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ActivIdentity's net income for the quarter ended June 30, 2009, was $2.1 million or $0.05 per basic and diluted share, compared to a net loss of ($7.0) million, or ($0.15) per basic and diluted share for the three months ended June 30, 2008. Net income for the quarter ended June 30, 2009 included realized and unrealized gains on foreign exchange totaling $2.1 million, primarily due to the weakening of the U.S. dollar. ActivIdentity's operating loss was ($1.1) million for the quarter ended June 30, 2009 compared to an operating loss of ($4.7) million for the quarter ended June 30, 2008 and ($1.7) million for the quarter ended March 31, 2009. Adjusted EBITDA was $0.9 million for the quarter ended June 30, 2009, representing an improvement of $3.6 million compared to the prior-year quarter, and an increase of $0.2 million sequentially. Adjusted EBITDA is a Non-GAAP measure and is defined as Operating Income adjusted for non-recurring and non-cash items such as stock-based compensation expense, depreciation, amortization of intangibles, severance and asset impairments. "Despite little improvement in the tough economic climate, ActivIdentity still posted solid operational and financial performance results during the fiscal third quarter," said Grant Evans, chief executive officer and chairman of ActivIdentity. "Throughout this challenging time our credential management and strong authentication solutions continue to exemplify the resiliency and stability of our renewed market focus and management team. As we look forward to the remainder of our fiscal year ending September 30, 2009 and beyond, we remain focused on streamlining our operations and continue to manage our expenses in order to be positioned for future growth." Financial Highlights
GAAP RESULTS Three Months Ended
-----------------------------------
(In Millions except Per Share Data) Jun. 30 Mar. 31 June. 30
2009 2009 2008
----------- ---------- ----------
Revenue $ 15.4 $ 16.1 $ 14.3
Net Income (Loss) $ 2.1 ($ 2.8) ($ 7.0)
(Loss) Earnings Per Share - Basic $ 0.05 ($ 0.06) ($ 0.15)
(Loss) Earnings Per Share - Diluted $ 0.05 ($ 0.06) ($ 0.15)
NON-GAAP RESULTS
Adjusted EBITDA $ 0.9 $ 0.7 ($ 2.7)
ActivIdentity is presenting non-GAAP numbers in this press release as it believes the one time charges for nonrecurring items and the non-cash charges distort the period to period results and that investors will benefit from the comparison of information from period to period without these items. Please refer to the GAAP to non-GAAP reconciliation table for further detail. Certain financial results are subject to the application of accounting estimates, especially with regards to fair value accounting. Management has used what it believes to be appropriate valuation techniques to assess the fair value of impaired investments and the fair value of undelivered elements in multi-element software arrangements. Conference Call Details ActivIdentity will host its Fiscal Third Quarter conference call on Thursday, Aug 6, at 5:00 PM Eastern Daylight Savings Time / 2:00 PM Pacific Daylight Savings Time. To access the conference call within the U.S. or Canada, please dial (866) 393-1796 and enter conference ID 2295985. To access the conference call outside the U.S. or Canada please dial (706) 679-9681 and enter conference ID 2295985. A replay of the conference call will be available approximately two hours after the conclusion of the call at www.actividentity.com. About ActivIdentity ActivIdentity Corporation is a global leader in credential management and strong authentication, providing solutions to confidently establish a person's identity when interacting digitally. For more than two decades the company's experience has been leveraged by security-minded organizations in large-scale deployments such as the U.S. Department of Defense, Nissan, and Saudi Aramco. The company's customers have issued more than 100 million credentials, securing the holder's digital identity. ActivIdentity is headquartered in Silicon Valley, California. For more information, visit www.actividentity.com. ActivIdentity is a registered trademark in the United States and/or other countries. All other trademarks are the property of their respective owners in the United States and/or other countries. Safe Harbor Statement The statements in this press release that are not historical facts are forward-looking statements that involve risks and uncertainties including, but not limited to, statements regarding ActivIdentity's ability to achieve its fiscal year guidance and continued customer acceptance of its products. These risks and