EXHIBIT 99.2
Press Release Source: SSP Solutions, Inc.
SSP Solutions, Inc. Announces Second Quarter Operating Results
Tuesday September 2, 9:05 am ET
Revenues Increase 64.5% and Gross Margin Dollars Up by 89.9%
IRVINE, Calif.--(BUSINESS WIRE)--Sept. 2, 2003--SSP Solutions, Inc. (Nasdaq:
SSPX - News), long-term provider of identity management solutions for corporate
and government institutions, today announced financial results for the second
quarter ended June 30, 2003.
The Company reported total revenues of $3.8 million for the second quarter ended
June 30, 2003, versus $2.3 million in the same quarter last year, or a 64.5%
increase; six month period revenues increased from $4.1 million to $7.1 million,
or 75.8%. Gross margin dollars increased from $1.6 million to $3.0 million, an
89.9% increase for the quarter ended June 30, 2003 and from $2.5 million to $5.3
million, a 107.5% increase for the six month period then ended.
The Company reported an operating loss of $608,000 for the quarter ended June
30, 2003, versus an operating loss of $2.8 million in 2002. Included in the 2003
operating loss was an accrual of $1.3 million for a pending final settlement and
termination related to a restructured facility lease. Excluding the settlement
charge, the Company's pro-forma, non-GAAP operating income would have been
$692,000 and $240,000 for the three and six months ended June 30, 2003,
respectively, versus operating losses of $2.8 million and $6.4 million for the
three and six months ended June 30, 2002.
With the Company's previously announced discontinuance of its network solutions
business and a $1.3 million settlement charge, the net loss from continuing
operations for the quarter was $1.8 million or $0.07 per basic and diluted
share, versus a loss from continuing operations of $3.6 million, or $0.18 per
basic and diluted share, in the same quarter of 2002. The net loss for the
quarter ended June 30, 2003, was $1.8 million, or $.07 per basic and diluted
share, versus a net loss of $3.7 million, or $0.18 per basic and diluted share,
in the same quarter last year. The Company's pro-forma, non-GAAP net loss,
excluding the $1.3 million facility settlement charge, would have been $3.7
million for the quarter ended June 30, 2002 and $521,000 million for the quarter
ended June 30, 2003. The Company's pro-forma, non-GAAP net loss per share,
excluding the facility settlement charge, would have been $.18 per share for the
quarter ended June 30, 2002 and $.02 per share for the quarter ended June 30,
2003.
Service revenues increased 380.7% from $457,000 to $2.2 million, and license
revenues decreased by 36% from $623,000 to $399,000 for the quarter ended June
30 2003 versus the same quarter in 2002. Product sales decreased .9% to $1.24
million from $1.25 million during the quarters ended June 30, 2003 and June 30,
2002, respectively.
The total gross margin percentage increased to 78.6% for the quarter ended June
30, 2003 from 68.1% during the same quarter in 2002. The Company reduced
operating expenses by $728,000 or 16.7%. This reduction included a $466,000 or
33.0% reduction in research and development expenses (R&D); a $594,000 or 28.5%
increase in selling, general, and administrative expenses (S,G&A); and the
elimination of the Wave Systems development contract. For the quarter ended June
30, 2003, S,G&A included the $1.3 million facility settlement charge. The
Company eliminated $833,000 in quarterly R&D expenses through the previously
reported termination and settlement effective August 31, 2002 of the Wave
development contract. Without the $1.3 million settlement charge, non-GAAP
proforma total operating expenses would have decreased by $2.0 million, or 46.6%
to $2.3 million with S,G&A expenses decreasing $706,000, or 33.9% to $1.4
million for the quarter ended June 30, 2003.
With the Company's previously announced discontinuance of its network solutions
business and including the $1.3 million settlement charge, the net loss from
continuing operations for the six months ended June 30, 2003 was $3.3 million or
$0.13 per basic and diluted share, versus a loss from continuing operations of
$7.4 million, or $0.35 per basic and diluted share, in the same quarter of 2002.
The net loss for the six months ended June 30, 2003, was $3.4 million, or $.14
per basic and diluted share, versus a net loss of $7.7 million, or $0.37 per
basic and diluted share, in the same quarter last year. The Company's pro-forma,
non-GAAP net loss, excluding the $1.3 million facility settlement charge, would
have been $7.7 million for the six month period ended June 30, 2002 and $2.1
million for the quarter ended June 30, 2003. The Company's pro-forma, non-GAAP
net loss per share, excluding the facility settlement charge, would have been
$.37 per share for the six month period ended June 30, 2002 and $.09 per s hare
for the six month period ended June 30, 2003.
