Exhibit 99.1
LaserCard Corporation Reports Financial Results for FY10 Third Quarter
Fourth Consecutive Profitable Quarter
Mountain View, Calif. – February 2, 2010 – LaserCard Corporation (NASDAQ:LCRD), a leading provider of secure ID solutions, today announced the financial results for its fiscal 2010 third quarter ended December 31, 2009.
Revenues for the third quarter of fiscal 2010 were $12.4 million, compared with $15.7 million in the prior quarter and $10.9 million in the same quarter a year ago. Net income for the third quarter of fiscal 2010 was $1.3 million, or $0.11 per diluted share, compared with net income of $1.8 million, or $0.15 per diluted share, in the prior quarter, and net loss of $849,000, or ($0.07) per diluted share, in the same quarter a year ago.
LaserCard® optical memory card revenues for the quarter were $9.1 million compared with $6.0 million in the third quarter of fiscal 2009. Revenues from specialty cards and printers totaled $3.3 million compared with $4.3 million from the same quarter a year ago. Drives, systems and services segment revenue for the quarter was $0.1 million, compared with $0.7 million from the same quarter a year ago.
Cash
Cash, cash equivalents, and investments less debt associated with auction rate securities were $33.8 million at December 31, 2009 compared with $20.6 million at March 31, 2009.
Non-GAAP Results
The non-GAAP net income for the third quarter of fiscal 2010 was $1.8 million, or $0.15 per diluted share, compared to non-GAAP net income of $1.9 million, or $0.15 per diluted share, in the prior quarter, and a non-GAAP net loss of approximately $25,000, or $0.00 per diluted share, in the same quarter a year ago.
Non-GAAP net income and net income per diluted share exclude expenses related to ASC 718 (formerly SFAS123R) stock-based compensation, the unrealized income relating to the fair value adjustment of auction rate securities and our UBS put option agreement, and exclude the gain related to the termination of a contract.
“We have achieved strong operating results over the past four quarters,” said Robert DeVincenzi, President and CEO of LaserCard. “Our performance continues to benefit from our previously implemented expense reduction and resource reallocation program and the ongoing contributions from our core customer programs. Our program revenue and financial results will continue to be subject to fluctuations on a quarterly basis.”
Earnings Results Conference Call
LaserCard will hold a conference call to discuss its fiscal 2010 third quarter results today, February 2, 2010, at approximately 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time. For access to the conference call, please call 773-799-3302 by 1:50 p.m. Pacific Time. A taped replay of the call will be available for one week. To access the replay, please call 203-369-0057. You will need to reference the passcode “LaserCard” and the conference leader “Robert DeVincenzi.” To listen to the call via the Internet, please log on to: www.lasercard.com or www.investorcalendar.com. The Internet Webcast will be archived for one year. A copy of this press release will be furnished to the Securities and Exchange Commission on a Form 8-K and be posted to our web site prior to the conference call.
About LaserCard Corporation
LaserCard Corporation, together with its subsidiaries, is a leading provider of secure ID solutions to governments and commercial clients worldwide. It develops, manufactures, and integrates LaserCard® optical memory cards, multi-technology cards, encoders, peripherals, smart and specialty cards, biometrics, and modular software. The Company’s cards and systems are used in various applications, including citizen identification, border security, government service delivery, and facility access.
For more information, please go to www.lasercard.com.
Forward Looking Statement Disclaimer
All statements contained in this press release that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are not historical facts or guarantees of future performance or events. Rather, they are based on current expectations, estimates, beliefs, assumptions, goals and objectives and are subject to uncertainties that are difficult to predict. As a result, our actual results may differ materially from the statements made. Often such statements can be identified by the use of words such as may, will, intends, plans, believes, anticipates, visualizes, expects, and estimates. Examples of forward-looking statements in this release include our belief that quarterly results will fluctuate. This and other forward-looking statements in this press release are based upon our assumptions about and assessment of the future, which may or may not prove true, and involve a number of risks and uncertainties including, but not limited to whether projected orders or scheduled delivery dates are rescheduled or canceled in whole or in part, that the complex nature of the secure ID business will continue to subject our results to fluctuations on a quarterly basis, and whether our other customers continue orders as currently expected as well as the other risk factors detailed in the Company's Forms 10-K and 10-Q filings with the Securities and Exchange Commission under the caption “Risk Factors” and elsewhere in such reports. Due to these and other risks, future actual results could differ materially from the Company’s expectations. These forward-looking statements speak only as to the date of this release, and, except as required by law, the Company undertakes no obligation to publicly release updates or revisions to these statements whether as a result of new information, future events, or otherwise.
