Secure Computing's Secure Quarter: Fool by Numbers

On Wednesday, Motley Fool Rule Breakers pick Secure Computing (Nasdaq: SCUR  ) released Q3 2006 earnings for the period ended Sept. 30, 2006.

  • At first blush, earnings looked awful. And yet the opposite is true. After one-time items and after backing out the effects of the CipherTrust acquisition, which occurred during the quarter, Secure Computing earned $0.10 a share on $42.5 million in sales, both of which beat expectations.
  • What's more, Secure's balance sheet inherited only $89 million in debt. That's an impressive discount from the $115 million management had expected to take on to finance the CipherTrust deal, and suggests high confidence in the firm's ability to produce excellent cash flow.

  • Guidance according to generally accepted accounting principles suggests further losses during Q4, but it's likely the next quarter will also see more one-time charges due to the CipherTrust deal. Keep a closer eye on cash flow, Fool.

(Figures in thousands, except per-share data)

Income Statement Highlights

Q3 2006

Q3 2005

Change

Sales

$43,748

$27,249

60.5%

Net Profit

($8,194)

$5,792

N/A

EPS

($0.14)

$0.15

N/A

Diluted Shares

57,378

38,182

50.3%



Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

73.06%

81.53%

(8.47)

Operating Margin

(14.51%)

19.83%

(34.34)

Net Margin

(18.73%)

21.26%

(39.99)

*Expressed in percentage points

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$8,370

$72,644

(88.5%)

Accounts Rec.

$51,733

$23,881

116.6%

Inventory

$4,533

$2,553

77.6%



Liabilities

Q3 2006

Q3 2005

Change

Accounts Payable

$13,628

$1,738

684.1%

Total Debt

$88,905

$0

N/A



Learn the ways of the balance sheet.

Cash Flow Checkup

Q3 2006

Q3 2005

Change

Cash From Ops.

$26,008

$18,780

38.5%

Capital Expenditures

$8,368

$1,737

381.8%

Free Cash Flow

$17,640

$17,043

3.5%

*Trailing 12 month total

Find out why Fools always follow the money.

Related Companies:

Related Foolishness:

Secure Computing is one of dozens in a Rule Breakers portfolio that features five stocks that have more than doubled in price. Want to find out who they are? Click here to get 30 days of free access to the service.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so checkFool.comfor more of our in-depth discussion of what the numbers mean.

Fool contributor Tim Beyers owns shares of Secure Computing. You can find out which other stocks he owns by checking Tim's Fool profile. Symantec is a Motley Fool Inside Value selection. The Motley Fool's disclosure policy always adds up.


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