EXHIBIT 99.1
VASCO Reports Results for Fourth Quarter and Full Year 2004
REVENUES INCREASED 50% OVER FOURTH QUARTER AND 31% OVER FULL-YEAR 2003,
RESPECTIVELY, ON RECORD NUMBER OF TOKENS SHIPPED; BACKLOG AT $10.7 MILLION FOR
THE FIRST QUARTER OF 2005, INCLUDING $1.0 MILLION FROM ITS RECENT ACQUISITION OF
AOS-HAGENUK, UP 106% COMPARED TO BACKLOG FOR FIRST QUARTER OF 2004 AND UP 57%
COMPARED TO BACKLOG FOR FOURTH QUARTER 2004. FINANCIAL RESULTS TO BE DISCUSSED
ON CONFERENCE CALL TODAY AT 10:00 A.M. E.S.T.
OAKBROOK TERRACE, Ill., and BRUSSELS, Belgium, February 15, 2005 - VASCO Data
Security International, Inc. (Nasdaq: VDSI) ( www.vasco.com), today reported
financial results for the fourth quarter and full year ended December 31, 2004.
Revenues for the fourth quarter of 2004 increased 50% to $9,298,000 from
$6,196,000 in 2003 and, for the full year 2004, increased 31% to $29,893,000
from $22,866,000 in 2003.
Net income available to common shareholders for the fourth quarter of 2004 was
$481,000, or $0.01 per diluted share and compares to $165,000, or $0.01 per
diluted share in 2003. Net income available to common shareholders for the full
year 2004 was $3,021,000, or $0.09 per diluted share compared to a loss of
$1,715,000, or $0.06 per diluted share in 2003. Net income available to common
shareholders for full year 2003 included a charge of $3,720,000 for the
beneficial conversion option associated with the issuance of the Series D 5%
Cumulative Preferred Stock.
Financial Highlights:
o Results reflect the eighth consecutive quarter of operating profit
and positive earnings before interest, taxes, depreciation and
amortization ("EBITDA").
o Results reflect the fourth consecutive quarter-over-quarter increase
in revenue. Revenue for the fourth quarter 2004 is 26% higher than
the third quarter of 2004.
o Gross profit was $6,032,000 or 65% of revenue for the fourth quarter
and $20,709,000 or 69% of revenue for the full year 2004. Gross
profit was $3,913,000 or 63% of revenue for the fourth quarter and
$13,856,000 or 61% of revenue for the full year 2003.
o Operating expenses for the fourth quarter and full year 2004 were
$4,539,000 and $15,157,000, respectively, an increase of 28% from
$3,547,000 reported for the fourth quarter 2003 and an increase of
19% from $12,733,000 reported for the full year 2003.
o Operating income for the fourth quarter and full year 2004 was
$1,493,000 and $5,552,000, respectively, an increase of $1,127,000,
or 308%, from $366,000 reported for the fourth quarter of 2003 and
an increase of $4,429,000, or 394%, from the $1,123,000 reported for
the full year 2003. Operating income as a percentage of revenue for
the fourth quarter and full year 2004 was 16% and 19%, respectively,
compared to 6% and 5% for the comparable periods in 2003.
o Other expense, which primarily includes exchange gains and losses,
was $538,000 for the fourth quarter 2004 and $539,000 full year 2004
and compares to expense of $261,000 for the fourth quarter of 2003
and income of $115,000 for the full year 2003.
o Income from continuing operations for the fourth quarter and full
year 2004 was $516,000 and $3,253,000, respectively, and compares to
$236,000 and $761,000 reported for the same periods in 2003.
o Net income from total operations for the fourth quarter and for the
full year 2004 was $516,000 and $3,253,000, respectively, an
increase of 94% from $266,000 reported for the fourth quarter of
2003 and an increase of 18% from $2,756,000 reported for the full
year 2003, respectively. Net income from total operations in 2003
included the results of its VACMAN Enterprise business, which was
sold in the third quarter of 2003.
o Earnings before interest, taxes, depreciation and amortization from
continuing operations was $1,186,000 and $5,747,000 for the fourth
quarter and for the full year 2004, respectively, an increase of
240% from $349,000 reported for the fourth quarter of 2003 and an
increase of 150% from $2,299,000 reported for the full year 2003.
o Cash balances at December 31, 2004 totaled $8,220,000 compared to
$8,948,000 and $4,817,000 at September 30, 2004 and December 31,
2003, respectively.
