ITEM 1. BUSINESS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements other than statements of historical facts
included in this Report, including, without limitation, statements regarding the
Company's future financial position, business strategy, planned products,
products under development, markets, budgets and plans and objectives of
management for future operations, are forward-looking statements. Although we
believe that the expectations reflected in these forward-looking statements are
reasonable, we cannot assure you those expectations will prove to have been
correct. Important factors that could cause actual results to differ materially
from the Company's expectations are disclosed in statements set forth under
"Cautionary Statements" and elsewhere in this Report, including, without
limitation, in conjunction with the forward-looking statements included in this
Report. All subsequent written and oral forward-looking statements attributable
to us, or persons acting on our behalf, are expressly qualified in their
entirety by the Cautionary Statements and such other statements. References to
the "Company," "BindView," "we," "us," and "our" refer to BindView Development
Corporation and its subsidiaries.
BindView Development Corporation ("BindView" or the "Company") delivers
proactive network security-management software and services to help secure,
automate and lower the costs of managing information technology infrastructures.
Our software helps safeguard our customers' computer networks from the inside
out, working to protect those networks from both internal and external threats,
while also helping to lower our customers' overall cost of ownership through
automation of numerous administrative tasks and security reporting requirements.
Since our founding in 1990, more than 20 million licenses of our software have
been shipped worldwide to approximately 5,000 companies, including more than 80
of the Fortune 100 and 24 of the largest 25 U.S. banks.
BindView was founded in May 1990 as a Texas corporation. Before 1995 we
were known as The LAN Support Group, Inc. Our initial public offering was
completed in July 1998 and a follow-on offering in December 1998. On December
18, 1998, we acquired CuraSoft, Inc. ("CuraSoft"), a provider of automated event
management software. On March 1, 1999, we acquired Netect, Ltd. ("Netect"), a
provider of corporate security software for Internet/Intranet networks. On
February 9, 2000, we acquired Entevo Corporation ("Entevo"), a provider of
directory management and migration software for Windows NT and Windows 2000
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Our global business is principally in a single industry segment, as
described above under the heading "General". For a discussion of our financial
information in this segment, see Note 14 of our Consolidated Financial
Statements included elsewhere in this Report.
NARRATIVE DESCRIPTION OF BUSINESS
PRODUCTS AND TECHNOLOGY
BindView currently has three main product lines to help secure, automate
and lower the costs of managing IT infrastructures: bv-Control(R), bv-Admin(R)
and the BindView Policy Center.
Our bv-Control(R) Software
Many traditional security management solutions (such as firewalls,
anti-virus scanners, and intrusion detection systems) typically take action only
when an intrusion across the security perimeter is detected. In contrast,
BindView's proactive solutions work to find and fix security holes and thus help
security vulnerabilities before they are exploited. Our software can help
protect our customers' networks from internal as well as external threats. This
can be important to customers because internal security threats may pose a
greater business risk and potential for financial loss than external threats.
Our bv-Control product line provides vulnerability assessment,
configuration management, general reporting, and disaster recovery documentation
capabilities. Our core bv-Control software products use a centralized management
console called the BindView RMS Console and Information Server software, or
simply, the "RMS Console" software. The RMS Console software uses an
object-oriented architecture that enables a variety of network operating systems
and managed objects to be supported through snap-in modules. The RMS Console
software supplies a set of common core services to such modules. This
architecture provides a development environment that enables our customers to
deploy new products more quickly.
Our bv-Control software products provide customers with a flexible querying
capability. Our query engine gathers large amounts of data about the network and
presents query results to the user. The user can quickly create custom queries,
or can select a query from the many sample reports that are provided
"out-of-the-box" with our software. The bv-Control software thus helps to detect
vulnerabilities within the network and to alert administrators of critical
issues so administrators can begin taking corrective action before users
experience system downtime or performance problems.
Our various bv-Control software products help to manage daily configuration
and operational issues, including password policies, effective-rights analysis,
and user accounts. Our products deliver robust reporting and analysis
capabilities, and thereby help to reduce downtime from improperly configured
servers and access rights and from security holes. Our bv-Control products help
improve service levels by identifying and proactively correcting problems
quickly and easily; they also help reduce the likelihood of unknown security
We offer bv-Control software for a variety of operating systems and
applications, including but not limited to the following:
- bv-Control for Windows(R) 2000
- bv-Control for NetWare(R)
- bv-Control for NDS(R) eDirectory
- bv-Control for UNIX(R)
- bv-Control for Microsoft(R) Exchange
- bv-Control for Active Directory(R)
- bv-Control for Internet Security
- bv-Control for SAP(R) Systems
- bv-Control for SQL Server
- bv-Control for Desktops
- bv-Control for OS/400
- bv-Control for Web services
Our bv-Admin(R) Software
Our bv-Admin software provides a directory and systems administration
solution for security and migration, including roles-based access control for
network administrators and help-desk staffs; provisioning of users and machine
accounts; and automation of many day-to-day tasks. The bv-Admin software helps
network administrators to focus more effectively on the planning and
implementation issues that surround technologies such as Windows 2000, Active
Directory and Exchange 2000. Our bv-Admin migration software products also
help organizations to manage proactively the transition from Windows NT,
Exchange 5.5, and Novell environments to Windows 2000, Active Directory, and
Exchange 2000 environments.
