Published on March 18, 2008
|
Contacts:
|
|
|
Stephan
Rohaly
|
Darby
Dye
|
|
Chief
Financial Officer
|
Investor
Relations-US
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+49
89 95 95 5101
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510
249 4883
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srohaly@scmmicro.de
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ddye@scmmicro.com
|
SCM
MICROSYSTEMS REPORTS 2007 FOURTH QUARTER AND YEAR END
RESULTS
Operating
and Net Profit Achieved in 2007 Fourth Quarter
Ismaning,
Germany - March 18, 2008
- SCM
Microsystems, Inc. (Nasdaq: SCMM, Prime Standard: SMY), a leading provider
of
solutions that open the Digital World, today announced
final results for its fourth quarter and fiscal year ended December 31, 2007.
Fourth
Quarter 2007 Results
Revenue
from continuing operations in the fourth quarter of 2007 was $9.7 million,
up 3%
from $9.4 million in the fourth quarter of 2006. By product segment, fourth
quarter 2007 PC Security revenue, reflecting sales of smart card readers and
other products for secure network and physical access, was $7.3 million, flat
with PC Security sales levels in the fourth quarter of 2006. Digital Media
Reader revenue, reflecting sales of OEM digital media reader technology, was
$2.4 million, up 12% from $2.1 million in the fourth quarter of 2006.
Gross
margin in the fourth quarter of 2007 was 43%, compared with gross margin of
42%
in the fourth quarter of 2006.
Operating
expenses in the fourth quarter of 2007, as determined in accordance with GAAP,
were $4.1 million, compared with GAAP operating expenses of $3.5 million in
the
fourth quarter of 2006, which included amortization of intangibles and
restructuring and other charges of $0.2 million.
As
determined in accordance with GAAP, operating income for the fourth quarter
of
2007 was $0.1 million, compared with operating income of $0.4 million in the
year ago quarter.
As
expected, interest income had a positive effect on the Company’s financial
results in the fourth quarter and resulted in GAAP income from continuing
operations of $0.4 million, or $0.02 per share, compared with GAAP income from
continuing operations of $0.7 million, or $0.05 per share, in the fourth quarter
of 2006.
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2 of
7
Earnings
before interest, taxes, depreciation and amortization (EBITDA) in the fourth
quarter of 2007 was $27,000, compared with a EBITDA of $0.5 million in the
fourth quarter of 2006. (See reconciliation of EBITDA to GAAP accounting
contained within this press release.)
Fiscal
2007 Results
Revenue
for the year ended December 31, 2007 was $30.4 million, down 9% from $33.6
million for the year ended December 31, 2006. By product segment, PC Security
revenue was $24.4 million, up 3% from $23.7 million in fiscal 2006. Digital
Media Reader revenue was $6.0 million in fiscal 2007, down 39% from $9.9 million
in fiscal 2006, primarily as a result of the loss of a major customer at the
beginning of 2007, which higher sales in the second half of the year did not
offset. Gross margin in 2007 was 42%, compared with 35% in 2006. Loss from
continuing operations in 2007, as determined in accordance with GAAP, was ($3.3)
million, or ($0.21) per share, compared with GAAP loss from continuing
operations of ($7.7) million, or ($0.49) per share in 2006.
Total
net
loss for fiscal year 2007, as determined in accordance with GAAP, was ($1.9)
million, or ($0.12) per share, including a loss from discontinued operations
of
($0.2) million and a gain on the sale of discontinued operations of $1.6
million, compared to total net income of $1.0 million in fiscal year 2006,
or
$0.07 per share, including a gain from discontinued operations of $3.5 million
and a gain on the sale of discontinued operations of $5.2 million.
Cash
and
cash equivalents at December 31, 2007 were $32.4 million, compared with cash
and
cash equivalents of $36.9 million at December 31, 2006.
“During
2007, SCM maintained momentum in an increasingly competitive environment, while
continuing to leverage the increased efficiency of our organization. Improved
gross margins and lower expenses helped narrow our net loss for the year,” said
Stephan Rohaly, chief financial officer of SCM Microsystems.
“Over
the
past several months we have strengthened our management team with broader
industry experience, added new sales resources to expand our geographic
coverage, and begun to put in place a growth strategy based on delivering new
products for new and existing markets,” said Felix Marx, chief executive officer
of SCM Microsystems. “Clearly, it will take time and dedicated focus to create
the sustainable growth that we desire. Our strategy
builds on SCM’s strengths as an innovative developer and trusted supplier of
smart card readers to the financial, government and enterprise sectors.
Our
aim is
to establish SCM as a significant supplier of Near Field Communication and
other
contactless reader technology for fast growing global markets such as electronic
and mobile payments.”
Page
3 of
7
Guidance
for 2008
For
fiscal 2008 as a whole, the Company expects to achieve revenue growth between
25% and 35%, which would result in revenues of $38 million to $41 million for
the year. The Company’s projections of revenue growth are based on the planned
release of new products currently under development, which are forecasted to
generate increased sales volumes beginning in the second half of 2008. The
Company further expects base operating expenses between $17 million and $20
million in 2008, including anticipated further investments in sales resources
and development activities to address growth initiatives. Within these ranges,
the Company currently expects to record both operating and net profit from
continuing operations for the full 2008 fiscal year.