uncertainties include risks relating to uncertainty in the economy and its impact on customer deployments of our products, customer adoption of ActivIdentity's new products, continued expense reductions from ActivIdentity's various restructuring and cost control measures, changes to our management team, the use of estimates and assumptions in our financial reporting, and other risks identified under the caption "Risk Factors" in our most recent Annual Report on Form 10-K, and as may be amended in subsequent Quarterly Reports on Form 10-Q, which are filed with the United States Securities and Exchange Commission (SEC). Copies of these filings are available from us and on the SEC website at www.sec.gov. Actual results, events and performance may differ materially from our forward-looking statements and final results may vary from our preliminary reports. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. ActivIdentity disclaims any intention to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
ACTIVIDENTITY CORPORATION
CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS
(In thousands)
June 30, September 30,
2009 2008
----------------- -----------------
(Unaudited) (1)
ASSETS
Current assets:
Cash and cash
equivalents $ 75,392 $ 70,173
Short-term
investments 3,454 9,656
Accounts
receivable, net of
allowance for
doubtful accounts
of $288 and $317 10,092 11,792
Inventories, net 990 1,760
Prepaid and other
current assets 2,517 1,696
----------------- -----------------
Total current
assets 92,445 95,077
Restricted cash 1,610 --
Investments 11,752 11,752
Property and
equipment, net 1,953 2,877
Other intangible
assets, net 2,248 4,150
Other long-term
assets 848 3,745
----------------- -----------------
Total assets $ 110,856 $ 117,601
================= =================
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 812 $ 1,652
Accrued
compensation and
related benefits 5,095 5,935
Current portion of
accrued
restructuring
liability 634 616
Accrued and other
current
liabilities 3,869 3,682
Current portion of
deferred revenue 10,637 11,024
----------------- -----------------
Total current
liabilities 21,047 22,909
Deferred revenue, net
of current portion 826 1,125
Accrued restructuring
liability, net of
current portion 490 962
Long-term deferred
rent 208 430
Other long-term
liabilities 571 2,517
----------------- -----------------
Total liabilities 23,142 27,943
----------------- -----------------
Minority interest 312 304
Commitments and
contingencies -- --
Stockholders' equity:
Preferred stock,
$0.001 par value:
10,000,000 shares
authorized, none
issued and
outstanding -- --
Common stock,
$0.001 par value:
75,000,000 shares
authorized,
45,839,860 and
45,786,184 issued
and outstanding 46 46
Additional paid-in
capital 428,183 426,141
Accumulated deficit (328,285) (323,053)
Accumulated other
comprehensive loss (12,542) (13,780)
----------------- -----------------
Total
stockholders'
equity 87,402 89,354
----------------- -----------------
Total liabilities
and stockholders'
equity $ 110,856 $ 117,601
================= =================
(1) Derived from Audited Consolidated Financial Statements
ACTIVIDENTITY CORPORATION
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
(In thousands, except per share data)
Three Months Ended Nine Months Ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Revenue:
Software $ 6,888 $ 5,024 $ 18,405 $ 13,961
Hardware 3,245 3,175 12,196 11,090
Service 5,236 6,099 17,199 18,311
--------- --------- --------- ---------
Total revenue 15,369 14,298 47,800 43,362
--------- --------- --------- ---------
Cost of revenue:
Software 1,046 530 3,227 829
Hardware 1,675 2,071 6,234 6,819
Service 1,716 2,596 5,699 8,034
Amortization of acquired
developed technology and
patents 593 592 1,779 1,788
--------- --------- --------- ---------
Total cost of revenue 5,030 5,789 16,939 17,470
--------- --------- --------- ---------
Gross profit 10,339 8,509 30,861 25,892
--------- --------- --------- ---------
Operating expenses:
Sales and marketing 4,868 5,827 15,172 19,548
Research and development 3,398 4,676 11,690 14,092
General and administration 3,101 2,626 9,732 8,267
Restructuring expense (net of
adjustments) -- 3 -- (70)
Amortization of acquired
intangible assets 41 42 123 124
Impairment of goodwill -- -- -- 35,874
--------- --------- --------- ---------
Total operating expenses 11,408 13,174 36,717 77,835
--------- --------- --------- ---------
Income (Loss) from operations (1,069) (4,665) (5,856) (51,943)
--------- --------- --------- ---------
Other income (expense):
Interest income, net 285 845 1,465 3,772
Other income (expense), net 2,108 (2,927) (1,053) (4,977)
