Operating and Net Profit Achieved in 2007 Fourth Quarter ISMANING,
Germany, March 18 /PRNewswire-FirstCall/ -- SCM Microsystems, Inc.
(Nasdaq: SCMM; Prime Standard: SMY), a leading provider of
solutions that open the Digital World, today announced final
results for its fourth quarter and fiscal year ended December 31,
2007. Fourth Quarter 2007 Results Revenue from continuing
operations in the fourth quarter of 2007 was $9.7 million, up 3%
from $9.4 million in the fourth quarter of 2006. By product
segment, fourth quarter 2007 PC Security revenue, reflecting sales
of smart card readers and other products for secure network and
physical access, was $7.3 million, flat with PC Security sales
levels in the fourth quarter of 2006. Digital Media Reader revenue,
reflecting sales of OEM digital media reader technology, was $2.4
million, up 12% from $2.1 million in the fourth quarter of 2006.
Gross margin in the fourth quarter of 2007 was 43%, compared with
gross margin of 42% in the fourth quarter of 2006. Operating
expenses in the fourth quarter of 2007, as determined in accordance
with GAAP, were $4.1 million, compared with GAAP operating expenses
of $3.5 million in the fourth quarter of 2006, which included
amortization of intangibles and restructuring and other charges of
$0.2 million. As determined in accordance with GAAP, operating
income for the fourth quarter of 2007 was $0.1 million, compared
with operating income of $0.4 million in the year ago quarter. As
expected, interest income had a positive effect on the Company's
financial results in the fourth quarter and resulted in GAAP income
from continuing operations of $0.4 million, or $0.02 per share,
compared with GAAP income from continuing operations of $0.7
million, or $0.05 per share, in the fourth quarter of 2006.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) in the fourth quarter of 2007 was $27,000, compared with a
EBITDA of $0.5 million in the fourth quarter of 2006. (See
reconciliation of EBITDA to GAAP accounting contained within this
press release.) Fiscal 2007 Results Revenue for the year ended
December 31, 2007 was $30.4 million, down 9% from $33.6 million for
the year ended December 31, 2006. By product segment, PC Security
revenue was $24.4 million, up 3% from $23.7 million in fiscal 2006.
Digital Media Reader revenue was $6.0 million in fiscal 2007, down
39% from $9.9 million in fiscal 2006, primarily as a result of the
loss of a major customer at the beginning of 2007, which higher
sales in the second half of the year did not offset. Gross margin
in 2007 was 42%, compared with 35% in 2006. Loss from continuing
operations in 2007, as determined in accordance with GAAP, was
($3.3) million, or ($0.21) per share, compared with GAAP loss from
continuing operations of ($7.7) million, or ($0.49) per share in
2006. Total net loss for fiscal year 2007, as determined in
accordance with GAAP, was ($1.9) million, or ($0.12) per share,
including a loss from discontinued operations of ($0.2) million and
a gain on the sale of discontinued operations of $1.6 million,
compared to total net income of $1.0 million in fiscal year 2006,
or $0.07 per share, including a gain from discontinued operations
of $3.5 million and a gain on the sale of discontinued operations
of $5.2 million. Cash and cash equivalents at December 31, 2007
were $32.4 million, compared with cash and cash equivalents of
$36.9 million at December 31, 2006. "During 2007, SCM maintained
momentum in an increasingly competitive environment, while
continuing to leverage the increased efficiency of our
organization. Improved gross margins and lower expenses helped
narrow our net loss for the year," said Stephan Rohaly, chief
financial officer of SCM Microsystems. "Over the past several
months we have strengthened our management team with broader
industry experience, added new sales resources to expand our
geographic coverage, and begun to put in place a growth strategy
based on delivering new products for new and existing markets,"
said Felix Marx, chief executive officer of SCM Microsystems.
"Clearly, it will take time and dedicated focus to create the
sustainable growth that we desire. Our strategy builds on SCM's
strengths as an innovative developer and trusted supplier of smart
card readers to the financial, government and enterprise sectors.
Our aim is to establish SCM as a significant supplier of Near Field
Communication and other contactless reader technology for fast
growing global markets such as electronic and mobile payments."
Guidance for 2008 For fiscal 2008 as a whole, the Company expects
to achieve revenue growth between 25% and 35%, which would result
in revenues of $38 million to $41 million for the year. The
Company's projections of revenue growth are based on the planned
release of new products currently under development, which are
forecasted to generate increased sales volumes beginning in the
second half of 2008. The Company further expects base operating
expenses between $17 million and $20 million in 2008, including
anticipated further investments in sales resources and development
activities to address growth initiatives. Within these ranges, the
Company currently expects to record both operating and net profit
from continuing operations for the full 2008 fiscal year.