Additional
Information
SCM
does
not plan to hold a conference call or webcast to discuss the results of its
2007
fourth
quarter and year end. For more information on SCM’s fiscal 2007 results, please
see the Company’s Annual Report on Form 10-K for year ended December 31, 2007,
filed with the U.S. Securities and Exchange Commission on March 18, 2008.
About
SCM Microsystems
SCM
Microsystems is a leading provider of solutions that open the Digital World
by
enabling people to conveniently access digital content and services. The company
develops, markets and sells the industry’s broadest range of smart card reader
technology for secure PC, network and physical access and digital media readers
for transfer of digital content to OEM customers in the government, financial,
enterprise, consumer electronics and photographic equipment markets worldwide.
Global headquarters are in Ismaning, Germany. For additional information, visit
the SCM Microsystems web site at www.scmmicro.com.
NOTE:
This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These include, without limitation,
the
statements
by Felix
Marx and our
statements contained above
regarding our expectations for the
Company’s fiscal year 2008 revenue growth, operating
expenses and
expected operating and net profit
from
continuing operations. These statements are
based
on current expectations or beliefs, as well as a number of preliminary
assumptions about future events that
are
subject to risks and uncertainties that may cause actual results to differ
materially from those contemplated herein. Our financial results may not meet
expectations. Readers
should not unduly rely on these forward-looking statements, which are not a
guarantee of future performance and are subject to a number of
risks
and uncertainties,
many of
which are outside our control,
that
could cause our actual business and operating results to differ,
including, but
not
limited to, our ability to grow market share and revenues based on a strategy
of
developing and selling new products into current and new markets; our ability
to
successfully develop and introduce new products that satisfy the evolving and
increasingly complex requirements of
Page
4 of
7
customers;
the
fact
that sales to a relatively small number of customers historically have accounted
for a significant percentage of the Company's revenue; the
markets in which we participate or target may not grow, converge
or
standardize at anticipated rates or at all, including the financial, government
and enterprise security markets that we are targeting; we may not successfully
compete in the markets in which we participate or target; competitors could
take
market share or create pricing pressure; and we may not be successful in
maintaining operating expenses at current or lower levels. For a discussion
of
further risks and uncertainties related to our business, please refer to our
public company reports filed
with the U.S. Securities and Exchange Commission,
including
our
Annual Report on Form 10-K for the year ended December 31, 2007.
###
All
trade
names are trademarks or registered trademarks of their respective
holders.
--Financials
Follow--
Page
5 of
7
SCM
MICROSYSTEMS, INC.
Condensed
Consolidated Statements of Operations
(in
thousands, except per share data)
(unaudited,
except for twelve months figures)
|
|
|
Three
months
ended
|
|
Twelve
months
ended
|
|||||||||
|
December
31,
|
December
31,
|
||||||||||||
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||||
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Revenues
|
$
|
9,714
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$
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9,428
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$
|
30,435
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$
|
33,613
|
|||||
|
Cost
of revenues
|
5,580
|
5,505
|
17,781
|
21,756
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|||||||||
|
Gross
profit
|
4,134
|
3,923
|
12,654
|
11,857
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|||||||||
|
Operating
expenses:
|
|||||||||||||
|
Research
and development
|
795
|
652
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3,123
|
3,767
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|||||||||
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Sales
and marketing
|
1,802
|
1,444
|
6,603
|
7,498
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|||||||||
|
General
and administrative
|
1,479
|
1,210
|
7,132
|
7,548
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|||||||||
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Amortization
of intangible assets
|
--
|
170
|
272
|
666
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|||||||||
|
Restructuring
and other charges (credits)
|
--
|
54
|
(4
|
)
|
1,120
|
||||||||
|
Total
operating expenses
|
4,076
|
3,530
|
17,126
|
20,599
|
|||||||||
|
Income
(loss) from operations
|
58
|
393
|
(4,472
|
)
|
(8,742
|
)
|
|||||||
|
Interest
and other, net
|
294
|
316
|
1,293
|
1,125
|
|||||||||
|
Income
(loss) from continuing operations before income taxes
|
352
|
709
|
(3,179
|
)
|
(7,617
|
)
|
|||||||
|
Benefit
(provision) for income taxes
|
11
|
(26
|
)
|
(113
|
)
|
(73
|
)
|
||||||
|
Income
(loss) from continuing operations
|
363
|
682
|
(3,292
|
)
|
(7,690
|
)
|
|||||||
|
Gain
(loss) from discontinued operations
|
(13
|
)
|
715
|
(215
|
)
|
3,508
|
|||||||
|
Gain
(loss) on sale of discontinued operations
|
17
|
(63
|
)
|
1,586
|
5,224
|
||||||||
|
Net
income (loss)
|
$
|
367
|
$
|
1,334
|
$
|
(1,921
|
)
|
$
|
1,042
|
||||
|
Loss
per share from continuing operations:
|
|||||||||||||
|
Basic
and diluted
|
$
|
0.02
|
$
|
0.05
|
$
|
(0.21
|
)
|
$
|
(0.49
|
)
|
|||
|
Gain
(loss) per share from discontinued operations:
Basic
and diluted
|
$
|
0.00
|
$
|
0.04
|
$
|
0.09
|
$
|
0.56
|
|||||
|
Net
income (loss) per share:
|
|||||||||||||
|
Basic
and diluted
|
$
|
0.02
|
$
|
0.09
|
$
|
(0.12
|
)
|
$
|
0.07
|
||||
|
Shares
used in computing loss per share:
|
|||||||||||||
|
Basic
|
15,736
|
15,683
|
15,725
|
15,638
|
|||||||||
|
Diluted
|
15,759
|
15,714
|
15,725
|
15,638
|
|||||||||
Note:
Financial results contained in this release reflect continuing operations of
the
Company’s PC Security and Digital Media Reader businesses only. The Company
completed the sale of its Digital TV solutions business in May 2006; therefore,
financial results for the Digital TV solutions business are being accounted
for
as discontinued operations.