--------- --------- --------- ---------
Total other income
(expense), net 2,393 (2,082) 412 (1,205)
--------- --------- --------- ---------
Income (loss) before income tax
and minority interest 1,324 (6,747) (5,444) (53,148)
Income tax benefit (provision) 766 (250) 113 (280)
Minority interest (5) 14 99 32
--------- --------- --------- ---------
Net Income (loss) $ 2,085 $ (6,983) $ (5,232) $ (53,396)
========= ========= ========= =========
Net income (loss) per share:
Basic 0.05 (0.15) $ (0.11) (1.17)
========= ========= ========= =========
Diluted 0.05 (0.15) (0.11) (1.17)
========= ========= ========= =========
Shares used to compute net
income (loss) per share: Basic 45,817 45,778 45,800 45,764
Diluted 46,309 45,778 45,800 45,764
Other comprehensive income
(loss):
Net income (loss) $ 2,085 $ (6,983) $ (5,232) $ (53,396)
Unrealized (loss) gain on
short-term investment, net -- (78) 152 (911)
Reclassification of
unrealized income (loss) on
short-term investments -- -- -- 945
Foreign currency translation
gain (loss) (1,678) (372) 1,086 (1,213)
--------- --------- --------- ---------
Reclassification of currency
translation loss on
liquidation of investment in
foreign entity -- 1,946 -- 1,946
--------- --------- --------- ---------
Comprehensive income (loss) $ 407 $ (5,487) $ (3,994) $ (52,629)
--------- --------- --------- ---------
ACTIVIDENTITY CORPORATION
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended
June 30,
---------------------------
2009 2008
------------- -------------
Cash flows from operating activities:
Net loss $ (5,232)$ (53,396)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation of property, plant, and
equipment 973 1,225
Amortization of acquired developed
technology and patents 1,779 1,787
Unrealized foreign exchange (gain) loss 717 (1,470)
Amortization of acquired intangible assets 123 124
Stock-based compensation expense 2,152 2,127
Loss on disposal of property and equipment 43 20
Currency translation loss on liquidation of
investment in foreign entity -- 1,946
Goodwill impairment charge -- 35,874
Investment impairment charge -- 3,812
Minority interest in ActivIdentity Europe
S.A. (99) (32)
Changes in:
Accounts receivable 1,872 6,339
Inventories 731 22
Prepaid and other current assets (505) 593
Long-term income taxes receivable 2,719 --
Accounts payable (809) (192)
Accrued compensation and related benefits (761) (714)
Accrued restructuring liability (454) (581)
Accrued and other liabilities (2,029) 666
Deferred revenue (759) (1,396)
------------- -------------
Net cash provided by (used in) operating
activities 461 (3,246)
------------- -------------
Cash flows from investing activities:
Purchases of property and equipment, net (135) (264)
Purchases of short-term investments -- (37,245)
Proceeds from sales and maturities of
short-term investments 6,184 78,215
Restricted cash (1,396) --
Other long-term assets 7 63
------------- -------------
Net cash provided by investing activities 4,660 40,643
------------- -------------
Cash flows from financing activities:
Proceeds from exercise of options, rights and
warrants -- 25
------------- -------------
Net cash provided by financing activities -- 25
------------- -------------
------------- -------------
Effect of exchange rate changes on cash and
cash equivalents 98 257
------------- -------------
Net increase in cash and cash equivalents 5,219 37,679
Cash and cash equivalents, beginning of period $ 70,173 $ 30,639
------------- -------------
Cash and cash equivalents, end of period $ 75,392 $ 68,318
============= =============
Supplemental disclosures:
Cash paid (refund received) for income taxes $ 35 $ (11)
Supplemental Financial Measures - Adjusted EBITDA In this press release and our related earnings conference call, we intend to provide investors with a better understanding of operating results and underlying trends to assess our performance and liquidity. We evaluate our operating performance based on several measures, including the non-GAAP financial measure of Adjusted EBITDA (defined as Operating Income adjusted for non-recurring and non-cash items such as stock-based compensation expenses, depreciation, amortization of intangibles, severance and asset impairments). We believe Adjusted EBITDA is a useful supplemental financial measure for investors because it facilitates investors' ability to evaluate the operational strength of the company's business. Adjusted EBITDA, however, is not calculated in accordance with GAAP and should not be considered a substitute for net income as an indicator of operating performance. A reconciliation of Adjusted EBITDA to operating income from continuing operations is presented below.