Operational and Other Highlights:
o VASCO wins 196 new customers in Q4 2004 (22 banks and 174 corporate
customers) and 543 for full year 2004. Year-to-date new customers
include 70 new banks and 473 corporate customers.
o VASCO ships approximately 1,065,000 Digipass authentication tokens
in the fourth quarter and approximately 2,835,000 for the full year
2004, an increase of 18% over the number of tokens shipped in full
year 2003. The number of Digipass tokens shipped in the fourth
quarter of 2004 was 405,000 units, or 61%, higher than the 660,000
tokens shipped in the third quarter of 2004.
o Egnatia Bank (Greece), ING Luxemburg and Swedbank (Sweden) to use
VASCO's Digipass for Retail Banking
o VASCO launches VACMAN Middleware 2.3 and Digipass Plug-In for Novel
NMAS Version 3
o VASCO signs new distributors in Ireland, Switzerland and Norway
o VASCO hosts successful first Worldwide Banking Summit. Over 80
Bankers from 21 Countries Attend Banking Summit on October 20 and
21.
o Benelux Channel Summit On October 21 Attracts Over 40 Delegates
"Our strategies to expand the market's awareness of our products are working as
evidenced by our year-over-year and quarter-over-quarter growth in revenue and
the continued expansion of our customer base," said Ken Hunt, VASCO's CEO, and
Chairman. "As we mentioned in earlier quarters, we have increased our investment
in sales and marketing programs and, at the same time, maintained strong
profitability. We expect that we will be able to continue that pattern
throughout 2005 as communicated in the guidance we issued in December 2004."
"The results of the fourth quarter reflect strong growth in our banking market,
especially the consumer banking market," said Jan Valcke, VASCO's President and
COO." The fourth quarter included large volume shipments to both our traditional
strategic banking customers as well as new banking customers. We believe that
our product is very well suited for consumer applications where large quantities
of tokens need to be distributed at an affordable price. The market appears to
agree as interest in and demand for our products continues to grow rapidly. In
addition to the significant increase in Q4 revenues, our backlog for orders to
be shipped in Q1 2005, excluding the backlog from our recent acquisition of
AOS-Hagenuk, is 87% higher than the backlog reported for Q1 2004 and is 43%
higher than Q4 2004. Including the backlog for AOS-Hagenuk, the total backlog
for Q1 2005 is 106% higher than Q1 2004 and is 57% higher than Q4 2004."
Cliff Bown, Executive Vice President and CFO added, "Our balance sheet continues
to strengthen as a result of the strong operating performance. While cash
balances decreased $728,000 or 8% from September 30, 2004 due to tax payments in
the quarter, cash has increased $3,403,000 or 71% from December 31, 2003. Our
working capital increased by 16% in the fourth quarter, from $8,685,000 at
September 30, 2004 to $10,055,000 at December 31, 2004. Days Sales Outstanding
(DSO) in net accounts receivable increased to approximately 59 days at December
31, 2004 from 43 days at September 30, 2004 due in large part to the significant
amount of shipments in the month of December."
Conference Call Details
In conjunction with this announcement, VASCO Data Security International, Inc.
will host a conference call today, February 15, 2005, at 10:00 a.m. EST - 16:00h
CET. During the Conference Call, Mr. Ken Hunt, CEO, Mr. Jan Valcke, President
and COO, and Mr. Cliff Bown, CFO, will discuss VASCO's Results for the Fourth
Quarter and Full Year 2004.
To participate in this Conference Call, please dial one of the following
numbers:
USA/Canada: +1 800-322-0079
International: +1 973-409-9258
And mention access code: VASCO to be connected to the Conference Call.
The Conference Call is also available in listen-only mode on www.vasco.com.
Please log on 15 minutes before the start of the Conference Call in order to
download and install any necessary software. The recorded version of the
Conference Call will be available on the VASCO website 24 hours a day.