Page
6 of
7
SCM
MICROSYSTEMS, INC.
Reconciliation
of EBITDA Calculation to GAAP Accounting
(in
thousands)
(unaudited)
|
|
|
Three
Months Ended
December
31,
|
|
Twelve
Months Ended
December
31,
|
|
||||||||
|
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||
|
EBITDA
|
$
|
27
|
$
|
523
|
$
|
(4,238
|
)
|
$
|
(7,931
|
)
|
|||
|
Interest
income
|
405
|
407
|
1,639
|
1,350
|
|||||||||
|
Provision
for income taxes
|
11
|
(26
|
)
|
(113
|
)
|
(73
|
)
|
||||||
|
Depreciation
and amortization
|
(80
|
)
|
(222
|
)
|
(580
|
)
|
(1,036
|
)
|
|||||
|
Net
income (loss) from continuing operations
|
$
|
363
|
$
|
682
|
$
|
(3,292
|
)
|
$
|
(7,690
|
)
|
|||
We
conduct a significant amount of our business in Europe, we are dually traded
on
the U.S. Nasdaq and German Prime Standard stock exchanges, our corporate
headquarters are located in Germany and the majority of our investors are
German-based. Based on these factors, we have determined that EBITDA is a
relevant measure of performance for our company, as it is a metric commonly
used
among companies doing business in Europe and is therefore a helpful tool for
communicating our performance to our investors and analysts and for comparisons
to other companies in Europe and within our industry.
EBITDA
should be considered in addition to, but not as a substitute for, other measures
of financial performance determined in accordance with accounting principles
generally accepted in the United States. While we believe that EBITDA is useful
within the context described above, it is in fact incomplete and not a measure
that should be used to evaluate the full performance of the Company or its
prospects. Such evaluation needs to consider all of the complexities associated
with our business including, but not limited to, how past actions are affecting
current results and how they may affect future results, how we have chosen
to
finance the business and how regulations and the other aforementioned items
affect the final amounts that are or will be available to shareholders as a
return on their investment. Net income determined in accordance with U.S. GAAP
is the most complete measure available today to evaluate all elements of our
performance. Similarly, our Consolidated Statement of Cash Flows, as presented
in our most recent filings with the Securities and Exchange Commission, provide
the full accounting for how we have decided to use resources provided to us
from
our customers, lenders and shareholders.
Page
7 of
7
SCM
MICROSYSTEMS, INC.
Condensed
Consolidated Balance Sheets
(in
thousands)
|
December
31,
|
|
December
31,
|
|||||
|
ASSETS
|
2007
|
|
2006
|
||||
|
Current
assets:
|
|||||||
|
Cash,
cash equivalents and short-term investments
|
$
|
32,444
|
$
|
36,902
|
|||
|
Accounts
receivable, net
|
8,638
|
6,583
|
|||||
|
Inventories
|
2,738
|
1,927
|
|||||
|
Other
current assets
|
1,455
|
2,489
|
|||||
|
Total
current assets
|
45,275
|
47,901
|
|||||
|
Property,
equipment and other assets, net
|
3,289
|
3,182
|
|||||
|
Intangibles,
net
|
--
|
272
|
|||||
|
Total
assets
|
$
|
48,564
|
$
|
51,355
|
|||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable
|
$
|
3,063
|
$
|
4,572
|
|||
|
Accrued
expenses and other current liabilities
|
8,185
|
11,362
|
|||||
|
Total
current liabilities
|
11,248
|
15,934
|
|||||
|
Long-term
income taxes payable
|
200
|
--
|
|||||
|
Deferred
tax liability
|
77
|
103
|
|||||
|
Stockholders’
equity
|
37,039
|
35,318
|
|||||
|
Total
liabilities and stockholders’ equity
|
$
|
48,564
|
$
|
51,355
|
|||