EXHIBIT 99.1
ACTIVCARD REPORTS RECORD REVENUES IN FIRST QUARTER 2003
| • | Achieves Revenue Growth of 60% year-over-year and 8% sequentially |
| • | Experiences Continued Strength in U.S. Government Sector |
FREMONT, CA – April 30, 2003 – ActivCard® (NASDAQ: ACTI / NASDAQ EUROPE: ACTI), the leader in IDentity Management (IDM) software for remote access, secure sign-on and digital ID card solutions, today reported financial results for the quarter ended March 31, 2003.
In the first quarter of fiscal 2003, ActivCard reported its fifth consecutive quarterly revenue increase, achieving revenues of $13.1 million, an increase of 60% over revenues reported in the first quarter of 2002 and 8% higher than the fourth quarter of 2002.
Net loss for the quarter, in accordance with U.S. GAAP, was $4.6 million, or $0.11 per diluted share, compared to a net loss of $28.6 million, or $0.71 per diluted share in the first quarter of the previous year. The net loss for the first quarter of 2003 included charges of $1.4 million, or $0.03 per diluted share relating to a restructuring plan executed March 31, 2003, discontinued operations, which were sold on March 14, 2003 and foreign exchange losses caused by the strong Euro. These items were not included in the net loss guidance the Company provided previously. The net loss for the first quarter of 2002 included charges of $23.2 million or $0.57 per diluted share relating to restructuring, discontinued operations and foreign exchange.
“Positive customer reaction to our latest products indicates that our vision and execution have been on target to meet the growing demand for comprehensive digital identity management solutions,” commented Chairman and Chief Executive Officer Steven Humphreys. “Our record revenues and strong growth in the first quarter substantiate the value we’re delivering in securing our customers’ business and networking environments. With well established market acceptance of our products in both the government and commercial markets, and with successful competitive wins representing more than half of our new business, we believe that our success going forward is primarily a matter of our own continued execution,” added Mr. Humphreys.
First Quarter 2003 Highlights
| • | Experienced continued strength in the U.S. government market with the U.S. Department of Defense Common Access Card roll-out and non-Defense department digital identity initiatives in the United States and internationally |
| • | Selected as primary smart card middleware provider by Northrop Grumman Information Technology (IT) for the U.S. Army Set-D Common Access Card program |
| • | Launched significant upgrades to existing product lines including ActivCard Gold™ for CAC PKI 3.0 advanced management features; ActivPack™ AAA Server 5.2 and ActivPack™ for Windows® 4.5 secure authentication for Web access, terminal server login, and wireless LAN access; and Trinity™ secure sign-on that integrates smart cards, fingerprint biometrics, hardware tokens, passwords, or combinations of these authentication methods |
| • | Launched Smart Upgrade program enabling organizations to migrate their existing deployments of leased token solutions to ActivCard’s ActivPack™ secure remote access solution |
| • | Appointed Former NSA Deputy Director, Mr. William Crowell, and Financial Services Professional, Mr. Richard White, to the ActivCard Board of Directors |
| • | Completed re-incorporation of publicly listed company to the United States |
Blair Geddes, Chief Financial Officer stated, “We are pleased with the strength in our government business and the long term opportunity in the identity management market.” Mr. Geddes added, “Although we experienced proportionately higher hardware revenues than anticipated, we expect our product mix to return to more positive historical levels for the remainder of 2003.”
Second Quarter 2003 Outlook
In the second quarter, we expect revenues to range between $12.5 million and $13.5 million. Net loss in accordance with U.S. GAAP for the second quarter of 2003 is expected to range between $0.05 and $0.08 per diluted share.
ActivCard will hold a conference call at 11 a.m. Eastern Time on Wednesday, April 30, 2003, featuring Mr. Steven Humphreys and Chief Financial Officer, Mr. Blair Geddes, to discuss these first quarter 2003 results. A live Webcast of this conference call will be available on the Investor page of our Website athttp://www.activcard.com/company/ir_home.html?m=3. Webcast
participants should register approximately 15 minutes before the event to download and install any necessary software. A replay of the Webcast will be available on the Website’s investor page after the call.