ActivIdentity Corporation
Unaudited Reconciliation from GAAP Operating Income (Loss) to Adjusted
EBITDA
(In thousands)
Three Months Ended Nine Months Ended
------------------------------- --------------------
June 30 Mar. 31 June 30 June 30 June 30
2009 2009 2008 2009 2008
--------- --------- --------- --------- ---------
Operating Income
(Loss) ($ 1,069) ($ 1,678) ($ 4,665) ($ 5,856) ($ 51,943)
Add back
depreciation
expense 282 316 334 973 1,225
Add back
amortization
expense 634 634 634 1,902 1,911
Add back stock based
compensation
expense 521 740 760 2,152 2,127
Add back severance
expense 502 639 257 2,642 1,898
Add back impairment
related expense 0 0 0 0 35,874
--------- --------- --------- --------- ---------
Adjusted EBITDA $ 870 $ 651 ($ 2,680) $ 1,813 ($ 8,908)
========= ========= ========= ========= =========
Supplemental Financial Measures - Non-GAAP Results This press release contains non-GAAP financial measures. The following table reconciles the non-GAAP financial measures in the press release to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP measures include non-GAAP costs of revenue, operating expenses, other expenses, net loss and net loss per share amounts. Non-GAAP financial measures should not be considered as a substitute for, or superior to, GAAP financial measures, which should be considered as the primary financial metrics for evaluating our financial performance. Significantly, non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. Instead, they are based on subjective determinations by management designed to supplement our GAAP financial measures. They are subject to a number of important limitations and should be considered only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our non-GAAP financial measures differ from GAAP measures with the same names, may vary over time, and may differ from non-GAAP financial measures with the same or similar names used by other companies. Accordingly, investors should exercise caution when evaluating our non-GAAP financial measures. Despite these limitations, we believe our non-GAAP financial measures provide meaningful supplemental information about our operating results, primarily because they exclude goodwill and investment impairments as well as costs and expenses that we do not believe are indicative of the ongoing operating performance of our business and our senior management. Although these items should properly be considered in our GAAP financial measures, we believe they should be excluded when evaluating our current operating performance. The non-GAAP financial measures disclosed in the accompanying press release are used by our Board of Directors and senior management to evaluate our current operating performance, are used in evaluating the performance of our senior management, and are used in our budget and planning processes. We believe that our non-GAAP financial measures are helpful to investors by facilitating comparisons of our current and prior operating results and by facilitating comparisons of our operating results with those of other software companies.
