
1,704,146 | 1,848,411 | ||||
| Total assets |
81,271,087 | 106,733,911 | ||||
| Account |
December 31, 2003 |
December 31, 2004 |
||||
| <Liabilities and shareholders’ equity> |
||||||
| Current liabilities: |
||||||
| Current portion of long-term debt |
6,500,000 | — | ||||
| Notes payable, trade |
96,204 | 88,087 | ||||
| Accounts payable, trade |
899,508 | 1,271,067 | ||||
| Accounts payable, other |
1,326,244 | 2,699,762 | ||||
| Withholding income taxes |
490,315 | 882,693 | ||||
| Accrued expenses |
1,984,175 | 2,143,694 | ||||
| Accrued income and other taxes |
4,280,797 | 7,192,085 | ||||
| Deferred revenue |
17,486,298 | 24,634,662 | ||||
| Other |
557,050 | 651,503 | ||||
| Total current liabilities |
33,620,591 | 39,563,553 | ||||
| Long-term liabilities: |
||||||
| Deferred revenue |
3,017,105 | 3,268,892 | ||||
| Accrued pension and severance costs |
487,409 | 656,041 | ||||
| Other |
194,185 | 70,665 | ||||
| Total long-term liabilities |
3,698,699 | 3,995,598 | ||||
| Shareholders’ equity: |
||||||
| Common stock |
||||||
| Authorized |
||||||
| -December 31, 2003 250,000,000 shares (no par value) |
||||||
| -December 31, 2004 250,000,000 shares (no par value) |
||||||
| Issued |
||||||
| -December 31, 2003 132,620,100 shares |
7,396,194 | |||||
| -December 31, 2004 135,755,872 shares |
11,426,977 | |||||
| Additional paid-in capital |
13,165,881 | 17,359,335 | ||||
| Retained earnings |
28,236,466 | 42,165,026 | ||||
| Accumulated other comprehensive income |
||||||
| Net unrealized gain (loss) on debt and equity securities |
70,965 | 284,348 | ||||
| Cumulative translation adjustments |
(500,946 | ) | (606,463 | ) | ||
| (429,981 | ) | (322,115 | ) | |||
| Treasury stock, at cost |
||||||
| -December 31, 2003 1,958,647 shares |
(4,416,763 | ) | ||||
| -December 31, 2004 2,588,439 shares |
(7,454,463 | ) | ||||
| Total shareholders’ equity |
43,951,797 | 63,174,760 | ||||
| Total liabilities and shareholders’ equity |
81,271,087 | 106,733,911 | ||||
2. CONSOLIDATED STATEMENTS OF INCOME
(Thousands of yen)
| Account |
For the year ended December 31, 2003 |
For the year ended December 31, 2004 |
Increase % | |||||
| Net sales |
48,088,347 | 62,049,254 | 29.0 | |||||
| Cost of sales |
3,168,467 | 3,236,499 | ||||||
| Gross profit |
44,919,880 | 58,812,755 | 30.9 | |||||
| Operating expenses: |
||||||||
| Selling |
15,360,532 | 16,009,409 | ||||||
| Research and development and maintenance |
3,919,024 | 4,858,259 | ||||||
| Customer support |
4,830,660 | 5,723,426 | ||||||
| General and administrative |
5,656,168 | 6,143,985 | ||||||
| Total operating expenses |
29,766,384 | 32,735,079 | ||||||
| Operating income |
15,153,496 | 26,077,676 | 72.1 | |||||
| Other incomes (expenses): |
||||||||
| Interest income |
412,635 | 451,217 | ||||||
| Interest expense |
(173,830 | ) | (87,464 | ) | ||||
| Gain (loss) on sales of marketable securities |
(65,259 | ) | 101,199 | |||||
| Impairment loss of securities investments |
(7,360 | ) | — | |||||
| Foreign exchange gain (loss), net |
120,650 | (183,292 | ) | |||||
| Other income (expense), net |
(111,345 | ) | (34,350 | ) | ||||
| Total other income (expense) |
175,491 | 247,310 | ||||||
| Net income before tax |
15,328,987 | 26,324,986 | 71.7 | |||||
| Income taxes: |
||||||||
| Current |
7,437,576 | 11,893,659 | ||||||
| Deferred |
(1,334,998 | ) | (1,390,387 | ) | ||||
| 6,102,578 | 10,503,272 | |||||||
| Income before equity in earnings (losses) of affiliated companies |
9,226,409 | 15,821,714 | 71.5 | |||||
| Equity in earnings (losses) of affiliated companies |
23,623 | 53,122 | ||||||
| Net income |
9,250,032 | 15,874,836 | 71.6 | |||||
| Per share data: |
||||||||
| Yen |
Yen |
|||||||
| Net income |
||||||||
| -Basic |
70.11 | 120.64 | 72.1 | |||||
| -Diluted |
69.95 | 118.59 | 69.5 |
3. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Thousands of yen)
| Account |
For the year ended December 31, 2003 |
For the year ended December 31, 2004 |
||||
| Net income |
9,250,032 | 15,874,836 | ||||
| Other comprehensive income (loss), before tax: |
||||||
| Unrealized gains (losses) on debt and equity securities: |
