SCM Microsystems Announces Expected Fourth Quarter 2006 Results Including Operating Profit
February 07 2007 - 2:30AM
PR Newswire (US)
FREMONT, Calif., Feb. 7 /PRNewswire-FirstCall/ -- SCM Microsystems,
Inc. (Nasdaq: SCMM; Prime Standard: SMY), a leading provider of
solutions that open the Digital World, today updated guidance with
respect to its expected results for the fourth quarter ended
December 31, 2006. Highlights of the fourth quarter are expected to
include: -- Revenue at the high end of management's previous
guidance of $8.5 million to $9.5 million; -- Gross margin of
approximately 40%, above management's previous guidance of the high
30% range; -- A significant reduction in GAAP operating expenses to
between $3.3 million and $3.6 million; and -- A GAAP operating
profit in an amount yet to be determined. SCM's expected financial
results for the fiscal 2006 fourth quarter and final results for
the fourth quarter of fiscal 2005 reflect continuing operations of
the Company's PC Security and Flash Media Interface businesses
only. The Company completed the sale of its Digital TV solutions
business in May 2006; therefore, financial results for the Digital
TV solutions business are being accounted for as discontinued
operations. Revenues from continuing operations in the fourth
quarter of 2006 are expected to be at the high end of the range of
previous management guidance of $8.5 million to $9.5 million,
compared with $7.4 million in the fourth quarter of 2005. The
increase in revenue in the fourth quarter was driven by seasonally
greater demand that resulted in a more than 50% increase in sales
of smart card readers and other products for applications such as
secure network and facility access for military personnel and
corporate enterprises, as well as e-passport authentication.
Additionally, the Company expects that revenues for the full year
2006 will grow by approximately 20% compared with 2005, to above
$33 million. Gross margin in the fourth quarter of 2006 is expected
to be approximately 40%, above previous management guidance of the
high 30% range, primarily as a result of reduced operations
personnel costs and tighter inventory control. Operating expenses
in the fourth quarter of 2006, as calculated in accordance with
GAAP, are expected to be between $3.3 million and $3.6 million,
compared with average quarterly GAAP operating expenses in the
first three quarters of 2006 of $5.7 million. Management's previous
guidance was for expenses to decrease below $4.0 million. Lower
expense levels in the fourth quarter of 2006 primarily reflect the
full benefit of the consolidation and outsourcing actions taken by
the Company earlier in the year, and also include the one-time
positive effects of releases to expense accruals and customer
contributions to research and development expenses, totaling
approximately $0.3 million. For the fourth quarter of fiscal 2006,
the Company expects to record a GAAP operating profit, the amount
of which has not yet been determined, compared with GAAP operating
loss of $2.6 million in the fourth quarter of 2005. The Company
further expects cash and cash equivalents as of December 31, 2006
to be approximately $37 million after the release of $2.0 million
restricted cash in the fourth quarter of 2006, compared with $36.3
million as of September 30, 2006. Robert Schneider, chief executive
officer of SCM Microsystems, commented, "As planned, we have been
able to significantly reduce operating expenses in the fourth
quarter by completing the consolidation of our corporate finance
and compliance functions into our German office and the outsourcing
of our manufacturing. We have also continued to compete
successfully in the financial, enterprise and government security
markets with our smart card readers, while strengthening margins
for these products. These strategies have resulted in an expected
operating profit in the fourth quarter. We believe that continuing
to leverage this business model should allow us to achieve 15 to 20
percent revenue growth in fiscal 2007 as well as operating profit
for 2007 as a whole. Both of these targets are based on anticipated
increases in sales of our smart card readers in the second half of
the year from the expected expansion of e-passport and e-health
programs, combined with the momentum we expect to be able to
continue in the government, enterprise and financial sectors." SCM
has not yet completed its review of its results for the fourth
quarter or fiscal year 2006 and the Company's auditors have not
completed their audit of such results. Therefore the expected
results set forth in this press release are based only on a
preliminary review by the Company of its results for the fourth
quarter. Accordingly, the Company's actual results may differ from
those set forth herein. SCM expects to announce full results for
its fourth quarter and fiscal year 2006 following the completion of
its annual audit and the filing of the Company's Annual Report on
Form 10-K with the SEC, which is due on or before April 2, 2007.
About SCM Microsystems SCM Microsystems is a leading supplier of
solutions that open the Digital World by enabling people to
conveniently access digital content and services. The company
develops, markets and sells the industry's broadest range of smart
card reader technology for secure PC, network and physical access
and digital media readers for transfer of digital content to OEM
customers in the government, financial, enterprise, consumer
electronics and photographic equipment markets worldwide. Global
headquarters are in Fremont, California and European headquarters
are in Ismaning, Germany. For additional information, visit the SCM
Microsystems web site at http://www.scmmicro.com/. NOTE: This press
release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These
include, without limitation, our statements regarding our
expectations for revenues, gross margin, operating expenses and
operating profit in the fourth quarter of 2006; our expectations
for revenues of at least $33.0 million for fiscal 2006; our
expectations concerning cash and equivalents levels as of December
31, 2006; our implied expectation that we can continue to improve
margin performance for our smart card reader products; our
expectations that operating within our current business model will
enable us to increase revenues 15%-20% in fiscal 2007 and to record
operating profit for the full year 2007; and our expectation for
increased revenues from sales of our smart card readers for
financial, government and enterprise security programs, in
particular e- passport and e-health projects. These statements are
subject to risks and uncertainties which may cause actual results
to differ materially from those contemplated herein. Our financial
results may not meet expectations. Some of the risks and
uncertainties that could cause our actual business and operating
results to differ include, but are not limited to, items discovered
during our review of our full results for the year or during the
audit of such results by our independent accounting firm; our
ability to grow market share and revenues based on a strategy of
participating in specific early stage markets; our ability to
successfully develop and introduce new products that satisfy the
evolving and increasingly complex requirements of customers; our
ability to identify and complete strategic market opportunities;
the markets in which we participate or target may not grow,
converge or standardize at anticipated rates or at all; we may not
successfully compete in the markets in which we participate or
target; competitors could take market share or create pricing
pressure; and we may not be successful in maintaining operating
expenses at current or lower levels. For a discussion of further
risks and uncertainties related to our business, please refer to
our public company reports, including our Annual Report on Form
10-K and Form 10-K/A for the year ended December 31, 2005 filed
with the U.S. Securities and Exchange Commission. All trade names
are trademarks or registered trademarks of their respective
holders. DATASOURCE: SCM Microsystems, Inc. CONTACT: Stephan
Rohaly, Chief Financial Officer, +49 89 9595 5101, or , or Darby
Dye, Investor Relations-US, +1-510-249-4883, or , or Manfred
Mueller, Investor Relations-Europe, +49 89 9595 5140, or , all of
SCM Microsystems, Inc. Web site: http://www.scmmicro.com/
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