For the six month period ended June 30, 2003, service revenues increased 227.8%
from $994,000 to $3.3 million, and license revenues increased by 116.3% from
$743,000 to $1.6 million for the six month period ended June 30 2003 versus the
same six month period in 2002. Product sales decreased 2.2% to $2.27 million
from $2.32 million during the six month periods ended June 30, 2003 and June 30,
2002, respectively.
The total gross margin percentage increased to 73.6% for the six month period
ended June 30, 2003 from 62.3% during the same six month period in 2002. The
Company reduced operating expenses by $2.6 million or 29.2%. This reduction
included a $962,000 or 31.5% reduction in R&D; a $75,000 or 1.8% increase in
S,G&A; and the elimination of the Wave Systems development contract. The Company
eliminated $1.7 million in the six month period R&D through the previously
reported termination and settlement effective August 31, 2002 of the Wave
development contract. Without the $1.3 million settlement charge, non-GAAP
proforma total operating expenses would have decreased by $3.9 million, or 43.8%
to $5.0 million with S,G&A expenses decreasing $1.2 million, or 29.5% to $2.9
million for the six month period ended June 30, 2003.
"We are pleased with our revenue growth, margin improvement, and operating cost
reductions," commented Marvin J. Winkler, co-chairman and CEO. "With our
improved operating results and the pending facility settlement, we are now in
the process of restructuring our balance sheet and raising equity capital that
will dramatically decrease future financing costs and create positive working
capital."
The Company prepares its financial statements in accordance with accounting
principles generally accepted in the United States ("GAAP"), but has included
non-GAAP disclosures. The Company believes the presentation of these non-GAAP
financial measures provides useful information to investors because excluding
the effects of these non-recurring items allows investors to more easily compare
the Company's financial performance from period to period. These non-GAAP
financial measures should be viewed in addition to, and not as an alternative
for, the Company's reported results prepared in accordance with GAAP. Further,
these non-GAAP financial measures may differ from similar measures presented by
other companies.
About SSP Solutions, Inc.
SSP Solutions, Inc. designs and develops innovative identity management
solutions for corporate and government institutions. Our PKI solutions
streamline the deployment, use, and management of digital identities across an
organization, delivering strong authentication and access control. For more
information, visit http://www.sspsolutions.com/ or call SSP Solutions, Inc. at
949-851-1085.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
With the exception of historical information, matters discussed in this news
release, including, in particular, those related to a pending final settlement
and termination of a facility lease, balance sheet restructuring, raising equity
capital, and creating positive working capital are forward-looking statements
involving a number of risks and uncertainties and may not be achieved due to
factors beyond the Company's control. The Company's actual future results could
differ from those statements. Factors that could cause or contribute to such
differences include, but are not limited to, changing regulatory and
technological environments, difficulties in the Company's ability to obtain key
components from suppliers, which could impair the Company's ability to deliver
products under development in a timely fashion and to achieve revenue growth and
continue technological innovation, difficulties in increasing revenue despite
staff reductions needed to control costs, unpredictability of economic recovery
from th e heretofore depressed IT markets and the related effect on IT buying
decisions, difficulties we may encounter in obtaining needed capital, which
include the converting of existing debt into equity, the exercise of existing
warrants and the cost of obtaining additional capital, unforeseen technological
difficulties (both for the Company and its suppliers), increased competition,
and changing customer demands. Other risks inherent in the Company's business
include those factors contained in the "Risk Factors" section of the Company's
Form 10-K for the fiscal year ended December 31, 2002 and Form 10-QSB for the
quarter ended June 30, 2003. SSP Solutions, Inc. undertakes no obligation to
revise or update any forward-looking statements to reflect events or
circumstances after the date of this release.