Additional Information SCM does not plan to hold a conference call
or webcast to discuss the results of its 2007 fourth quarter and
year end. For more information on SCM's fiscal 2007 results, please
see the Company's Annual Report on Form 10-K for year ended
December 31, 2007, filed with the U.S. Securities and Exchange
Commission on March 18, 2008. About SCM Microsystems SCM
Microsystems is a leading provider 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 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, the statements by Felix Marx and our statements
contained above regarding our expectations for the Company's fiscal
year 2008 revenue growth, operating expenses and expected operating
and net profit from continuing operations. These statements are
based on current expectations or beliefs, as well as a number of
preliminary assumptions about future events that are subject to
risks and uncertainties that may cause actual results to differ
materially from those contemplated herein. Our financial results
may not meet expectations. Readers should not unduly rely on these
forward-looking statements, which are not a guarantee of future
performance and are subject to a number of risks and uncertainties,
many of which are outside our control, that could cause our actual
business and operating results to differ, including, but not
limited to, our ability to grow market share and revenues based on
a strategy of developing and selling new products into current and
new markets; our ability to successfully develop and introduce new
products that satisfy the evolving and increasingly complex
requirements of customers; the fact that sales to a relatively
small number of customers historically have accounted for a
significant percentage of the Company's revenue; the markets in
which we participate or target may not grow, converge or
standardize at anticipated rates or at all, including the
financial, government and enterprise security markets that we are
targeting; 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 filed with the
U.S. Securities and Exchange Commission, including our Annual
Report on Form 10-K for the year ended December 31, 2007. All trade
names are trademarks or registered trademarks of their respective
holders. --Financials Follow-- SCM MICROSYSTEMS, INC. Condensed
Consolidated Statements of Operations (in thousands, except per
share data) (unaudited, except for twelve months figures) Three
months ended Twelve months ended December 31, December 31, 2007
2006 2007 2006 Revenues $9,714 $9,428 $30,435 $33,613 Cost of
revenues 5,580 5,505 17,781 21,756 Gross profit 4,134 3,923 12,654
11,857 Operating expenses: Research and development 795 652 3,123
3,767 Sales and marketing 1,802 1,444 6,603 7,498 General and
administrative 1,479 1,210 7,132 7,548 Amortization of intangible
assets -- 170 272 666 Restructuring and other charges (credits) --
54 (4) 1,120 Total operating expenses 4,076 3,530 17,126 20,599
Income (loss) from operations 58 393 (4,472) (8,742) Interest and
other, net 294 316 1,293 1,125 Income (loss) from continuing
operations before income taxes 352 709 (3,179) (7,617) Benefit
(provision) for income taxes 11 (26) (113) (73) Income (loss) from
continuing operations 363 682 (3,292) (7,690) Gain (loss) from
discontinued operations (13) 715 (215) 3,508 Gain (loss) on sale of
discontinued operations 17 (63) 1,586 5,224 Net income (loss) $367
$1,334 $(1,921) $1,042 Loss per share from continuing operations:
Basic and diluted $0.02 $0.05 $(0.21) $(0.49) Gain (loss) per share
from discontinued operations: Basic and diluted $0.00 $0.04 $0.09
$0.56 Net income (loss) per share: Basic and diluted $ 0.02 $ 0.09
$(0.12) $0.07 Shares used in computing loss per share: Basic 15,736
15,683 15,725 15,638 Diluted 15,759 15,714 15,725 15,638 Note:
Financial results contained in this release reflect continuing
operations of the Company's PC Security and Digital Media Reader
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. SCM MICROSYSTEMS, INC. Reconciliation of
EBITDA Calculation to GAAP Accounting (in thousands) (unaudited)
Three Months Ended Twelve Months Ended December 31, December 31,
2007 2006 2007 2006 EBITDA $27 $523 $(4,238) $(7,931) Interest
income 405 407 1,639 1,350 Provision for income taxes 11 (26) (113)
(73) Depreciation and amortization (80) (222) (580) (1,036) Net
income (loss) from continuing operations $363 $ 682 $(3,292)
$(7,690) We conduct a significant amount of our business in Europe,
we are dually traded on the U.S. Nasdaq and German Prime Standard
stock exchanges, our corporate headquarters are located in Germany
and the majority of our investors are German-based. Based on these
factors, we have determined that EBITDA is a relevant measure of
performance for our company, as it is a metric commonly used among
companies doing business in Europe and is therefore a helpful tool
for communicating our performance to our investors and analysts and
for comparisons to other companies in Europe and within our
industry. EBITDA should be considered in addition to, but not as a
substitute for, other measures of financial performance determined
in accordance with accounting principles generally accepted in the
United States. While we believe that EBITDA is useful within the
context described above, it is in fact incomplete and not a measure
that should be used to evaluate the full performance of the Company
or its prospects. Such evaluation needs to consider all of the
complexities associated with our business including, but not
limited to, how past actions are affecting current results and how
they may affect future results, how we have chosen to finance the
business and how regulations and the other aforementioned items
affect the final amounts that are or will be available to
shareholders as a return on their investment. Net income determined
in accordance with U.S. GAAP is the most complete measure available
today to evaluate all elements of our performance. Similarly, our
Consolidated Statement of Cash Flows, as presented in our most
recent filings with the Securities and Exchange Commission, provide
the full accounting for how we have decided to use resources
provided to us from our customers, lenders and shareholders. SCM
MICROSYSTEMS, INC. Condensed Consolidated Balance Sheets (in
thousands) December 31, December 31, ASSETS 2007 2006 Current
assets: Cash, cash equivalents and short-term investments $ 32,444
$ 36,902 Accounts receivable, net 8,638 6,583 Inventories 2,738
1,927 Other current assets 1,455 2,489 Total current assets 45,275
47,901 Property, equipment and other assets, net 3,289 3,182
Intangibles, net -- 272 Total assets $ 48,564 $ 51,355 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable
$3,063 $4,572 Accrued expenses and other current liabilities 8,185
11,362 Total current liabilities 11,248 15,934 Long-term income
taxes payable 200 -- Deferred tax liability 77 103 Stockholders'
equity 37,039 35,318 Total liabilities and stockholders' equity $
48,564 $ 51,355 DATASOURCE: SCM Microsystems, Inc. CONTACT: Stephan
Rohaly, Chief Financial Officer, +49 89 95 95 5101, , or Darby Dye,
Investor Relations-US, +1-510-249-4883, , both of SCM Microsystems,
Inc. Web site: http://www.scmmicro.com/
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