VASCO DATA SECURITY INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
-------------------------- ------------------------
2004 2003 2004 2003
------------ ------------ ------------ ----------
Net revenues $ 9,298 $ 6,196 $ 29,893 $ 22,866
Cost of goods sold 3,266 2,283 9,184 9,010
------------ ------------ ------------ ----------
Gross profit 6,032 3,913 20,709 13,856
Operating costs:
Sales and marketing 2,942 2,066 9,160 6,987
Research and development 787 549 2,835 2,281
General and administrative 810 931 3,194 3,424
Restructuring costs (recovery) - - (32) -
Non-cash compensation - 1 - 41
------------ ------------ ------------- ----------
Total operating costs 4,539 3,547 15,157 12,733
Operating income from continuing operations 1,493 366 5,552 1,123
Interest income (expense), net 32 39 120 (80)
Other income, net (538) (261) (539) 115
------------ ------------ ------------ ----------
Income from continuing operations before income taxes 987 144 5,133 1,158
Provision for income taxes 471 (92) 1,880 397
------------ ------------ ------------ ----------
Income from continuing operations 516 236 3,253 761
Discontinued operations:
Income (loss) from discontinued operations - 41 - 638
Gain on sale of discontinued operations - (11) - 1,357
------------ ------------ ------------ ----------
Net income 516 266 3,253 2,756
Preferred stock beneficial conversiom option - (3,720)
Preferred stock accretion and dividends (35) (101) (232) (751)
------------ ------------ ------------- -----------
Net income (loss) available to common shareholders $ 481 $ 165 $ 3,021 $ (1,715)
============ ============ ============= ===========
Basic net income (loss) per common share
Income (loss) from continuing operations $ 0.02 $ 0.01 $ 0.09 $ (0.13)
Income from discontinued operations - - - 0.07
------------ ------------ ------------ ----------
Net income (loss) $ 0.02 $ 0.01 $ 0.09 $ (0.06)
============ ============ ============ ==========
Diluted net income (loss) per common share
Income (loss) from continuing operations $ 0.01 $ 0.01 $ 0.09 $ (0.13)
Income from discontinued operations - - - 0.07
------------ ------------ ------------ ------------
Net income (loss) $ 0.01 $ 0.01 $ 0.09 $ (0.06)
============ ============ ============ ============
Weighted average common shares outstanding:
Basic 33,167 30,424 32,216 29,270
============ ============ ============ ============
Diluted 34,568 31,315 33,128 29,270
============ ============ ============ ============
VASCO DATA SECURITY INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
UNAUDITED
December 31, December 31,
2004 2003
------------- -------------
ASSETS
CURRENT ASSETS:
Cash $ 8,138 $ 4,817
Restricted cash 82 -
Accounts receivable, net of allowance for doubtful accounts
of $160 and $470 in 2004 and 2003 5,965 2,523
Inventories, net 1,346 1,075
Prepaid expenses 791 476
Deferred income taxes 23 70
Foreign sales tax receivable 313 362
Other current assets 464 335
------------ ------------
Total current assets 17,122 9,658
Property and equipment, net 838 882
Intangible assets, net 1,134 1,378
Goodwill 250 250
Note receivable and investment in SSI 760 1,132
Other assets 146 83
------------ ------------
Total assets $ 20,250 $ 13,383
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,065 $ 1,698
Deferred revenue 620 386
Accrued wages and payroll taxes 1,602 1,515
Income taxes payable 435 (197)
Other accrued expenses 1,345 1,038
------------ ------------
Total current liabilities 7,067 4,440
Long term deferred warranty 152 -
STOCKHOLDERS' EQUITY:
Series D Convertible Preferred Stock 1,504 5,786
Common stock 34 30
Additional paid-in capital 51,825 47,167
Accumulated deficit (40,672) (43,693)
Accumulated other comprehensive income (loss) -
cumulative translation adjustment 340 (347)
------------ ------------
Total stockholders' equity 13,031 8,943
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,250 $ 13,383
============ ============
Reconciliation of EBITDA from continuing operations to net income from
continuing operations (in thousands);
THREE MONTHS TWELVE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
---------------------------------------------------
2004 2003 2004 2003
---------- ----------- ---------- ----------
(unaudited) (unaudited)
EBITDA $ 1,186 $ 349 $ 5,747 $ 2,299
Interest (income) expense, net (32) (39) (120) 80
Tax provision 471 (92) 1,880 397
Depreciation and amortization 231 244 734 1,061
---------- ----------- ---------- ----------
Net income $ 516 $ 236 $ 3,253 $ 761
========== =========== ========== ==========
ABOUT VASCO: VASCO designs, develops, markets and supports patented "Identity
Authentication" products for e-business and e-commerce. VASCO's Identity
Authentication software is delivered via its Digipass security products, small
"calculator" hardware devices carried by an end user, or in a software format on
mobile phones, other portable devices, and PCs. For user access control, VASCO's
VACMAN products guarantee that only designated Digipass users get access to the
application. VASCO's target markets are the applications and their several
hundred million users that utilize fixed passwords as security. VASCO's
time-based system generates a "one-time" password that changes with every use,
and is virtually impossible to hack, or break. With approximately 13.5 million
Digipass products sold and delivered, VASCO has established itself as a
world-leader for strong Identity Authentication with over 350 international
financial institutions and over 1,500 blue-chip corporations and governments
located in more than 80 countries.
Forward Looking Statements
Statements made in this news release that relate to future plans, events or
performances are forward-looking statements. Any statement containing words such
as "believes," "anticipates," "plans," "expects," and similar words, is
forward-looking, and these statements involve risks and uncertainties and are
based on current expectations. Consequently, actual results could differ
materially from the expectations expressed in these forward-looking statements.
Reference is made to the Company's public filings with the US Securities and
Exchange Commission for further information regarding the Company and its
operations.
For more information contact:
Jochem Binst, +32 2 456 9810, jbinst@vasco.com