About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which statements are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP net income and non-GAAP EPS. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures" included at the end of this release.
We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses and expenditures that may not be indicative of our "recurring core business operating results," meaning our operating performance excluding not only non-cash charges, such as stock-based compensation, but also discrete cash charges or gains that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance as well as comparisons to our competitors' results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business. These non-GAAP financial measures may be different than those used by other companies, including our competitors.
Non-GAAP net income and EPS. We define non-GAAP net income as net income plus stock-based compensation, and unrealized fair-value adjustments less the related tax effects of such items plus other nonrecurring gains or losses. We define non-GAAP EPS as non-GAAP net income divided by the weighted average outstanding shares, on a fully-diluted basis. We consider these non-GAAP financial measures to be a useful metric for management and investors. However, in order to provide a complete picture of our recurring core business operating results, we exclude from non-GAAP net income and non-GAAP EPS the tax effects associated with stock-based compensation and the impairment charges. Without excluding these tax effects, investors would only see the gross effect that excluding these expenses had on our operating results. There are a number of limitations related to the use of non-GAAP net income versus net income calculated in accordance with GAAP. First, non-GAAP net income excludes some recurring costs, namely stock-based compensation. Stock-based compensation has been and will continue to be for the foreseeable future a significant recurring expense in our business. Second, stock-based compensation is an important part of our employees' compensation and impacts their performance. Third, the components of the costs that we exclude in our calculation of non-GAAP operating income may differ from the components that our peer companies exclude when they report their results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP EPS and evaluating non-GAAP net income and non-GAAP EPS together with net income and EPS calculated in accordance with GAAP.
The accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.
LASERCARD CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)(In thousands, except per share amounts)
| | | Three Months Ended | | | Nine Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | | | | | | | | | | | |
| Revenues | | $ | 12,409 | | | $ | 10,906 | | | $ | 44,433 | | | $ | 35,095 | |
| Cost of sales | | | 6,827 | | | | 7,314 | | | | 25,459 | | | | 23,471 | |
| Gross profit | | | 5,582 | | | | 3,592 | | | | 18,974 | | | | 11,624 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | | | | |
| Selling, general, and administrative expenses | | | 4,087 | | | | 3,950 | | | | 12,439 | | | | 11,437 | |
| Research and development expenses | | | 214 | | | | 286 | | | | 881 | | | | 1,974 | |
| Total operating expenses | | | 4,301 | | | | 4,236 | | | | 13,320 | | | | 13,411 | |
| Operating income (loss) | | | 1,281 | | | | (644 | ) | | | 5,654 | | | | (1,787 | ) |
| | | | | | | | | | | | | | | | | |
| Other income (expense), net | | | (13 | ) | | | (219 | ) | | | 687 | | | | (94 | ) |
| | | | | | | | | | | | | | | | | |
| Income (loss) before income taxes | | | 1,268 | | | | (863 | ) | | | 6,341 | | | | (1,881 | ) |
| | | | | | | | | | | | | | | | | |
| Provision (benefit) for income tax | | | (81 | ) | | | (14 | ) | | | 1,202 | | | | 3 | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) | | $ | 1,349 | | | $ | (849 | ) | | $ | 5,139 | | | $ | (1,884 | ) |
| | | | | | | | | | | | | | | | | |
| Net income (loss) per share: | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.11 | | | $ | (0.07 | ) | | $ | 0.42 | | | $ | (0.16 | ) |
| Diluted | | $ | 0.11 | | | $ | (0.07 | ) | | $ | 0.42 | | | $ | (0.16 | ) |
| | | | | | | | | | | | | | | | | |
| Weighted-average shares of common stock | | | | | | | | | | | | | | | | |