SSP Solutions, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2003 2002 2003
Revenues:
Product $1,255 $1,244 $2,325 $2,274
Service 457 2,197 994 3,258
License 623 399 743 1,607
Total revenues 2,335 3,840 4,062 7,139
Cost of Sales:
Product 567 340 1,069 637
Service 136 471 365 441
License 43 12 96 807
Total cost of sales 746 823 1,530 1,885
Gross margin 1,589 3,017 2,532 5,254
Operating Expenses:
Selling, general and
administrative 2,084 2,678 4,150 4,225
Research and development 1,413 947 3,051 2,089
Research and development --
Wave Systems Corp. 833 -- 1,667 --
Amortization of goodwill and
other intangibles 23 -- 46 --
Total operating expenses 4,353 3,625 8,914 6,314
Operating income (loss) (2,764) (608) (6,382) (1,060)
Non-operating Expenses
(Income):
Unrealized loss on trading
securities 121 10 122 25
Interest expense, net 189 313 315 590
Non-cash interest and
financing expense 368 611 368 1,111
Loss from equity investee -- 140 -- 409
Impairment of equity
investee -- 142 -- 142
Other expense, net 174 (6) 187 (6)
Total non-operating
expenses 852 1,210 992 2,271
Loss before income taxes (3,616) (1,818) (7,374) (3,331)
Provision for (benefit from)
income taxes (2) 3 2 3
Loss from continuing operations (3,614) (1,821) (7,376) (3,334)
Loss from discontinued
operations (99) -- (363) (106)
Net Loss $(3,713) $(1,821) $(7,739) $(3,440)
Loss per share of common stock,
basic and diluted $(0.18) $(0.07) $(0.37) $(0.14)
Loss per share from continuing
operations $(0.18) $(0.07) $(0.35) $(0.13)
Loss per share from
discontinued operations $(0.00) $(0.00) $(0.02) $(0.01)
Shares used in per share
computations 20,678 25,169 20,671 25,174
SSP SOLUTIONS, INC.
Pro Forma Summary of Non-GAAP Adjustments
To Condensed Consolidated Statements of Operations
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2003 2002 2003
Net loss $(3,713) $(1,821) $(7,739) $(3,440)
Plus loss from discontinued
operation (99) -- (363) (106)
Plus loss from continuing
operations (3,614) (1,821) (7,376) (3,334)
Plus provision (benefit)
for income taxes (2) 3 2 3
Operating loss before
income taxes (3,616) (1,818) (7,374) (3,331)
Plus non operating expenses 852 1,210 992 2,271
Operating loss (2,764) (608) (6,382) (1,060)
Less facility lease
settlement charge -- 1,300 -- 1,300
Non-GAAP, pro-forma
operating income (loss),
net of facility
settlement charge $(2,764) $692 $(6,382) $240
Total operating expenses $4,353 $3,625 $8,914 $6,314
Less facility lease
settlement charge -- 1,300 -- 1,300
Non-GAAP, pro-forma total
operating expenses,
net of facility
settlement charge $ 4,353 $ 2,325 $ 8,914 $ 5,014
Selling, general and
administrative expenses $2,084 $2,678 $4,150 $4,225
Less facility lease
settlement charge -- 1,300 -- 1,300
Non-GAAP, pro-forma
selling, general and
administrative expenses,
net of facility settlement
charge $ 2,084 $ 1,378 $ 4,150 $ 2,925
Net loss $(3,713) $(1,821) $(7,739) $(3,440)
Less facility lease
settlement charge -- 1,300 -- 1,300
Non-GAAP, pro-forma net
income (loss), net of
facility settlement
charge $(3,713) $(521) $(7,739) $(2,140)
Non-GAAP, pro-forma net
income (loss) per share,
net of facility
settlement charge $(0.18) $(0.02) $(0.37) $(0.09)
SSP Solutions, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
Dec. 31, June 30,
2002 2003
(Unaudited)
Total Current Assets $2,905 $3,426
Property, Plant & Equipment, Net 90 57
Other Assets 599 499
Equity investment in affiliate 452 --
Goodwill 25,930 25,930
Total Assets $29,976 $29,912
Total Current Liabilities $8,853 $11,510
Long-Term Debt -- --
Shareholders' Equity 21,123 18,402
Total Liabilities & Shareholders' Equity $29,976 $29,912
_______________________
Contact:
SSP-Litronic (Editorial Contact)
Press Relations, 949-851-1085
pr@sspsolutions.com
or
SSP Solutions, Inc. (Investor Contact)
Thomas E. Schiff, 949-851-1085
tom.schiff@sspsolutions.com