Exhibit 99.1
ACTIVCARD REPORTS FOURTH QUARTER FINANCIAL RESULTS
FREMONT, CA – February 12, 2004 – ActivCard Corp. (NASDAQ: ACTI), a global provider of secure digital identity and authentication solutions for secure remote access, single sign-on and digital ID cards, today reported financial results for the quarter and year ended December 31, 2003. The Company had announced preliminary estimates of revenue last week.
ActivCard revenues for the fourth quarter were $6.7 million, compared to $12.1 million reported in the fourth quarter of 2002. Net loss for the quarter was $9.4 million, or $0.22 per diluted share, compared to a net loss of $9.2 million, or $0.22 per diluted share in the fourth quarter of 2002. Included in the net loss for the quarter ended December 31, 2003 is $1.5 million, or 100 percent of the loss incurred by ASPACE Solutions Limited. During the fourth quarter, ActivCard increased its ownership of ASPACE to 49 percent of the voting control.
As of December 31, 2003, the Company had $229 million in cash and short-term investments.
William P. Crowell, ActivCard Chairman of the Board, said that “The company is completing its business strategy and roadmap for 2004, which includes refocusing on ActivCard core competencies; completing the research and development as well as the launch of our converged modular product line; reducing costs in areas that do not contribute directly to building the core business; and streamlining management and operations. Our objective during this period is to preserve cash for future strategic opportunities while building a strong core business.” He further indicated that a special committee appointed by the Board is working closely with the senior executive team that is operating the company on a day-to-day basis while a search for a new Chief Executive Officer is completed.
“Fourth-quarter revenue was down because first half strength in U.S. Department of Defense business did not continue into the second half. However, the quarter’s financial results overshadowed a number of positive developments in the quarter and the year. ActivCard continued to make progress in the marketplace, working both with integrators and direct sales to sign significant agreements that should have positive impact in future quarters. We also began deployments that represent penetration into major civilian government and enterprise applications that offer the most growth opportunities,” said Blair Geddes, Chief Financial Officer.
Fourth Quarter and Subsequent Highlights
| • | ActivCard will provide its smart card and credential lifecycle management software for an initial project phase of the NASA employee ID badge, through its partnership with MAXIMUS® and a NASA smart card system task order awarded by the U.S. General Services Administration. |
| • | Northrop Grumman Information Technology selected the ActivCard Identity Management System™ (AIMS) for the initial phase of a large federal law enforcement organization’s employee ID card initiative. |
| • | U.S. Department of Interior’s Bureau of Land Management is deploying ActivCard Gold™ client software and AIMS for their employee ID badge program combining both physical and network security credentials in the form of a smart card-based badge. |
| • | The Company launched its updated AIMS Enterprise v3.5 card and credential management system for issuing and managing trusted digital identities – offering enhanced interoperability for Microsoft® environments. |
| • | New ActivCard Keychain Token and ActivReader™ Solo pin-pad smart card reader were introduced — enhancing mobility for secure remote access users while broadening the choice of authentication form-factors for secure dial-up, VPN, web, terminal services, and wireless LAN access. |
| • | ActivCard Trinity™ single sign-on solution achieved IBM® “Ready for Tivoli” status, extending the IBM identity management and centralized provisioning model with desktop SSO, as well as smart card-based ID and biometric capabilities. |
2003 Highlights
| • | ActivCard now has a worldwide installed base of 6.7 million users of ActivCard digital identity software and devices, an increase of approximately 25 percent over the prior year. |
| • | ActivCard shipped over 500,000 licenses of ActivCard Gold™, resulting in an installed base of over 2.3 million users of the award-winning smart card client software to date. |
| • | ActivCard shipped over 800,000 ActivCard authentication tokens for secure remote access and secure Internet banking. |
| • | U.S. Department of Defense (DoD) Common Access Card (CAC) badge program has deployed over 4 million CAC cards to date using ActivCard issuance and management software – illustrating the scalability and robustness of ActivCard technology for large scale ID card programs. |
| • | While maintaining the lead as primary DoD smart card middleware provider, ActivCard extended government penetration to multiple defense and civilian department digital identity projects in the United States and internationally. |
| • | ActivCard completed its re-incorporation as a publicly listed company in the United States. |
Outlook
In the first quarter of 2004, the Company expects revenues to range between $6.3 million and $7.5 million, with the geographic mix similar to the fourth quarter of 2003.
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Year End Results
Revenues for the year ended December 31, 2003 were $38.3 million compared to $41.8 million for the year ended December 31, 2002. Net loss for the year ended December 31, 2003 was $29.8 million, or $0.72 per diluted share, compared to $45.5 million, or $1.10 per diluted share, for the year ended December 31, 2002. Included in the net loss for the year ended December 31, 2003 is 100 percent of the loss of ASPACE Solutions Limited in the amount of $2.4 million from the date of ActivCard’s initial investment.
