EXHIBIT 99.1
ACTIVCARD REPORTS THIRD QUARTER FINANCIAL RESULTS
FREMONT, CA – October 30, 2003 – ActivCard® (NASDAQ: ACTI), a leading global provider of Secure Digital Identity and Authentication solutions for secure remote access, secure sign-on and digital ID cards, today reported financial results for the quarter ended September 30, 2003.
ActivCard revenues for the third quarter were $9.0 million, compared to $12.0 million reported in the third quarter of 2002. Net loss for the quarter, in accordance with U.S. GAAP, was $5.6 million, or $0.14 per diluted share, compared to a net loss of $2.9 million, or $0.07 per diluted share in the third quarter of 2002. Included in our net loss is a charge of $855 thousand, representing 100 percent of U.S. GAAP losses incurred by ASPACE Solutions Limited, a company in which ActivCard acquired a 38% interest during the third quarter.
ActivCard will hold a conference call at 11 a.m. Eastern Time today, Thursday, October 30, 2003, featuring Mr. George Garrick and Mr. Blair Geddes, to discuss these third quarter 2003 results. A live Webcast of this conference call will be available on the Investor page of the ActivCard Website athttp://www.activcard.com/company/ir_home.html. Webcast participants should register approximately 15 minutes before the event to download and install any necessary software. An archived replay of the Webcast will be available on the Company’s website after the call.
About ActivCard
ActivCard, www.activcard.com, is a leading global provider of Secure Digital Identity and Authentication solutions for secure remote access, secure sign-on and digital ID card solutions. Our scalable systems and strong authentication solutions are trusted by organizations – from enterprise to governments around the world. ActivCard delivers 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 filed on March 31, 2003, and under the caption “Risks Related to Our Business” in our Quarterly Report on Form 10Q filed on August 14, 2003. Actual results, events and performance may differ materially from our forward-looking statements. 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 Return on Identity is a trademark 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 Corporate
Julie White
jwhite@activcard.com
510-574-1708
ActivCard
Unaudited Condensed Consolidated Statements of Operations (U.S. GAAP)
(In thousands of US dollars, except per share data)
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
Revenues | $ | 8,950 | $ | 11,983 | $ | 31,539 | $ | 29,755 | ||||||||
Cost of revenues | 3,013 | 3,850 | 16,962 | 9,364 | ||||||||||||
Gross margin | 5,937 | 8,133 | 14,577 | 20,391 | ||||||||||||
Operating expenses | ||||||||||||||||
Research and development | 4,580 | 4,777 | 13,417 | 14,683 | ||||||||||||
Selling and marketing | 5,050 | 4,761 | 15,116 | 15,131 | ||||||||||||
General and administrative | 1,598 | 1,179 | 4,632 | 3,135 | ||||||||||||
Amortization of acquired intangibles | 113 | 498 | 416 | 1,589 | ||||||||||||
Write-off of acquired intangibles | — | — | 758 | — | ||||||||||||
Other charges | 536 | 978 | 3,423 | 9,366 | ||||||||||||
| 11,877 | 12,193 | 37,762 | 43,904 | |||||||||||||
Loss from operations | (5,940 | ) | (4,060 | ) | (23,185 | ) | (23,513 | ) | ||||||||
Interest and other income | 870 | 1,434 | 3,241 | 4,045 | ||||||||||||
Foreign exchange gain (loss) | 23 | (107 | ) | (147 | ) | (186 | ) | |||||||||
Loss from continuing operations before income taxes, minority interest and equity in net loss of Aspace Solutions Limited | (5,047 | ) | (2,733 | ) | (20,091 | ) | (19,654 | ) | ||||||||
Income taxes | (1 | ) | — | (84 | ) | (69 | ) | |||||||||
Minority interest | 100 | — | 699 | — | ||||||||||||
Equity in net loss of Aspace Solutions Limited | (855 | ) | — | (855 | ) | — | ||||||||||
Loss from continuing operations | (5,803 | ) | (2,733 | ) | (20,331 | ) | (19,723 | ) | ||||||||
Income (loss) from discontinued operations | 158 | (214 | ) | (70 | ) | (16,541 | ) | |||||||||
Net loss | $ | (5,645 | ) | $ | (2,947 | ) | $ | (20,401 | ) | $ | (36,264 | ) | ||||
Basic and diluted loss per common share: | ||||||||||||||||
From continuing operations | $ | (0.14 | ) | $ | (0.07 | ) | $ | (0.50 | ) | $ | (0.48 | ) | ||||
From discontinued operations | — | — | — | (0.40 | ) | |||||||||||
| $ | (0.14 | ) | $ | (0.07 | ) | $ | (0.50 | ) | $ | (0.88 | ) | |||||
Weighted average number of common shares: | ||||||||||||||||
Basic and diluted | 41,686 | 41,439 | 40,789 | 41,080 | ||||||||||||
Other charges consist of: | ||||||||||||||||
Amortization of deferred compensation related to options and warrants granted | $ | 228 | $ | 237 | $ | 757 | $ | 731 | ||||||||
Amortization of deferred compensation related to acquisitions | — | 115 | — | 322 | ||||||||||||
Acquired in process research and development | 306 | — | 306 | 68 | ||||||||||||
Restructuring and business realignment expenses | 1 | 133 | 1,293 | 7,752 | ||||||||||||