Our bv-Admin software utilizes a standards-based, non-intrusive
architecture (ADSI, LDAP, XML, COM, and HTTP). It supports large, distributed
environments through its scalable infrastructure. The bv-Admin software provides
role-based administration, reducing the cost and complexity of directory
management, while improving service levels at the same time. It consolidates
multiple directories and domains into a single management console, and provides
a powerful Find-and-Fix query facility to help locate and correct directory
information. It offers secure remote administration via a Web browser, and
automates a variety of complex and repetitive tasks with a powerful,
non-proprietary scripting facility.
We offer bv-Admin software for a variety of operating systems and
applications, including but not limited to the following:
- bv-Admin for Windows(R) 2000
- bv-Admin for Windows(R) 2000 Migration
- bv-Admin for Novell NDS(R)
- bv-Admin for Novell(R) Migration
- bv-Admin for Microsoft(R) Exchange
- bv-Admin for Microsoft(R) Exchange Migration
- bv-Admin for .Net Web Services
- bv-Admin for Group Policy Objects
The BindView Policy Center
In July 2002 we announced the launch of a new product line, the BindView
Policy Center, and released the first product in that line, the BindView Policy
Operations Center. The BindView Policy Operations Center, which is hosted for us
by META Security Group, is a Web-based system that helps policy officers and
system administrators to develop, implement, and manage security policies. Major
features of the BindView Policy Operations Center include:
- Security Policy Creation and Development: Organizations can easily
document and distribute proprietary security policies throughout the
enterprise, helping to ensure that all employees have access to and are
aware of relevant security policies -- an important component of meeting
basic requirements for protecting information assets. Additionally,
existing policies can be easily imported and integrated with the new best
- Education and Awareness: Organizations can measure user awareness of
internal security policies and then document when each user has read and
accepted those policies, providing important information for legal and
- Disaster Recovery and Business Continuity: The Web-based delivery method
provides organizations with 24x7 access to their security policies and
documentation, regardless of physical location.
- No Internal Installation or Support Costs: Organizations need only to
provide the browser and Web access -- BindView Policy Operations Center
does not require lengthy or complex installations, thereby reducing
implementation delays and ongoing support concerns.
We normally do not operate with a backlog because we ship our products
shortly after orders are received.
Currently, our products compete with products from a variety of
organizations including but not necessarily limited to the following:
- providers of security analysis and audit products;
- providers of Windows NT management and migration tools;
- providers of network security scanning technology;
- providers of security-policy products and services;
- providers of shareware/freeware software products that perform some of
the same functions as our software;
- providers of enterprise resource planning application add-ons for SAP
security administration and vulnerability assessment;
- providers of LAN desktop management suites; and
- providers of stand-alone inventory and asset management products.
Some examples of specific companies with whom we compete in particular
markets or submarkets are: Aelita Corporation; ConfigureSoft, Inc.; CSI
International; Ecora Corporation; Hewlett-Packard Company; Intel Corporation;
Intrusion.Com; ISS Group, Inc.; BearingPoint; Microsoft Corporation; NetIQ
Corporation; Network Associates Inc.; PentaSafe, Inc. (recently acquired by
NetIQ Corporation); PoliVec, Inc.; Quest Software; Symantec Inc.; and Tally
In addition, companies such as Novell and Microsoft also offer native tools
with their products that provide a basic set of management tools. While the
native tools currently offered by these companies provide assistance in certain
administrative tasks for their own respective platforms, we believe that they do
not help IT administrators or security professionals cope, to the same extent
that our products do, with the day-to-day management tasks with which they are
challenged. Our software solutions provide an easy-to-use interface and can be
scaled to the largest of the heterogeneous environments. We believe we are in a
unique position to help address the growing demand for cross-platform security
and administration solutions in these installations.
SALES AND MARKETING
We sell our products through direct sales and telesales forces, and, to a
lesser extent, through value-added resellers ("VARs"), distributors, and
original equipment manufacturers ("OEMs"). In addition, we have strategic
marketing relationships with certain professional service organizations and
software vendors that provide us with increased visibility, as well as sales
leads. Sales cycles typically range from three months for departmental sales and
up to twelve months or more for large, enterprise-wide deployments.
Direct Sales Force. Our direct sales force focuses on enterprise and
large-market customers, generally Fortune 500 companies. Direct sales
representatives are in communication with our largest opportunities, using our
staff of software engineers to help customers with the technical aspects of our
software. Most of our direct sales force is based at our Houston headquarters.