Conference Call
ActivCard will hold a conference call at 11 a.m. Eastern Time today, Thursday, February 12, 2004, to discuss fourth quarter results. To access the conference call, please dial 800-218-9073 in the U.S., or 303-262-2211 for international callers. Participants are asked to dial-in at least 10 minutes prior to the start of the call, and will need to reference “ActivCard Fourth Quarter Financial 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 10 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.
ActivCard will exhibit its solutions at the upcoming RSA Conference in San Francisco, February 23–27, Booth # 1201.
About ActivCard
ActivCard, www.activcard.com, is a global provider of Secure Digital Identity and Authentication solutions for secure remote access, single 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.
Safe Harbor Statement
The statements in this press release that are not historical facts are forward-looking statements that involve risks and uncertainties, including risks associated with our future operating results, changes in our management team, changes in our business focus, streamlining of our operations, our history of losses, the concentration of our customer base, our reliance on strategic relationships, 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 most recent Annual Report on Form 10-K, and in our Quarterly Reports on Form 10-Q. Copies of these filings are available from ActivCard and on the SEC’s website at www.sec.gov. 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.
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ActivCard is a registered trademark and ActivCard Gold, ActivCard Identity Management System, ActivReader, 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.
Financial Schedules Attached
Contact
ActivCard Corporate
Julie White
jwhite@activcard.com
510-574-1708
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ActivCard Unaudited Condensed Consolidated Statements of Operations (U.S. GAAP)
(In thousands of US dollars, except per share data)
For the three months ended December 31, | For the twelve months ended December 31, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
Revenues | $ | 6,723 | $ | 12,085 | $ | 38,262 | $ | 41,840 | ||||||||
Cost of revenues | 3,614 | 4,088 | 20,576 | 13,452 | ||||||||||||
Gross margin | 3,109 | 7,997 | 17,686 | 28,388 | ||||||||||||
Operating expenses | ||||||||||||||||
Research and development | 4,774 | 4,744 | 18,191 | 19,427 | ||||||||||||
Selling and marketing | 5,360 | 4,808 | 20,476 | 19,939 | ||||||||||||
General and administrative | 1,368 | 1,045 | 6,000 | 4,180 | ||||||||||||
Amortization of acquired intangibles | 124 | 484 | 540 | 2,073 | ||||||||||||
Write-off of acquired intangibles | — | 5,090 | 758 | 5,090 | ||||||||||||
Other charges | 262 | 1,643 | 3,685 | 11,009 | ||||||||||||
| 11,888 | 17,814 | 49,650 | 61,718 | |||||||||||||
Loss from operations | (8,779 | ) | (9,817 | ) | (31,964 | ) | (33,330 | ) | ||||||||
Interest and other income | 1,022 | 1,153 | 4,263 | 5,198 | ||||||||||||
Foreign exchange gain (loss) | 27 | (272 | ) | (120 | ) | (458 | ) | |||||||||
Loss from continuing operations before income taxes, minority interest and equity in net loss of Aspace Solutions Limited | (7,730 | ) | (8,936 | ) | (27,821 | ) | (28,590 | ) | ||||||||
Income taxes | (154 | ) | — | (238 | ) | (69 | ) | |||||||||
Minority interest | 45 | — | 744 | — | ||||||||||||
Equity in net loss of Aspace Solutions Limited | (1,539 | ) | — | (2,394 | ) | — | ||||||||||
Loss from continuing operations | (9,378 | ) | (8,936 | ) | (29,709 | ) | (28,659 | ) | ||||||||
Income (loss) from discontinued operations | — | (293 | ) | (70 | ) | (16,834 | ) | |||||||||
Net loss | $ | (9,378 | ) | $ | (9,229 | ) | $ | (29,779 | ) | $ | (45,493 | ) | ||||
Basic and diluted loss per common share: | ||||||||||||||||
From continuing operations | $ | (0.22 | ) | $ | (0.21 | ) | $ | (0.72 | ) | $ | (0.69 | ) | ||||
From discontinued operations | — | (0.01 | ) | — | (0.41 | ) | ||||||||||
| $ | (0.22 | ) | $ | (0.22 | ) | $ | (0.72 | ) | $ | (1.10 | ) | |||||
Weighted average number of common shares: | ||||||||||||||||
Basic and diluted | 42,103 | 41,605 | 41,120 | 41,212 | ||||||||||||
Other charges consist of: | ||||||||||||||||
Amortization of deferred compensation related to options and warrants granted | $ | 58 | $ | 236 | $ | 815 | $ | 967 | ||||||||
Amortization of deferred compensation related to acquisitions | — | 65 | — | 387 | ||||||||||||
Acquired in process research and development | — | — | 306 | 68 | ||||||||||||
Restructuring and business realignment expenses | 204 | 834 | 1,497 | 8,586 | ||||||||||||
Re-incorporation expenses | — | 508 | 1,067 | 1,001 | ||||||||||||
