FREMONT, Calif., Aug. 10 /PRNewswire-FirstCall/ -- SCM
Microsystems, Inc. (Nasdaq: SCMM; Prime Standard: SMY), a leading
provider of solutions that open the Digital World, today announced
results for its second quarter ended June 30, 2005. Revenues in the
second quarter of 2005 were $10.2 million, within the range of
management guidance of $8 million to $12 million. This compares
with revenues of $11.5 million in the second quarter of 2004. By
product segment, second quarter 2005 revenues included $4.5 million
from sales of Digital TV security modules, $3.6 million from sales
of smart card readers and other products for PC and network
security, and $2.1 million from sales of OEM flash media reader
technology. Gross margin in the second quarter of 2005 was 32%,
below the range of management guidance of 38% to 41%, and reflected
$0.3 million of tooling costs for new chip production as well as
pricing pressure and the mix of products sold during the quarter.
Operating expenses, as reported in accordance with GAAP, were $7.3
million in the second quarter of 2005, including net charges for
amortization of intangibles, restructuring and other items of $0.1
million. This represents a decrease of 18% from expenses of $8.9
million in the second quarter of 2004, which included $0.1 million
of net charges for amortization, restructuring and other items.
Operating loss for the quarter, as reported in accordance with
GAAP, was $(4.1) million, compared with operating loss of $(7.2)
million in the year ago quarter. Loss from continuing operations
for the second quarter of 2005, as reported in accordance with
GAAP, was $(3.5) million, or $(0.23) per share, compared with loss
from continuing operations of $(6.9) million, or $(0.44) per share,
in the second quarter of 2004. Business and Market Highlights
During the Quarter During the second quarter of 2005, SCM's
achievements included: -- Recognition of the Company's first
significant revenue from sales of OpenCable(TM) CableCARD(TM)
modules for digital TV decryption in South Korea. -- Certification
from South Korea's Telecommunications Technology Association (TTA)
of the Company's CableCARD modules carrying conditional access
security software from Conax AS. SCM's modules are the first in the
market to obtain TTA certification that includes the required copy
protection function. -- Selection by a fourth major operator in
South Korea, Qrix Communications, to supply CableCARD modules for
the rollout of digital cable television pay-TV services to
subscribers. It is expected that the Korean government will deploy
digital cable television to between six and nine million households
in Korea over the next several years. In November 2001, the South
Korean government selected OpenCable as the technical standard for
securing the country's digital cable TV broadcasts. By adopting
this open standards-based broadcast security model, the South
Korean government hopes to create a digital television industry
that is both competitive for consumers and profitable for
operators. Robert Schneider, chief executive officer of SCM
Microsystems, commented, "Our hard work produced positive results
in the second quarter, as we added another major cable operator,
achieved the first certification in the South Korean digital TV
industry for our CableCARD modules and recognized our first
significant revenue from this market. Our focus on long-term goals
is a critical element in our PC/network security strategy as well,
as we continue to build the technology and relationships required
to be the premier supplier of smart card readers for personal ID
and security programs in the enterprise, healthcare, financial and
government sectors." For the third quarter of 2005, management
estimates that revenues will be in the range of $8 million to $12
million, reflecting continued pressure on sales of Digital TV
products in Europe and a lack of visibility into the timing of
anticipated digital security projects in the U.S. and Europe. Gross
margin is expected to be between 38% and 41%. Within this range of
revenue and gross margin, SCM expects to record an operating loss
in the third quarter of 2005. SCM does not plan to hold a
conference call or webcast to discuss the results of its 2005
second quarter. For more information on SCM's second quarter
results, please see the Company's Quarterly Report on Form 10-Q for
quarter ended June 30, 2005, filed with the U.S. Securities and
Exchange Commission. NOTE: The unaudited financial results
contained within this release for the second quarter ended June 30,
2005 reflect continuing operations for the Company's Security
business only, as SCM sold its retail Dazzle(TM)-branded digital
media and video business in July of 2003. SCM's continuing Security
business is focused on enabling secure access to digital content
and services through the digital television and PC platforms.