About ActivCard
ActivCard,www.activcard.com, is the leader in IDentity Management (IDM) software for secure remote access, secure sign-on and digital identity card solutions. Our scalable IDM and strong authentication solutions are trusted by organizations – from enterprise to governments around the world. ActivCard IDM systems deliver maximum Return On Identity™ (ROI) through increased security, reduced cost, and user convenience. The modular product design allows our customers to add capabilities as required, preserving their investment.
The statements in this press release that are not historical facts are forward-looking statements that involve risks and uncertainties, including risks associated with fluctuations in operating results, our history of losses, the concentration of our customer base, our reliance on strategic relationships, acquisitions and managing our future growth, and other risks identified in our periodic filings with the United States Securities and Exchange Commission, including but not limited to those appearing under the caption “Risk Factors” in our Annual Report on Form 10K for the fiscal year ended December 31, 2002 filed on March 31, 2003. Actual results, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. ActivCard disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
ActivCard is a registered trademark and ActivCard Gold, ActivPack, Return on Identity and Trinity are trademarks of ActivCard 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.
Contact:
ActivCard
Public Relations
Julie White
510-574-1708
jwhite@activcard.com
ActivCard
Unaudited Condensed Consolidated Statements of Operations (U.S. GAAP)
(In thousands of US dollars, except per share data)
For the three months ended March 31, | ||||||||
2003 | 2002 | |||||||
Revenues | $ | 13,067 |
| $ | 8,165 |
| ||
Cost of revenues |
| 5,162 |
|
| 2,645 |
| ||
Gross margin |
| 7,905 |
|
| 5,520 |
| ||
Operating expenses | ||||||||
Selling and marketing |
| 5,147 |
|
| 5,232 |
| ||
General and administrative |
| 1,374 |
|
| 927 |
| ||
Research and development |
| 4,394 |
|
| 4,988 |
| ||
Amortization of acquired intangibles |
| 152 |
|
| 566 |
| ||
Other charges |
| 2,190 |
|
| 7,771 |
| ||
| 13,257 |
|
| 19,484 |
| |||
Loss from operations |
| (5,352 | ) |
| (13,964 | ) | ||
Interest and other income |
| 1,245 |
|
| 1,242 |
| ||
Foreign exchange (loss) gain |
| (216 | ) |
| 35 |
| ||
Loss from continuing operations before income taxes |
| (4,323 | ) |
| (12,687 | ) | ||
Income taxes |
| (62 | ) |
| (1 | ) | ||
Minority interest |
| 49 |
|
| — |
| ||
Loss from continuing operations |
| (4,336 | ) |
| (12,688 | ) | ||
Loss from discontinued operations |
| (228 | ) |
| (15,918 | ) | ||
Net loss | $ | (4,564 | ) | $ | (28,606 | ) | ||
Basic and diluted loss per common share: | ||||||||
From continuing operations | $ | (0.10 | ) | $ | (0.31 | ) | ||
From discontinued operations |
| (0.01 | ) |
| (0.40 | ) | ||
$ | (0.11 | ) | $ | (0.71 | ) | |||
Weighted average number of common shares: | ||||||||
Basic and diluted |
| 40,614 |
|
| 40,512 |
| ||
Other charges consist of: | ||||||||
Amortization of deferred compensation related to acquisitions | $ | 65 |
| $ | 101 |
| ||
Acquired in process research and development |
| — |
|
| 68 |
| ||
Amortization of deferred compensation related to options and warrants granted |
| 233 |
|
| 250 |
| ||
Restructuring and business realignment expenses |
| 947 |
|
| 7,352 |
| ||
Re-incorporation expenses |
| 945 |
|
| — |
| ||
Total other charges | $ | 2,190 |
| $ | 7,771 |
| ||
ActivCard
Unaudited Condensed Consolidated Balance Sheets (U.S. GAAP)
(In thousands of US dollars)
