Published on May 14, 2008
SCM Microsystems Reports First Quarter 2008 Results
FREMONT, Calif., May 14 /PRNewswire-FirstCall/ -- SCM Microsystems, Inc.
(Nasdaq: SCMM, Prime Standard: SMY), a leading provider of solutions that open
the Digital World, today announced results for the first quarter ended March 31,
2008.
Revenue from continuing operations in the first quarter of 2008 was $6.5
million, down 24% from revenue of $8.5 million in the first quarter of 2007. The
decrease was primarily due to a significant reduction in sales of smart card
readers for U.S. government authentication programs in the first quarter of
2008, as a result of slower than expected project deployment schedules and
overall weaker demand from this market. By product segment, first quarter 2008
PC Security revenue was $5.0 million, reflecting sales of smart card readers and
other products for secure network and physical access, down 30% from $7.1
million in the first quarter of 2007. Digital Media Reader revenue was $1.5
million, reflecting sales of OEM digital media reader technology, up 7% from
$1.4 million in the year ago quarter.
Gross margin in the first quarter of 2008 was 42%, compared with gross
margin of 44% in the first quarter of 2007. The decrease in gross margin was due
primarily to lower revenue levels in the first quarter of 2008 as described
above.
Operating expenses in the first quarter of 2008, as determined in
accordance with GAAP, were $4.7 million, an increase of 22% from operating
expenses of $3.9 million in the first quarter of 2007, which included
amortization of intangibles of $0.2 million. Higher operating expenses in the
first quarter of 2008 primarily reflect the recent addition of sales resources
in Latin America, Asia, Europe and the U.S. to increase the Company's ability to
address current and future business opportunities, as well as increased spending
on new product development.
Operating loss for the first quarter of 2008, as determined in accordance
with GAAP, was $(2.0) million, compared with operating loss of $(114,000) in the
year ago quarter.
Earnings before interest, taxes, depreciation and amortization (EBITDA) in
the first quarter of 2008 was $(1.7) million, compared with EBITDA of $40,000 in
the first quarter of 2007. (See reconciliation of EBITDA to GAAP accounting
contained within this press release.)
As determined in accordance with GAAP, loss from continuing operations in
the first quarter of 2008 was $(1.6) million, or $(0.10) per share, compared
with income from continuing operations of $134,000, or $0.01 per share, in the
first quarter of 2007.
Cash and cash equivalents at March 31, 2008 were $28.7 million, compared
with $32.4 million at December 31, 2007.
"As we said last quarter, achieving sustainable growth in our business
will take time and dedicated focus," said Felix Marx, Chief Executive Officer of
SCM Microsystems. "Our growth strategy is based on expanding our sales into new
geographic markets and on diversifying and growing our customer base. We have
made progress in these areas during the last few months, adding sales resources
and launching marketing programs that leverage our existing products to target
the government and enterprise sectors in Latin America and Asia, and the photo
kiosk markets in Asia and Europe. We have also initiated business development
activities aimed at penetrating the worldwide financial services and enterprise
markets with new contactless reader products. Building on our core strengths of
experience and innovation, we aim to become a significant supplier of Near Field
Communication and other contactless reader technology for fast growing global
markets such as electronic and mobile payments. We introduced the first of our
new products in April, an NFC Dongle that enables a variety of contactless
applications using mobile electronic devices."
Guidance for 2008
For full fiscal year 2008, despite the results of the first quarter, the
Company still expects to achieve revenue growth between 25% and 35% compared to
fiscal 2007, which would result in total revenues of $38 million to $41 million
for the year. The Company's projections of revenue growth are based on the
release of new products currently being prepared for release or under
development, which are scheduled to be released beginning in the second half of
2008. The Company further expects base operating expenses of approximately $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 2008 first quarter. For more information on SCM's first quarter
results, please see the Company's Quarterly Report on Form 10-Q for quarter
ended March 31, 2008, filed with the U.S. Securities and Exchange Commission.
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
http://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, our statements contained above regarding our expectations for the
Company's fiscal year 2008, including specifically our statements regarding our
expectations that we will achieve annual revenue growth of 25% to 35% in fiscal
2008, based on sales of new products in the second half of 2008; that our
operating expenses will be approximately $20 million for fiscal 2008 as a whole;
that we will record operating and net profit for the full year 2008; and the
statements by Felix Marx, including that we will become a significant supplier
of Near Field Communication and other contactless reader technology for global
markets. These statements are subject to risks and uncertainties which may cause
actual results to differ materially from those contemplated herein. Our
financial results may not meet expectations. Some of the risks and uncertainties
that could cause our actual business and operating results to differ include,
but are not limited to, our ability to grow revenues based on a strategy of
expanding our sales into new geographic markets and on diversifying and growing
our customer base; our ability to successfully develop and introduce new
products, particularly contactless reader products, that satisfy the evolving
and increasingly complex requirements of customers; sales to a relatively small
number of customers historically have accounted for a significant percentage of
our revenues; the markets in which we participate or target may not grow,
converge or standardize at anticipated rates or at all, including the 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 our operating expenses may not be
at levels that support profitability. For a discussion of further risks and
uncertainties related to our business, please refer to our public company
reports, including our Annual Report on Form 10-K for the year ended December
31, 2007 and subsequent reports, filed with the U.S. Securities and Exchange
Commission.
All trade names are trademarks or registered trademarks of their
respective holders.
- FINANCIALS FOLLOW -
SCM MICROSYSTEMS, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
SCM MICROSYSTEMS, INC.
Reconciliation of EBITDA Calculation to GAAP Accounting
(in thousands)
(unaudited)
Three Months Ended
March 31,
2008 2007
EBITDA $ (1,737) $ 40
Interest income 295 398
(Provision) benefit for income taxes (47) (60)
Depreciation and amortization (81) (244)
Net income (loss) from continuing operations $ (1,570) $ 134
We conduct a significant amount of our business in Europe, we are dually
traded on the U.S. Nasdaq Global Market and the Prime Standard of the Frankfurt
exchange and the majority of our investors are German-based. In addition, our
corporate headquarters are in Germany. 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 reported in accordance with accounting
principles generally accepted in the United States ("GAAP"). While we believe
that EBITDA, as defined above, 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.
SCM MICROSYSTEMS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
March 31, December 31,
ASSETS 2008 2007
Current assets:
Cash, cash equivalents and
short-term investments $ 28,654 $ 32,444
Accounts receivable, net 9,263 8,638
Inventories 4,104 2,738
Other current assets 2,002 1,455
Total current assets 44,023 45,275
Property, equipment and other assets, net 3,379 3,289
Total assets $ 47,402 $ 48,564
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,907 $ 3,063
Accrued expenses and other current liabilities 8,380 8,185
Total current liabilities 11,287 11,248
Long-term income taxes payable 205 200
Deferred tax liability 87 77
Stockholders' equity 35,823 37,039
Total liabilities and stockholders' equity $ 47,402 $ 48,564
SOURCE SCM Microsystems, Inc.