Wall Data Reports First Quarter Results - Company Financial Information

Edge: Work-Group Computing Report, August 30, 1999

Wall Data Incorporated (Nasdaq:WALL), a leading provider of powerful host access solutions for Web-to-host, PC-to-host and server-based (thin client) computing, has reported financial results for its fiscal first quarter ended July 31, 1999. First quarter revenues were $20.1 million resulting in a net loss of $11.3 million, or $1.12 per share. The Company had cash and short-term investments totaling $60.3 million as of July 31, 1999.

As previously announced, revenues for the quarter were $20.1 million compared with $20.2 million during the immediately preceding fourth quarter of fiscal 1999. Revenues were down 50% compared to $40.4 million in the first quarter of fiscal 1999. This decline was caused by the continued effects of the Company's sales force reorganization during the immediately preceding quarter and the slowing of the enterprise software market caused, in part, by customer focus on their Year 2000 compliance. The Company reduced its operating expenses by $4.0 million compared to the immediately preceding quarter due to headcount reductions and increased spending controls across all functional areas of the business. The net loss for the first quarter was $11.3 million, or $1.12 per share, compared to net income of $2.2 million, or $0.22 per share, during the prior year.

Substantially all of the Company's revenues in the quarter consisted of PC and Web-to-host products and services. Revenues from corporate information portal and business intelligence products were nominal. During the first two weeks of the second fiscal quarter, the Company reduced its overall workforce by roughly one third and is in the process of closing and consolidating offices and facilities. The Company will no longer continue to pursue the corporate information portal market.

"We have made extensive changes in Wall Data's operating structure in the last two weeks and have now sized the company for a lower sales volume for the balance of the year," said Kevin Vitale, president and chief executive officer of Wall Data. "We will now leverage RUMBA's brand recognition, customer base, technology, people and financial resources to target the emerging web-to-host and thin-client market segments."

The Company previously disclosed that its second fiscal quarter ending October 31, 1999 will include a restructuring charge and a $2.9 million non-operating gain on the sale of an equity investment in an Internet software company. The restructuring charge is currently estimated to be between $14 and $16 million and includes severance costs, facility closure costs and approximately $6 million of non-cash asset write-offs.

Wall Data is an enterprise software company providing fast, easy and reliable access to business-critical information systems from any client across any Net. As the first company to provide access to host information systems through a Windows desktop, Wall Data continues to innovate with its award-winning RUMBA 2000 product family, offering powerful and comprehensive host access solutions for Web-to-Host, server-based (thin client) and PC-to-host environments. Since its inception in 1982, the company has enabled thousands of organizations, including 85 percent of Fortune 1000 companies, to maximize their technology investments by extending their enterprise systems to new platforms.

                     WALL DATA INCORPORATED
        CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
            (In thousands, except per share amounts)

                                           Three months ended
                                               July 31,
                                          1999            1998
                                      ------------    -----------
Net revenues
     License fees                         $12,428       $ 32,722
     Services                               7,644          7,688
                                      ------------    -----------
     Total net revenues                    20,072         40,410
Cost of revenues
     License fees                           3,310          4,553
     Services                               2,817          2,955
                                      ------------    -----------
     Total cost of revenues                 6,127          7,508
                                      ------------    -----------
Gross margin                               13,945         32,902
Operating expenses:
     Product development                    6,025          6,601
     Sales and marketing                   16,021         19,525
     General and administrative             3,028          3,947
     Amortization of intangibles
      from acquisitions                       567            519
                                      ------------    -----------
     Total operating expenses              25,641         30,592
                                      ------------    -----------
Operating income (loss)                   (11,696)         2,310
Other income, net                             590            417
                                      ------------    -----------
Income (loss) before income taxes         (11,106)         2,727
Provision for income taxes                    234            544
                                      ------------    -----------
Net income (loss)                        $(11,340)       $ 2,183
                                      ------------    -----------
Net income:
     Basic earnings (loss) per share      $ (1.12)        $ 0.22
                                      ------------    -----------
     Diluted earnings (loss)
      per share                           $ (1.12)        $ 0.22
                                      ------------    -----------
Shares used to calculate
  earnings per share:
     Basic                                 10,152          9,906
                                      ------------    -----------
     Diluted                               10,152          9,965
                                      ------------    -----------

                     WALL DATA INCORPORATED
                   CONSOLIDATED BALANCE SHEETS
                         (In thousands)

                                          July 31,      April 30,
                                           1999          1999
                                       ------------    -----------
            ASSETS                      (unaudited)

  Current assets:
      Cash and cash equivalents           $13,720        $17,728
      Marketable securities                46,605         47,736
      Accounts receivable                  14,910         19,866
      Deferred income taxes                 5,696          5,697
      Other current assets                  3,063          3,317
                                      ------------   ------------
           Total current assets            83,994         94,344
  Fixed assets, net                         9,001          9,559
  Deferred income taxes                       400            400
  Long-term investments                     2,017          2,017
  Intangible assets related
   to acquisitions                         14,363         14,861
  Other assets                              4,908          5,614
                                      ------------   ------------
                                         $114,683       $126,795
                                      ------------   ------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

  Current liabilities
      Accounts payable                   $ 7,111        $ 7,531
      Accrued expenses                    12,353         11,107
      Income taxes payable                 3,334          3,249
      Deferred revenues                   14,695         15,877
                                     ------------   ------------
         Total current liabilities        37,493         37,764
                                     ------------   ------------
  Deferred income taxes                    2,639          2,630
                                     ------------   ------------
  Shareholders' equity:
      Preferred stock                        --             --
      Common stock                        62,177         62,145
      Retained earnings                   13,042         24,382
      Accumulated other
       comprehensive income                 (668)          (126)
                                     ------------   ------------
         Total shareholders' equity       74,551         86,401
                                     ------------   ------------
                                        $114,683       $126,795
                                     ------------   ------------