March 31, 2003 | December 31, 2002 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and equivalents | $ | 43,629 |
| $ | 158,880 |
| ||
Short term investments |
| 201,468 |
|
| 89,502 |
| ||
Accounts receivable |
| 10,888 |
|
| 9,192 |
| ||
Inventory |
| 4,298 |
|
| 3,488 |
| ||
Other receivables |
| 2,283 |
|
| 1,579 |
| ||
Assets held for sale |
| — |
|
| 262 |
| ||
Other current assets |
| 2,278 |
|
| 1,959 |
| ||
Total current assets |
| 264,844 |
|
| 264,862 |
| ||
Restricted investments |
| 524 |
|
| 432 |
| ||
Property and equipment |
| 6,976 |
|
| 7,313 |
| ||
Goodwill |
| 10,600 |
|
| 10,600 |
| ||
Other intangibles |
| 2,144 |
|
| 2,311 |
| ||
Other assets |
| 848 |
|
| 874 |
| ||
Total assets | $ | 285,936 |
| $ | 286,392 |
| ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 12,749 |
| $ | 10,493 |
| ||
Restructuring and business realignment accruals |
| 835 |
|
| 867 |
| ||
Deferred revenue |
| 3,383 |
|
| 3,997 |
| ||
Liabilities held for sale |
| — |
|
| 250 |
| ||
Current portion of long term liabilities |
| 6 |
|
| 22 |
| ||
Total current liabilities |
| 16,973 |
|
| 15,629 |
| ||
Long-term portion of restructuring and business realignment accruals |
| 4,267 |
|
| 4,429 |
| ||
Other long-term liabilities |
| 580 |
|
| 525 |
| ||
Total long-term liabilities |
| 4,847 |
|
| 4,954 |
| ||
Minority interest |
| 13,603 |
|
| — |
| ||
Shareholders’ equity | ||||||||
Common shares and paid-in capital |
| 380,492 |
|
| 399,517 |
| ||
Accumulated deficit |
| (114,183 | ) |
| (115,769 | ) | ||
Accumulated other comprehensive loss |
| (13,642 | ) |
| (14,817 | ) | ||
Deferred stock compensation |
| (2,154 | ) |
| (3,122 | ) | ||
Total shareholders’ equity |
| 250,513 |
|
| 265,809 |
| ||
Total liabilities and shareholders’ equity | $ | 285,936 |
| $ | 286,392 |
| ||
ActivCard
Unaudited Condensed Consolidated Statement of Cash Flows (U.S. GAAP)
(In thousands of US dollars)
For the three months ended March 31, 2003 | ||||
Operating activities | ||||
Net loss from continuing operations | $ | (4,336 | ) | |
Adjustments to reconcile net loss from continuing operations to net cash used in continuing operations: | ||||
Depreciation and amortization |
| 827 |
| |
Amortization of acquired intangible assets |
| 152 |
| |
Amortization of deferred compensation |
| 298 |
| |
Non-cash restructuring and business realignment expenses |
| 520 |
| |
Other non-cash items, net |
| 159 |
| |
Increase (decrease) in cash, net of effects of business combinations, from: | ||||
Accounts receivable |
| (1,623 | ) | |
Inventory |
| (695 | ) | |
Other receivables |
| (678 | ) | |
Other current assets |
| 4 |
| |
Accounts payable and accrued liabilities |
| 1,651 |
| |
Restructuring and business realignment accruals |
| (198 | ) | |
Deferred revenue |
| (640 | ) | |
Net cash used in continuing operations |
| (4,559 | ) | |
Net cash used in discontinued operations |
| (106 | ) | |
Net cash used in operating activities |
| (4,665 | ) | |
Investing activities | ||||
Purchases of property and equipment |
| (385 | ) | |
Purchases of short term investments |
| (136,935 | ) | |
Proceeds from sales and maturities of short term investments |
| 24,748 |
| |
Investments in other long term assets |
| (29 | ) | |
Net cash used in investing activities |
| (112,601 | ) | |
Financing activities | ||||
Proceeds from exercise of stock options |
| 1,555 |
| |
Repayment of long term liabilities |
| (13 | ) | |
Net cash provided by financing activities |
| 1,542 |
| |
Effect of exchange rate changes on cash and equivalents |
| 473 |
| |
Net decrease in cash and equivalents |
| (115,251 | ) | |
Cash and equivalents, beginning of period |
| 158,880 |
| |
Cash and equivalents, end of period | $ | 43,629 |
| |