We also have direct sales representatives in Frankfurt, Germany; Mexico City,
Mexico; Berkshire, England; and Sao Paolo, Brazil.
Telesales Force. Our telesales organization, which is based in Houston,
concentrates on emerging and middle-market customers by utilizing our staff of
software engineers, as well as the telephone and Internet
communications for product demonstrations and product sales. When necessary,
members of our telesales force also travel to customer locations.
VARS AND DISTRIBUTORS
We have established indirect distribution channels through relationships
with VARs and distributors in the United States, Europe, Latin America, and the
Pacific Rim, with the highest concentration of such relationships being located
in European markets.
Our international VARs and distributors typically perform selected
marketing, sales, and technical support functions in their country or region.
Each one might distribute directly to the customer, via other resellers, or
through a mixture of both channels.
SYSTEMS INTEGRATORS AND SERVICE PROVIDERS
We also market our products through certain service organizations that help
customers install, manage, and secure large Windows NT and NetWare networks.
Such organizations include certain large systems integrators, outsourcing
companies, and certain security auditing groups within accounting firms. Some of
these companies sell our products directly to their end-users, while others
license the products from us and include these products in their standard
toolkits used at their clients' sites.
CHANNEL ALLIANCES AND PROGRAMS
To support our sales organization and channel partners, we have devoted
significant resources to building a series of channel alliances and marketing
programs. Currently, we have developed relationships with certain companies
including Microsoft Corporation; Novell, Inc.; Hewlett-Packard Company; and IBM
Corporation. We are a Microsoft Solution Provider and hold Windows 2000
Certified and Microsoft Gold Partner status for several of our products. We also
collaborate with certain accounting firms to increase awareness of network
In addition, our marketing efforts have resulted in our participation in a
number of programs such as seminars, industry trade shows, vendor executive
briefings, analyst and press tours, advertising and public relations efforts.
CUSTOMER SUPPORT AND PROFESSIONAL SERVICES
We believe high-quality customer support and professional services are
requirements for continued growth and increased sales of our products. We have
made a significant investment in increasing the size of our support and services
organization in the past and plan to continue to do so in the future. Customer
support personnel provide technical support by telephone, e-mail and fax, and
maintain our Web site and bulletin boards to complement these services. Product
upgrades and enhancements are provided at no extra charge to our maintenance
customers as part of their maintenance subscriptions.
Our professional services group provides fee-based product training,
consulting, and implementation services to help customers maximize the benefits
of our products. In addition, we periodically offer training to our channel
partners and employees.
COMPANY-SPONSORED RESEARCH & DEVELOPMENT ACTIVITIES
We have been and continue to be an innovator and leader in the development
of IT administration and security management solutions. We believe a technically
skilled, quality oriented and highly productive software development
organization is key to the continued success of new product offerings. Our
software development staff is also responsible for enhancing our existing
products and expanding our product line. We expect we will continue to invest
substantial resources in product development expenditures. Tables showing
financial data, including our expenditures on research and development
activities are set forth in Item 6, "Selected Financial Data," and in Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations -- Operating Costs and Expenses."
As of December 31, 2002, we employed approximately 525 full-time employees
worldwide. We are not subject to any collective bargaining agreement.
PATENTS, TRADEMARKS, AND COPYRIGHTS
We protect our software and other intellectual-property assets under
copyright law, trademark law, trade-secret law, and patent law, as applicable.
We have obtained U.S. federal trademark registrations for certain trademarks and
U.S. copyright registrations for certain works of authorship. For additional
details, see the discussion of Proprietary Rights in Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Cautionary Statements," contained elsewhere in this Report.
See the discussion of Seasonality in Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Seasonal
Fluctuations," contained elsewhere in this Report.
We intend to continue focusing on proactive security management software
and services to help customers secure, automate, and lower costs of managing
their IT infrastructures. We anticipate that our future product directions will
focus on the "security-policy life cycle," i.e., on improving our customers'
ability to develop, implement, and manage security policy. This likely will
include expanding the number of platforms supported by our bv-Control and
bv-Admin products; selectively expanding the features and functionality of those
products; increasing the scope and capabilities of our new BindView Policy
Center offering; and possibly developing or acquiring other products relating to
security management. We will focus especially on developing and/or acquiring
products we believe we can sell to our existing markets, and/or that we believe
will leverage our existing technologies and core competencies.
BindView's internet address is http://www.bindview.com. BindView's filings
with the Securities and Exchange Commission ("SEC"), including its annual report
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
amendments to those reports, filed or furnished pursuant to Section 13(a) or
15(d) of the Exchange Act, are accessible free of charge at
http://www.bindview.com as soon as reasonably practicable after the company
electronically files such material with, or furnishes it to the SEC.