EXHIBIT 99.1
ACTIVCARD REPORTS FIRST QUARTER 2004 FINANCIAL RESULTS
FREMONT, CA – April 29, 2004 – ActivCard Corp. (NASDAQ: ACTI), a global provider of strong authentication and trusted digital identity solutions for secure remote access, single sign-on and enterprise access cards, today reported financial results for the quarter ended March 31, 2004. In the first quarter of fiscal 2004, ActivCard revenues were $7.3 million, compared with $6.7 million in the fourth quarter of 2003 and $13.1 million in the first quarter of 2003.
Net loss for the quarter was $9.1 million, or $0.22 per diluted share, compared with a net loss of $9.4 million or $0.22 per diluted share in the fourth quarter of 2003 and $4.6 million, or $0.11 per diluted share in the first quarter of 2003. The net loss for the first quarter of 2004 included charges of $1.2 million relating to a restructuring and business realignment plan executed in March 2004. Also included in the net loss for the quarter ended March 31, 2004 was the $1.6 million loss incurred by ASPACE Solutions Limited, a company in which ActivCard holds a 49 percent voting control interest.
“During the first quarter, we made significant progress on our strategic plan, including the interoperability of our enterprise access card, secure remote access and single sign on solutions for enterprise and government customers.” stated William Crowell, ActivCard Chairman of the Board. “We are now focusing on the initiatives to bring these innovative products and associated technology to market, which we believe will address the growing and diverse strong authentication and digital identity management needs of companies worldwide. We also began to execute a cost-reduction plan and restructuring aimed at maximizing efficiencies throughout our global organization. We believe our investment in interoperable and modular product development and the expansion of strategic partnerships, together with the realignment of our resources, will allow us to build our leadership position in the growing market for enterprise-wide identification solutions,” concluded Mr. Crowell.
As of March 31, 2004 the Company had $222 million in cash and short-term investments.
First Quarter and Subsequent Highlights
| • | Continued our strength in the U.S. government market with ActivCard solutions deployed in civilian department smart card programs such as the Bureau of Land Management. Enabled the deployment of over 5 million cards to date utilizing ActivCard software in Department of Defense Common Access Card roll-out. |
| • | Achieved highest revenue in the Europe-Middle East-Africa region since June, 2001. This revenue included enterprise, government and financial accounts. |
| • | Introduced a converged product line with modular solutions for government, enterprise, and financial services. The new ActivCard integrated architecture makes it easier to securely issue, use, manage, and deploy components of digital identity infrastructure as needed and allows customers to start with simple solutions and upgrade over time. |
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| • | Launched a low-cost, lifetime replacement option token that makes strong authentication affordable for the enterprise. |
| • | Signed new distributors including Unipalm in the UK and expanded relationship with Alternative Technologies in North America. |
| • | Received two industry awards honoring ActivCard solutions – Card Technology Magazine’s “Breakthrough Award” for the CICCP (Spanish Ministry of Public Works) Secure Digital Signature customer deployment – And SC Magazine’s Global Awards 2004 recognition of ActivClient™ as “Best Smart Card / Token Solution”. |
Outlook
In the second quarter of 2004, the Company expects revenues to range between $7.0 million and $8.0 million. In addition, the Company expects to record additional restructuring charges during the remainder of the year as various elements of the restructuring plan are executed and completed by the fourth quarter of 2004.
Conference Call
ActivCard will hold a conference call at 11 a.m. Eastern Time today, Thursday, April 29, 2004, to discuss first quarter results. To access the conference call, please dial 800-866-5043 in the U.S., or 303-262-2190 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 First 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. A taped replay of the conference call will also be available approximately one hour after the call concludes and will be accessible through May 15, 2004. To access the replay, please dial 800-405-2236 in the U.S., or 303-590-3000 outside of the U.S. Both replay numbers require the passcode 577045#. An archived replay of the Webcast will be available on the Company’s website after the call as well.
Financial Schedules Attached
About ActivCard
ActivCard, www.activcard.com, a global provider of strong authentication and trusted digital identity solutions for secure remote access, single sign-on and enterprise access cards. 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, cost reduction initiatives and streamlining of our operations, our history of losses, the concentration of our customer base, our
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reliance on strategic relationships, our non-controlling interest in ASPACE, 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.
