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================================================================= SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 December 10, 1998 ------------------------------------------------ Date of Report (Date of earliest event reported) VASCO DATA SECURITY INTERNATIONAL, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 0-24389 36-4169320 - ----------------------------------------------------------------- (State or other (Commission (IRS Employer jurisdiction of File No.) Identification Incorporation No.) 1901 South Meyers Road, Suite 210 Oakbrook Terrace, Illinois 60181 - ----------------------------------------------------------------- (Address of principal executive offices) (Zip Code) 630-932-8844 -------------------------------------------------- Registrant's telephone number, including area code Not applicable ------------------------------------------------------------ Former name or former address, if changed since last report) ================================================================= Item 5. Other Events. In a letter to stockholders dated December 8, 1998, the President of the Company reported on the Company's 1998 growth and development, results of operations and recent litigation. Item 7. Financial Statements and Exhibits. Exhibits - -------- 99.1 Letter to Stockholders dated December 8, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. VASCO DATA SECURITY INTERNATIONAL, INC. By: /s/ T. KENDALL HUNT ----------------------------------- T. Kendall Hunt President and Chief Executive Officer Dated: December 10, 1998 EXHIBIT INDEX Exhibit No. Description Page - ----------- ----------------------------------- ----- 99.1 Letter to Stockholders dated December 8, 1998.
EXHIBIT 99.1
December 8, 1998
[BAR CHART DEPICTING 5-YEAR REVENUE GROWTH]
Dear Shareholders,
One of my goals as President and Chairman of VASCO Data
Security International, Inc. is to keep you informed, on a
quarterly basis, about the growth and development of the Company
and its results of operations. In 1998, the Company made
significant progress by continuing the growth of its European
markets, making inroads in the North American market, adding new
products and achieving improved operating results, as evidenced
by the following:
Revenues for the quarter ended September 30, 1998 topped
$4,000,000, a historic high.
Operating income for the quarter ended September 30, 1998,
not including acquisition-related costs, was $41,814 as
compared to a loss of $1,340,976 for the same period in
1997.
Nine-month operating results through September 30, 1998 were
nearing breakeven levels, with a loss from operations, not
including acquisition-related costs, of $44,318 as compared
to a loss of $1,573,107 for the same period in 1997.
A historic high order backlog of nearly $10,000,000 as of
October 31, 1998.
The expansion of our Digipass family of tokens through the
successful introduction of the Digipass 300, combining
multiple functionality in a single device, suitable for both
our banking and remote access markets.
Continued success in Europe against our competitors,
especially Security Dynamics, and growing success in North
America.
With regard to the recent lawsuit filed against us (which is
applicable only in the United States) by our largest North
American competitor, Security Dynamics, we believe that the
lawsuit is being driven by our continued success in Europe and by
Security Dynamics' growing concern that we will replicate that
success in their single largest market, North America. In fact,
our products make it simple for their existing customers who are
looking for proven, open-standards based security alternatives to
easily migrate to VASCO Data Security's solution. Hundreds of
customers in North America and around the world have placed their
trust in our people, partners, and technology as proof of our
success.
Under the strong leadership of Mario Houthooft, Managing
Director of VASCO Data Security's European operations, the
Company is successfully expanding into new countries and new
markets. Recent events as publicized by the Company include
implementing secure network access for the University of
Groningen in Holland, and providing Digipass tokens to PBG Bank
for the first Internet banking project in Poland. The Company
has signed up new customers in Eastern Europe, the Middle East,
and Asia, and has experienced continued growth from a strong
European customer base that includes institutions such as ING
Bank, Rabobank, SE Banken, and ABN-AMRO Bank.
Mr. Houthooft has also been instrumental in coordinating our
worldwide marketing efforts, which are leading to increased
recognition around the world. More and more blue-chip companies
are recognizing the business value of our products. Recently
added customers include companies such as Polaroid, Shell, the
U.S. Coast Guard, Nextel Communications, Nokia, Volvo, NTT Japan,
Manpower, Cabletron, Hitachi, Manitoba Telecom, Andrew Corp., and
Stroehmann Bakeries.
These and other customers have deployed our affordable and
easy-to-use security solutions to enable secure remote
applications, Internet banking, and electronic commerce;
experienced our top-notch service and support; and used our tools
to help manage their large or small token installations. We
believe VASCO Data Security is poised to exceed this record of
success in the years ahead.
Best regards,
/s/ T. Kendall Hunt
President and Chairman
[CHART DEPICTING 3-MONTH AND 9-MONTH RESULTS OF OPERATION]
[BAR CHART DEPICTING WORLDWIDE VASCO Data Security continues
ANNUAL SALES OF DIGIPASSES] its pattern of growth in the
Sale of Digipass tokens around
the world. With more than 2.5
million tokens in use, the
Company is now the leading
supplier of authentication
tokens in the banking
industry, and second overall.