Total other charges | $ | 262 | $ | 1,643 | $ | 3,685 | $ | 11,009 | ||||||||
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ActivCard
Unaudited Condensed Consolidated Balance Sheets (U.S. GAAP)
(In thousands of US dollars)
| December 31, 2003 | December 31, 2002 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and equivalents | $ | 33,599 | $ | 158,880 | ||||
Short term investments | 195,135 | 89,502 | ||||||
Accounts receivable | 3,364 | 9,192 | ||||||
Inventory | 2,744 | 3,488 | ||||||
Other receivables | 2,372 | 1,579 | ||||||
Assets held for sale | — | 262 | ||||||
Other current assets | 1,082 | 1,959 | ||||||
Total current assets | 238,296 | 264,862 | ||||||
Restricted investments | 551 | 432 | ||||||
Property and equipment | 4,498 | 7,313 | ||||||
Investment in Aspace Solutions Limited | 5,816 | — | ||||||
Goodwill | 15,322 | 10,600 | ||||||
Other intangibles | 1,825 | 2,311 | ||||||
Other assets | 793 | 874 | ||||||
Total assets | $ | 267,101 | $ | 286,392 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 11,179 | $ | 10,493 | ||||
Restructuring and business realignment accruals | 892 | 867 | ||||||
Deferred revenues | 2,875 | 3,997 | ||||||
Income taxes payable | 148 | — | ||||||
Liabilities held for sale | — | 250 | ||||||
Current portion of long term liabilities | — | 22 | ||||||
Total current liabilities | 15,094 | 15,629 | ||||||
Long-term portion of restructuring and business realignment accruals | 3,859 | 4,429 | ||||||
Other long-term liabilities | 1,056 | 525 | ||||||
Total long-term liabilities | 4,915 | 4,954 | ||||||
Minority interest | 1,513 | — | ||||||
Shareholders’ equity | ||||||||
Common shares and paid-in capital | 398,004 | 399,517 | ||||||
Accumulated deficit | (139,398 | ) | (115,769 | ) | ||||
Accumulated other comprehensive loss | (12,816 | ) | (14,817 | ) | ||||
Deferred stock compensation | (211 | ) | (3,122 | ) | ||||
Total shareholders’ equity | 245,579 | 265,809 | ||||||
Total liabilities and shareholders’ equity | $ | 267,101 | $ | 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 December 31, 2003 | For the twelve December 31, | |||||||
Operating activities | ||||||||
Net loss from continuing operations | $ | (9,378 | ) | $ | (29,709 | ) | ||
Adjustments to reconcile net loss from continuing operations to net cash used in continuing operations: | ||||||||
Depreciation and amortization | 642 | 3,010 | ||||||
Write-down of property and equipment | — | 1,684 | ||||||
Amortization of other intangible assets | 124 | 540 | ||||||
Write-off of other intangible assets | — | 758 | ||||||
Acquired in process research and development | — | 306 | ||||||
Amortization of deferred compensation | 58 | 815 | ||||||
Non-cash restructuring and business realignment expenses | — | 520 | ||||||
Minority interest | (45 | ) | (744 | ) | ||||
Equity in net loss of Aspace Solutions Limited | 1,539 | 2,394 | ||||||
Other non-cash items, net | 293 | 1,088 | ||||||
Increase (decrease) in cash, net of effects of business combinations, from: | ||||||||
Accounts receivable | 2,380 | 6,239 | ||||||
Other receivables | (679 | ) | (637 | ) | ||||
Inventories | 165 | 1,347 | ||||||
Other current assets | 384 | 1,156 | ||||||
Accounts payable and accrued liabilities | 137 | (676 | ) | |||||
Restructuring and business realignment accruals | (29 | ) | (569 | ) | ||||
Deferred revenue | (102 | ) | (1,140 | ) | ||||
Income taxes payable | 158 | 158 | ||||||
Net cash used in continuing operations | (4,353 | ) | (13,460 | ) | ||||
Net cash used in discontinued operations | — | (106 | ) | |||||
Net cash used in operating activities | (4,353 | ) | (13,566 | ) | ||||
Investing activities | ||||||||
Acquisition of ActivCard S.A. minority interest | — | (395 | ) | |||||
Investment in Aspace Solutions Limited | (2,180 | ) | (8,213 | ) | ||||
Purchases of property and equipment | (508 | ) | (1,474 | ) | ||||
Purchases of short term investments | (67,338 | ) | (276,571 | ) | ||||
Proceeds from sales and maturities of short term investments | 27,000 | 169,598 | ||||||
Investments in other long term assets | 127 | 139 | ||||||
Net cash used in investing activities | (42,899 | ) | (116,916 | ) | ||||
Financing activities | ||||||||
Proceeds from exercise of options, rights and warrants | 419 | 3,925 | ||||||
Repayment of long term liabilities | (3 | ) | (20 | ) | ||||
Net cash provided by financing activities | 416 | 3,905 | ||||||
Effect of exchange rate changes on cash and equivalents | 334 | 1,296 | ||||||
Net decrease in cash and equivalents | (46,502 | ) | (125,281 | ) | ||||
Cash and equivalents, beginning of period | 80,101 | 158,880 | ||||||
Cash and equivalents, end of period | $ | 33,599 | $ | 33,599 | ||||
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