ActivCard is a registered trademark and ActivClient and Return on Identity 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 Corporate
Julie White
jwhite@activcard.com
510-574-1708
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ActivCard
Unaudited Condensed Consolidated Statements of Operations
(In thousands of US dollars, except per share data)
For the three months ended March 31, | ||||||||
| 2004 | 2003 | |||||||
Revenues | $ | 7,303 | $ | 13,067 | ||||
Cost of revenues | 3,025 | 5,172 | ||||||
Gross margin | 4,278 | 7,895 | ||||||
Operating expenses | ||||||||
Research and development | 4,384 | 4,550 | ||||||
Selling and marketing | 6,125 | 5,253 | ||||||
General and administrative | 1,378 | 1,400 | ||||||
Amortization of acquired intangibles | 114 | 152 | ||||||
Other charges | 1,187 | 1,892 | ||||||
| 13,188 | 13,247 | |||||||
Loss from operations | (8,910 | ) | (5,352 | ) | ||||
Interest and other income | 1,016 | 1,245 | ||||||
Foreign exchange gain (loss) | 410 | (216 | ) | |||||
Loss from continuing operations before income taxes, | (7,484 | ) | (4,323 | ) | ||||
Income taxes | (55 | ) | (62 | ) | ||||
Minority interest | 35 | 49 | ||||||
Equity in net loss of Aspace Solutions Limited | (1,572 | ) | — | |||||
Loss from continuing operations | (9,076 | ) | (4,336 | ) | ||||
Loss from discontinued operations | — | (228 | ) | |||||
Net loss | $ | (9,076 | ) | $ | (4,564 | ) | ||
Basic and diluted loss per common share: | ||||||||
From continuing operations | $ | (0.22 | ) | $ | (0.10 | ) | ||
From discontinued operations | — | (0.01 | ) | |||||
| $ | (0.22 | ) | $ | (0.11 | ) | |||
Weighted average number of common shares: | ||||||||
Basic and diluted | 42,144 | 40,614 | ||||||
Other charges consist of: | ||||||||
Restructuring and business realignment expenses | $ | 1,187 | $ | 947 | ||||
Re-incorporation expenses | — | 945 | ||||||
Total other charges | $ | 1,187 | $ | 1,892 | ||||
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ActivCard
Unaudited Condensed Consolidated Balance Sheets
(In thousands of US dollars)
| March 31, 2004 | December 31, 2003 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and equivalents | $ | 45,638 | $ | 33,599 | ||||
Short term investments | 176,386 | 195,135 | ||||||
Accounts receivable | 3,037 | 3,364 | ||||||
Inventory | 2,470 | 2,744 | ||||||
Other receivables | 2,048 | 2,372 | ||||||
Other current assets | 760 | 1,082 | ||||||
Total current assets | 230,339 | 238,296 | ||||||
Restricted investments | 566 | 551 | ||||||
Property and equipment | 4,512 | 4,498 | ||||||
Investment in Aspace Solutions Limited | 4,439 | 5,816 | ||||||
Goodwill | 15,322 | 15,322 | ||||||
Other intangible assets | 1,668 | 1,825 | ||||||
Other assets | 792 | 793 | ||||||
Total assets | $ | 257,638 | $ | 267,101 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 9,570 | $ | 11,179 | ||||
Restructuring and business realignment accruals | 1,222 | 892 | ||||||
Deferred revenue | 3,696 | 2,875 | ||||||
Income taxes payable | 20 | 148 | ||||||
Total current liabilities | 14,508 | 15,094 | ||||||
Long-term portion of restructuring and business realignment accruals | 3,720 | 3,859 | ||||||
Other long-term liabilities | 1,136 | 1,056 | ||||||
Total long-term liabilities | 4,856 | 4,915 | ||||||
Minority interest | 1,477 | 1,513 | ||||||
Shareholders’ equity | ||||||||
Common shares and paid-in capital | 398,386 | 398,004 | ||||||
Accumulated deficit | (148,474 | ) | (139,398 | ) | ||||
Accumulated other comprehensive loss | (12,971 | ) | (12,816 | ) | ||||
Deferred stock compensation | (144 | ) | (211 | ) | ||||
Total shareholders’ equity | 236,797 | 245,579 | ||||||
Total liabilities and shareholders’ equity | $ | 257,638 | $ | 267,101 | ||||
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ActivCard
Unaudited Condensed Consolidated Statement of Cash Flows
(In thousands of US dollars)
For the three months ended March 31, 2004 | ||||
Operating activities | ||||
Net loss from continuing operations | $ | (9,076 | ) | |
Adjustments to reconcile net loss from | ||||
Depreciation and amortization | 577 | |||
Amortization of acquired intangible assets | 114 | |||
Amortization of deferred compensation | 61 | |||
Minority interest | (35 | ) | ||
Equity in net loss of Aspace Solutions Limited | 1,572 | |||
Other non-cash items, net | 38 | |||
Increase (decrease) in cash from: | ||||
Accounts receivable | 304 | |||
Other receivables | 317 | |||
Inventories | 222 | |||
Other current assets | (93 | ) | ||
Accounts payable and accrued liabilities | (1,495 | ) | ||
Restructuring and business realignment accruals | 191 | |||
Deferred revenue | 854 | |||
Income taxes payable | (128 | ) | ||
Net cash used in operating activities | (6,577 | ) | ||
Investing activities | ||||
Purchases of property and equipment | (625 | ) | ||
Purchases of short term investments | (55,061 | ) | ||
Proceeds from sales and maturities of short term investments | 73,854 | |||
Investments in other long term assets | 60 | |||
Net cash provided by investing activities | 18,228 | |||
Financing activities | ||||
Proceeds from exercise of stock options and warrants | 387 | |||
Increase in long term obligations | 57 | |||
Net cash provided by financing activities | 444 | |||
Effect of exchange rate changes on cash and equivalents | (56 | ) | ||
Net decrease in cash and equivalents | 12,039 | |||
Cash and equivalents, beginning of period | 33,599 | |||
Cash and equivalents, end of period | $ | 45,638 | ||
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