Financial results for the retail digital media and video business
are being treated as discontinued operations. 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 its smart card reader technology for PC, network and
physical access and conditional access modules for secure digital
TV decryption to OEM customers in the government, financial,
enterprise and broadcasting markets worldwide. Global headquarters
are in Fremont, California, with European headquarters 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 statements are
subject to risks and uncertainties which may cause actual results
to differ materially from those contemplated herein. These include,
without limitation, our statements regarding our expectations for
revenues, gross margin and operating performance in the third
quarter of 2005. Actual results could differ materially. Our
financial results may not meet expectations. Other risks and
uncertainties that could cause our actual business and operating
results to differ include, but are not limited to our ability to
grow based on a strategy of participating in multiple early stage
markets; our ability to successfully develop and introduce new
products that satisfy the evolving and increasingly complex
requirements of customers; 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; and competitors could take market share
or create pricing pressure. 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 for the
year ended December 31, 2004 and our Quarterly Report on Form 10-Q
for the quarter ended June 30, 2005, both filed with the U.S.
Securities and Exchange Commission. NOTE: All trade names are
trademarks or registered trademarks of their respective holders.
SCM MICROSYSTEMS, INC. Condensed Consolidated Statements of
Operations (in thousands, except per share data) (unaudited) Three
months ended Six months ended June 30, June 30, 2005 2004 2005 2004
Revenues $10,241 $11,511 $21,023 $24,741 Cost of revenues 6,984
9,793 14,132 17,618 Gross margin 3,257 1,718 6,891 7,123 Operating
expenses: Research and development 2,276 2,797 4,725 5,553 Sales
and marketing 2,629 3,054 5,064 6,372 General and administrative
2,288 2,949 4,759 5,774 Amortization of intangible assets 174 290
350 593 Restructuring and other charges (credits) (26) (149) 163
(58) Total operating expenses 7,341 8,941 15,061 18,234 Loss from
operations (4,084) (7,223) (8,170) (11,111) Interest and other, net
517 374 1,676 773 Loss from continuing operations before income
taxes (3,567) (6,849) (6,494) (10,338) Benefit (provision) for
income taxes 90 (10) 177 (126) Loss from continuing operations
(3,477) (6,859) (6,317) (10,464) Loss from discontinued operations
(133) (79) (269) (108) Gain (loss) on sale of discontinued
operations (40) (35) 15 62 Net loss $(3,650) $(6,973) $(6,571)
$(10,510) Loss per share from continuing operations: Basic and
diluted $(0.23) $(0.44) $(0.41) $(0.68) Loss per share from
discontinued operations: Basic and diluted $(0.01) $(0.01) $(0.01)
$(0.00) Loss per share: Basic and diluted $(0.24) $(0.45) $(0.42)
$(0.68) Shares used in computing loss per share: Basic and diluted
15,522 15,392 15,504 15,359 SCM MICROSYSTEMS, INC. Condensed
Consolidated Balance Sheets (in thousands) (unaudited) June 30,
December 31, ASSETS 2005 2004 Current assets: Cash, cash
equivalents and short-term investments $36,347 $46,153 Accounts
receivable, net 6,446 8,700 Inventories 6,133 8,319 Other current
assets 2,396 2,336 Total current assets 51,322 65,508 Property,
equipment and other assets, net 5,221 6,059 Intangibles, net 1,222
1,740 Total assets $57,765 $73,307 LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $4,613 $4,790 Accrued
expenses and other current liabilities 14,301 21,557 Total current
liabilities 18,914 26,347 Deferred tax liability 103 131
Stockholders' equity 38,748 46,829 Total liabilities and
stockholders' equity $57,765 $73,307 DATASOURCE: SCM Microsystems,
Inc. CONTACT: Steve Moore, Chief Financial Officer,
+1-510-360-2300, or , or Darby Dye, Investor Relations-US,
+1-510-360-2302, or , or Manfred Mueller, Investor
Relations-Europe, +49 89 9595 5140, or , all of SCM Microsystems,
Inc. Web site: http://www.scmmicro.com/
Copyright