||||||
| Unrealized holding gains (loss) arising during period |
135,323 | 514,117 | ||||
| Less reclassification adjustment for gains or losses included in net income |
132,701 | (143,702 | ) | |||
| 268,024 | 370,415 | |||||
| Foreign currency translation adjustments |
(786,025 | ) | (105,517 | ) | ||
| Total |
(518,001 | ) | 264,898 | |||
| Income tax expense related to unrealized gains (losses) on debt and Equity securities |
(113,182 | ) | (157,032 | ) | ||
| Other comprehensive income (loss), net of tax |
(631,183 | ) | 107,866 | |||
| Comprehensive income |
8,618,849 | 15,982,702 | ||||
4. CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of yen)
| Account |
For the year ended December 31, 2003 |
For the year ended December 31, 2004 |
||||
| Cash flows from operating activities: |
||||||
| Net income |
9,250,032 | 15,874,836 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities - |
||||||
| Depreciation and amortization |
2,266,356 | 1,590,743 | ||||
| Pension and severance costs, less payments |
140,661 | 166,649 | ||||
| Deferred income taxes |
(1,334,998 | ) | (1,390,387 | ) | ||
| (Gain) loss on sales of marketable securities |
65,259 | (101,199 | ) | |||
| Impairment of securities investments |
7,360 | — | ||||
| Equity in earnings of affiliated companies |
(23,623 | ) | (53,122 | ) | ||
| Changes in assets and liabilities: |
||||||
| Increase in deferred revenue |
5,036,872 | 7,293,488 | ||||
| (Increase) decrease in accounts receivable, net of allowances |
(446,201 | ) | (3,421,729 | ) | ||
| (Increase) decrease in inventories |
278,751 | (124,093 | ) | |||
| Increase (decrease) in notes and accounts payable, trade |
(52,021 | ) | 379,882 | |||
| Increase (decrease) in accrued income and other taxes |
193,227 | 2,912,481 | ||||
| (Increase) decrease in other current assets |
(67,898 | ) | (90,479 | ) | ||
| Increase (decrease) in accounts payable, other |
(11,962 | ) | 823,199 | |||
| Increase in other current liabilities |
602,296 | 1,107,855 | ||||
| (Increase) decrease in other assets |
(324,879 | ) | 110,628 | |||
| Other |
87,072 | (178,744 | ) | |||
| Net cash provided by operating activities |
15,666,304 | 24,900,008 | ||||
| Cash flows from investing activities: |
||||||
| Payments for purchases of property and equipment |
(715,901 | ) | (801,935 | ) | ||
| Software development cost |
(788,760 | ) | (645,166 | ) | ||
| Payments for purchases of other intangibles |
(270,570 | ) | (229,167 | ) | ||
| Proceeds from sales of marketable securities |
2,945,331 | 4,986,012 | ||||
| Payment for purchase of marketable securities within three months or less (net) |
— | (2,156,191 | ) | |||
| Payments for purchases of marketable securities and security investments |
(10,248,908 | ) | (17,240,100 | ) | ||
| (Payments for)/Proceed from time deposits |
(374,601 | ) | 57,047 | |||
| Net cash used in investing activities |
(9,453,409 | ) | (16,029,500 | ) | ||
| Cash flows from financing activities: |
||||||
| Issuance of common stock pursuant to exercise of stock purchase warrants and stock acquisition rights |
278,002 | 8,049,004 | ||||
| Redemption of bonds |
(5,000,000 | ) | (6,500,000 | ) | ||
| Purchase of treasury stock (net of proceeds) |
(2,094,476 | ) | (3,165,679 | ) | ||
| Tax benefit from exercise of non-qualified stock warrants |
233,277 | 498,905 | ||||
| Tax recognition derived from elimination of reversed warrant related With stock option plan |
(228,085 | ) | (312,708 | ) | ||
| Dividend paid |
— | (1,819,607 | ) | |||
| Net cash used in financing activities |
(6,811,282 | ) | (3,250,085 | ) | ||
| Effect of exchange rate changes on cash and cash equivalents |
(512,494 | ) | 568,994 | |||
| Net increase (decrease) in cash and cash equivalents |
(1,110,881 | ) | 6,189,417 | |||
| Cash and cash equivalents at beginning of period |
47,829,821 | 46,718,940 | ||||
| Cash and cash equivalents at end of period |
46,718,940 | 52,908,357 | ||||
| Supplementary information of cash flow: |
||||||
| Payment for interest expense |
151,623 | 114,121 | ||||
| Payment for income taxes |
7,102,721 | 8,990,398 | ||||