ActivIdentity Corporation
Unaudited Reconciliation from GAAP to Non-GAAP Expenses
(In thousands)
Three Months Ended Nine Months Ended
---------------------------- ------------------
June 30 Mar. 31 June 30 June 30 June 30
2009 2009 2008 2009 2008
-------- -------- -------- -------- --------
COST OF REVENUE (GAAP) $ 5,030 $ 5,764 $ 5,789 $ 16,939 $ 17,470
Subtract depreciation
expense (17) (19) (29) (58) (85)
Subtract amortization
expense (593) (593) (592) (1,779) (1,787)
Subtract stock
compensation expense (15) (38) (62) (109) (195)
Subtract severance
expense (20) (11) 0 (37) 0
-------- -------- -------- -------- --------
COST OF REVENUE
(NON-GAAP) 4,385 5,103 5,106 14,956 15,403
OPERATING EXPENSES
Sales & Marketing (GAAP) 4,868 5,294 5,827 15,172 19,548
Subtract depreciation
expense (30) (32) (50) (100) (145)
Subtract stock based
compensation expense (148) (164) (155) (465) (486)
Subtract severance
expense (459) (515) 201 (1,612) (432)
-------- -------- -------- -------- --------
Sales & Marketing
(Non-GAAP) 4,231 4,583 5,823 12,995 18,485
Research & Development
(GAAP) 3,398 3,505 4,676 11,690 14,092
Subtract depreciation
expense (41) (45) (58) (140) (177)
Subtract stock based
compensation expense (34) (176) (219) (490) (628)
Subtract severance
expense (5) 0 (26) (784) (566)
-------- -------- -------- -------- --------
Research & Development
(Non-GAAP) 3,318 3,284 4,373 10,276 12,721
General & Administration
(GAAP) 3,101 3,204 2,626 9,732 8,267
Subtract depreciation
expense (193) (220) (197) (675) (818)
Subtract stock
compensation expense (324) (362) (324) (1,088) (818)
Subtract severance
expense (18) (113) (432) (209) (900)
-------- -------- -------- -------- --------
General & Administration
(Non-GAAP) 2,566 2,509 1,673 7,760 5,731
Amortization of
intangibles expense 41 41 42 123 124
Subtract amortization
expense (41) (41) (42) (123) (124)
Restructuring related
expenses 0 0 3 0 (70)
Impairment related
expense 0 0 0 0 35,874
Subtract impairment
related expense 0 0 0 0 (35,874)
OPERATING EXPENSES (GAAP) $ 11,408 $ 12,044 $ 13,174 $ 36,717 $ 77,835
OPERATING EXPENSES
(Non-GAAP) $ 10,115 $ 10,375 $ 11,872 $ 31,031 $ 36,867
======== ======== ======== ======== ========
Discussion of Specific Items Excluded from Non-GAAP Financial Measures We exclude the below items in our non-GAAP financial measures because we believe they are not closely related to the ongoing operating performance of our business and management and are generally excluded from our budget and planning process. In addition, we believe our non-GAAP financial measures are helpful to investors by facilitating comparisons of our operating results over different time periods and by facilitating comparisons of our financial performance with that of other companies. Except for costs and expenses related to restructuring and severance, these items are non-cash and do not affect cash flows. 1. Amortization of acquired intangible assets - In accordance with GAAP, we amortize intangible assets acquired in connection with acquisitions over the estimated useful lives of the assets. We exclude these amortization costs in our non-GAAP financial measures because they (i) result from prior acquisitions, rather than the ongoing operating performance of our business, and (ii) absent additional acquisitions, are expected to decline over time as the remaining carrying amounts of these assets are amortized. We believe excluding these costs helps investors compare our financial performance with that of other companies with different acquisition histories. However, as with impairment charges, we recognize that amortization costs provide a helpful measure of the financial impact and performance of prior acquisitions and investors should consider our non-GAAP financial measures in conjunction with our GAAP financial results that include amortization costs. 2. Stock based compensation - We exclude stock based compensation expense associated with stock options and restricted stock units granted to employees and non-executive directors in our non-GAAP financial measures. While stock based compensation is a significant component of our expenses, we believe that investors wish to be able to exclude the effects of stock based compensation expenses in comparing our financial performance with that of other companies. 3. Restructuring and severance - We exclude restructuring and severance in our non-GAAP financial measures because these costs are unrelated to our ongoing operations. We believe excluding restructuring and severance expenses help investors compare our operating performance with that of other companies. We recognize, however, that restructuring and severance will impact cash flows and that we and investors should carefully consider the impact of these costs on future cash flows. Press Contact: Corporate Torsten George ActivIdentity T: +1 510.745.6310 E: tgeorge@actividentity.com Business Press Kimberly Uberti The Bohle Company T: +1 310.721.6850 E: kim@bohle.com Trade Press Dan Chmielewski Madison Alexander PR T: +1 714.832.8716 E: dchm@madisonalexanderpr.com Investor Contact: Jacques Kerrest Chief Financial Officer T: +1 510-574-1792 E: jkerrest@actividentity.com SOURCE: ActivIdentity mailto:tgeorge@actividentity.com mailto:kim@bohle.com mailto:dchm@madisonalexanderpr.com mailto:jkerrest@actividentity.com For full details for ACTI click here.
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