| used in computing net income (loss) per share: | | | | | | | | | | | | | | | | |
| Basic | | | 12,234 | | | | 12,085 | | | | 12,143 | | | | 12,035 | |
| Diluted | | | 12,284 | | | | 12,085 | | | | 12,197 | | | | 12,035 | |
LASERCARD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)(In thousands)
| | | December 31, | | | March 31, | |
| | | 2009 | | | | 2009* | |
| ASSETS | | | | | | | |
| Current assets: | | | | | | | |
| Cash and cash equivalents | | $ | 29,756 | | | $ | 15,912 | |
| Short-term investments | | | 12,450 | | | | 174 | |
| Accounts receivable, net of allowance of $121 at December 31, 2009 | | | 2,962 | | | | 10,217 | |
| and $59 at March 31, 2009 | | | | | | | | |
| Inventories, net of reserves of $2,086 at December 31, 2009 | | | 13,110 | | | | 14,232 | |
| and $863 at March 31, 2009 | | | | | | | | |
| Deferred contract costs | | | 252 | | | | 345 | |
| Prepaid and other current assets | | | 829 | | | | 934 | |
| Total current assets | | | 59,359 | | | | 41,814 | |
| | | | | | | | | |
| Property and equipment, net of accumulated depreciation of $23,395 at December 31, 2009 | | | 9,880 | | | | 10,872 | |
| and $21,555 at March 31, 2009 | | | | | | | | |
| Equipment held for resale | | | 7,154 | | | | 7,062 | |
| Long-term investments | | | - | | | | 13,239 | |
| Patents and other intangibles, net | | | 328 | | | | 400 | |
| Notes receivable | | | 244 | | | | 227 | |
| Deferred contract costs | | | 79 | | | | 568 | |
| Other non-current assets | | | 49 | | | | 108 | |
| Total assets | | $ | 77,093 | | | $ | 74,290 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 1,840 | | | $ | 1,698 | |
| Accrued liabilities | | | 4,799 | | | | 3,397 | |
| Deferred income tax liability | | | 190 | | | | 234 | |
| Advance payments from customers | | | 4,254 | | | | 7,958 | |
| Short-term debt | | | 8,429 | | | | 8,681 | |
| Deferred revenue | | | 534 | | | | 589 | |
| Deferred rent | | | 261 | | | | 257 | |
| Capital lease obligation | | | 77 | | | | 72 | |
| Total current liabilities | | | 20,384 | | | | 22,886 | |
| | | | | | | | | |
| Capital lease obligation, net of current portion | | | 101 | | | | 166 | |
| Advance payments from customers, net of current portion | | | 24,506 | | | | 26,122 | |
| Deferred revenue, net of current portion | | | 3,306 | | | | 3,788 | |
| Deferred rent, net of current portion | | | 1,026 | | | | 1,203 | |
| Income tax payable | | | 277 | | | | 277 | |
| Total liabilities | | | 49,600 | | | | 54,442 | |
| | | | | | | | | |
| Stockholders' equity: | | | | | | | | |
| Common stock | | | 122 | | | | 121 | |
| Additional paid-in capital | | | 68,869 | | | | 66,422 | |
| Accumulated deficit | | | (41,668 | ) | | | (46,807 | ) |
| Accumulated other comprehensive income | | | 170 | | | | 112 | |
| Total stockholders' equity | | | 27,493 | | | | 19,848 | |
| | | | | | | | | |
| Total liabilities and stockholders’ equity | | $ | 77,093 | | | $ | 74,290 | |
| | | | | | | | | |
| *Amounts derived from audited consolidated financial statements | | | | | | | | |
LASERCARD CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)(In thousands)
| | | Nine Months Ended | |
| | | December 31, | |
| | | 2009 | | | 2008 | |
| Cash flows from operating activities: | | | | | | |
| Net income (loss) | | $ | 5,139 | | | $ | (1,884 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by | | | | | | | | |
| (used in) operating activities: | | | | | | | | |
| Depreciation and amortization | | | 2,006 | | | | 2,160 | |
| Equipment write-off reserve | | | 29 | | | | 296 | |
| Provision (benefit) for doubtful accounts receivable | | | 58 | | | | (2 | ) |
| Reserve for excess and obsolete inventory | | | 1,217 | | | | 66 | |
| Provision (benefit) for warranty reserve | | | (14 | ) | | | 51 | |
| Decrease in deferred income tax assets | | | - | | | | 65 | |
| Stock-based compensation | | | 1,684 | | | | 1,751 | |
| Put option, (gain)/loss on fair value | | | 79 | | | | (1,227 | ) |
| Mark to market, trading (gain)/loss | | | (340 | ) | | | 1,431 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Decrease (increase) in accounts receivable | | | 7,302 | | | | (3,424 | ) |
| Decrease (increase) in inventories | | | 48 | | | | (2,747 | ) |
| Decrease in deferred contract costs | | | 596 | | | | 328 | |
| Decrease in other current assets | | | 310 | | | | 32 | |
| Increase in equipment held for resale | | | (93 | ) | | | (517 | ) |