Re-incorporation expenses | 1 | 493 | 1,067 | 493 | ||||||||||||
Total other charges | $ | 536 | $ | 978 | $ | 3,423 | $ | 9,366 | ||||||||
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ActivCard
Unaudited Condensed Consolidated Balance Sheets (U.S. GAAP)
(In thousands of US dollars)
| September 30, 2003 | December 31, 2002 | |||||||
| ASSETS | ||||||||
Current assets | ||||||||
Cash and equivalents | $ | 80,101 | $ | 158,880 | ||||
Short term investments | 155,381 | 89,502 | ||||||
Accounts receivable | 5,596 | 9,192 | ||||||
Inventory | 2,702 | 3,488 | ||||||
Other receivables | 1,630 | 1,579 | ||||||
Assets held for sale | — | 262 | ||||||
Other current assets | 1,303 | 1,959 | ||||||
Total current assets | 246,713 | 264,862 | ||||||
Restricted investments | 627 | 432 | ||||||
Property and equipment | 4,483 | 7,313 | ||||||
Investment in Aspace Solutions Limited | 5,178 | — | ||||||
Goodwill | 15,322 | 10,600 | ||||||
Other intangibles | 1,958 | 2,311 | ||||||
Other assets | 794 | 874 | ||||||
Total assets | $ | 275,075 | $ | 286,392 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 10,602 | $ | 10,493 | ||||
Restructuring and business realignment accruals | 768 | 867 | ||||||
Current portion of deferred revenues | 2,899 | 3,997 | ||||||
Liabilities held for sale | — | 250 | ||||||
Current portion of long term liabilities | 2 | 22 | ||||||
Total current liabilities | 14,271 | 15,629 | ||||||
Long-term portion of restructuring and business realignment accruals | 3,995 | 4,429 | ||||||
Other long-term liabilities | 991 | 525 | ||||||
Total long-term liabilities | 4,986 | 4,954 | ||||||
Minority interest | 1,559 | — | ||||||
Shareholders’ equity | ||||||||
Common shares and paid-in capital | 398,991 | 399,517 | ||||||
Accumulated deficit | (130,020 | ) | (115,769 | ) | ||||
Accumulated other comprehensive loss | (13,036 | ) | (14,817 | ) | ||||
Deferred stock compensation | (1,676 | ) | (3,122 | ) | ||||
Total shareholders’ equity | 254,259 | 265,809 | ||||||
Total liabilities and shareholders’ equity | $ | 275,075 | $ | 286,392 | ||||
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ActivCard
Unaudited Condensed Consolidated Statements of Cash Flows
(U.S. GAAP)
(In thousands of US dollars)
| For the three months ended September 30, 2003 | For the nine months ended September 30, 2003 | |||||||
Operating activities | ||||||||
Net loss from continuing operations | $ | (5,803 | ) | $ | (20,331 | ) | ||
Adjustments to reconcile net loss from continuing operations to net cash used in continuing operations: | ||||||||
Depreciation and amortization | 629 | 2,368 | ||||||
Write-down of property and equipment | — | 1,684 | ||||||
Amortization of other intangible assets | 113 | 416 | ||||||
Write-off of other intangible assets | — | 758 | ||||||
Acquired in process research and development | 306 | 306 | ||||||
Amortization of deferred compensation | 228 | 757 | ||||||
Non-cash restructuring and business realignment expenses | — | 520 | ||||||
Minority interest | (100 | ) | (699 | ) | ||||
Equity in net loss of Aspace Solutions Limited | 855 | 855 | ||||||
Other non-cash items, net | 262 | 795 | ||||||
Increase (decrease) in cash, net of effects of business combinations, from: | ||||||||
Accounts receivable | (859 | ) | 3,859 | |||||
Other receivables | 420 | 42 | ||||||
Inventories | 233 | 1,182 | ||||||
Other current assets | 194 | 772 | ||||||
Accounts payable and accrued liabilities | 605 | (813 | ) | |||||
Restructuring and business realignment accruals | (336 | ) | (540 | ) | ||||
Deferred revenue | (228 | ) | (1,038 | ) | ||||
Net cash used in continuing operations | (3,481 | ) | (9,107 | ) | ||||
Net cash used in discontinued operations | — | (106 | ) | |||||
Net cash used in operating activities | (3,481 | ) | (9,213 | ) | ||||
Investing activities | ||||||||
Acquisition of ActivCard S.A. minority interest | (395 | ) | (395 | ) | ||||
Investment in Aspace Solutions Limited | (6,033 | ) | (6,033 | ) | ||||
Purchases of property and equipment | (341 | ) | (966 | ) | ||||
Purchases of short term investments | (59,738 | ) | (209,233 | ) | ||||
Proceeds from sales and maturities of short term investments | 32,550 | 142,598 | ||||||
Investments in other long term assets | 235 | 12 | ||||||
Net cash used in investing activities | (33,722 | ) | (74,017 | ) | ||||
Financing activities | ||||||||
Proceeds from exercise of options, rights and warrants | 82 | 3,506 | ||||||
Repayment of long term liabilities | (2 | ) | (17 | ) | ||||
Net cash provided by financing activities | 80 | 3,489 | ||||||
Effect of exchange rate changes on cash and equivalents | 40 | 962 | ||||||
Net decrease in cash and equivalents | (37,083 | ) | (78,779 | ) | ||||
Cash and equivalents, beginning of period | 117,184 | 158,880 | ||||||
Cash and equivalents, end of period | $ | 80,101 | $ | 80,101 | ||||
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