| Decrease in other non-current assets | | | 60 | | | | 168 | |
| Increase (decrease) in accounts payable and accrued liabilities | | | 1,438 | | | | (379 | ) |
| Decrease in deferred income tax | | | (61 | ) | | | (82 | ) |
| Increase (decrease) in deferred revenue | | | (549 | ) | | | 269 | |
| Increase (decrease) in deferred rent | | | (172 | ) | | | 221 | |
| Increase (decrease) in advance payments from customers | | | (5,470 | ) | | | 5,585 | |
| Net cash provided by operating activities | | | 13,267 | | | | 2,161 | |
| Cash flows from investing activities: | | | | | | | | |
| Purchases of property and equipment | | | (861 | ) | | | (2,366 | ) |
| Acquisition of patents and other intangibles | | | (10 | ) | | | (119 | ) |
| Net cash used in investing activities | | | (871 | ) | | | (2,485 | ) |
| Cash flows from financing activities: | | | | | | | | |
| Proceeds from sale of common stock through stock plans | | | 229 | | | | 138 | |
| Tax benefit on carryforward of gain from exercise of common stock options | | | 634 | | | | - | |
| Employee's taxes withheld and paid for restricted stock | | | (99 | ) | | | - | |
| Net borrowing on revolving credit agreement | | | 797 | | | | 3,000 | |
| Principal payments on capital lease obligation | | | (53 | ) | | | (36 | ) |
| Net cash provided by financing activities | | | 1,508 | | | | 3,102 | |
| Effect of exchange rate changes on cash and cash equivalents | | | (60 | ) | | | 240 | |
| Net increase in cash and cash equivalents | | | 13,844 | | | | 3,018 | |
| Cash and cash equivalents: | | | | | | | | |
| Beginning of period | | $ | 15,912 | | | $ | 5,583 | |
| End of period | | $ | 29,756 | | | $ | 8,601 | |
| | | | | | | | | |
| Supplemental disclosures - cash payments for: | | | | | | | | |
| Income taxes | | $ | 250 | | | $ | - | |
| Interest | | $ | 137 | | | $ | 93 | |
| | | | | | | | | |
| Supplemental schedule of non-cash investing activities: | | | | | | | | |
| Equipment acquired under capital lease | | $ | - | | | $ | 198 | |
| Unrealized (gain)/loss in fair value of investments | | $ | (261 | ) | | $ | 205 | |
LASERCARD CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)(In thousands, except per share amounts)
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | | | | | | | | | | | |
| Non-GAAP Net income (loss): | | | | | | | | | | | | |
| GAAP net income (loss) | | $ | 1,349 | | | $ | (849 | ) | | $ | 5,139 | | | $ | (1,884 | ) |
| Stock-based compensation | | | 553 | | | | 620 | | | | 1,684 | | | | 1,675 | |
| Loss (Gains) on fair value of investment | | | (147 | ) | | | 1,431 | | | | (340 | ) | | | 1,431 | |
| Loss related to the Put-Right option | | | 147 | | | | (1,227 | ) | | | 79 | | | | (1,227 | ) |
| Contract Termination | | | - | | | | - | | | | (495 | ) | | | - | |
| Income tax effect of non-GAAP adjustments | | | (89 | ) | | | - | | | | (149 | ) | | | - | |
| Non-GAAP Net Income/(loss) | | $ | 1,813 | | | $ | (25 | ) | | $ | 5,918 | | | $ | (5 | ) |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Non-GAAP EPS: | | | | | | | | | | | | | | | | |
| Net income (loss) per share: | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.15 | | | $ | 0.00 | | | $ | 0.49 | | | $ | 0.00 | |
| Diluted | | $ | 0.15 | | | $ | 0.00 | | | $ | 0.49 | | | $ | 0.00 | |
| | | | | | | | | | | | | | | | | |
| Weighted-average shares of common stock | | | | | | | | | | | | | | | | |
| used in computing net loss per share: | | | | | | | | | | | | | | | | |
| Basic | | | 12,234 | | | | 12,085 | | | | 12,143 | | | | 12,035 | |
| Diluted | | | 12,284 | | | | 12,085 | | | | 12,197 | | | | 12,035 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| As reported GAAP: | | | | | | | | | | | | | | | | |
| Net income (loss) per share: | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.11 | | | $ | (0.07 | ) | | $ | 0.42 | | | $ | (0.16 | ) |
| Diluted | | $ | 0.11 | | | $ | (0.07 | ) | | $ | 0.42 | | | $ | (0.16 | ) |
| | | | | | | | | | | | | | | | | |
| Weighted-average shares of common stock | | | | | | | | | | | | | | | | |
| used in computing net loss per share: | | | | | | | | | | | | | | | | |
| Basic | | | 12,234 | | | | 12,085 | | | | 12,143 | | | | 12,035 | |
| Diluted | | | 12,284 | | | | 12,085 | | | | 12,197 | | | | 12,035 | |
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