SOURCE: ActivIdentity

ActivIdentity

November 19, 2009 07:30 ET

ActivIdentity Reports Fourth Quarter Fiscal 2009 Financial Results

Revenue for the Full Fiscal Year 2009 Increased by 6% to $62.3 Million Over Prior Fiscal Year

FREMONT, CA--(Marketwire - November 19, 2009) - ActivIdentity Corporation (NASDAQ: ACTI), a global leader in credential management and strong authentication, today, reported revenue for the quarter ended September 30, 2009 of $14.5 million and revenue of $62.3 million for the full fiscal year ended September 30, 2009. Revenue was $15.6 million in the quarter ended September 30, 2008 and $15.4 million in the quarter ended June 30, 2009.

ActivIdentity's net loss for the quarter ended September 30, 2009, was ($0.3) million or ($0.01) per basic and diluted share, compared to a net loss of ($23.1) million, or ($0.50) per basic and diluted share for the three months ended September 30, 2008. Net loss for the quarter ended September 30, 2009 included realized and unrealized gains on foreign exchange totaling $0.2 million, primarily due to the weakening of the U.S. dollar. ActivIdentity's net loss for fiscal 2009 was ($5.5) million, or ($0.12) per basic and diluted share, as compared to a net loss for fiscal 2008 of ($76.5) million, or ($1.67) per basic and diluted share. The fiscal 2008 net loss included an other than temporary impairment on auction rate securities of $21.2 million and a goodwill impairment of $35.9 million.

ActivIdentity's operating loss was ($1.3) million in the quarter ended September 30, 2009 compared to an operating loss of ($4.5) million in the quarter ended September 30, 2008 and ($1.1) million in the quarter ended June 30, 2009. Operating loss in fiscal 2009 was ($7.2) million, as compared to an operating loss of ($56.5) million in fiscal 2008, which included a $35.9 million goodwill impairment.

Adjusted EBITDA was $0.5 million for the quarter ended September 30, 2009 and $2.3 million for the full fiscal year 2009, representing an improvement of $13.2 million over the prior fiscal year. Adjusted EBITDA is a Non-GAAP measure and is defined as Operating Income adjusted for non-recurring and non-cash items such as stock-based compensation expense, depreciation, amortization of intangibles, severance and asset impairments. Adjusted EBITDA in the quarter ended September 30, 2008 was ($2.0) million and $0.9 million in the quarter ended June 30, 2009.

"We are pleased with our financial results for fiscal 2009," said Grant Evans, chief executive officer and chairman of ActivIdentity. "We were able to increase our top line by six percent year over year and generate positive Adjusted EBITDA in this challenging economic environment. We've improved our execution and maintained fiscal discipline over the last several quarters and we will maintain this posture going forward."


Financial Highlights

GAAP RESULTS                   Three Months               Twelve Months
                                   Ended                      Ended
                       -----------------------------   -------------------
(In millions, except    Sep 30     Jun 30    Sep 30     Sep 30     Sep 30
 per share data)         2009       2009      2008       2009       2008
                       --------   --------  --------   --------   --------
Revenues               $   14.5   $   15.4  $   15.6   $   62.3   $   59.0
Net (Loss) Income      $   (0.3)  $    2.1  $  (23.1)  $   (5.5)  $  (76.5)
(Loss) Earnings
 Per Share - Basic     $  (0.01)  $   0.05  $  (0.50)  $  (0.12)  $  (1.67)
(Loss) Earnings
 Per Share - Diluted   $  (0.01)  $   0.05  $  (0.50)  $  (0.12)  $  (1.67)

NON-GAAP RESULTS

Adjusted EBITDA        $    0.5   $    0.9  $   (2.0)  $    2.3   $  (10.9)


ActivIdentity is presenting non-GAAP numbers in this press release as it believes the one time charges for non-recurring items and the non-cash charges distort the period to period results and that investors will benefit from the comparison of information from period to period without these items. Please refer to the GAAP to non-GAAP reconciliation table for further detail. Certain financial results are subject to the application of accounting estimates, especially with regards to fair value accounting. Management has used what it believes to be appropriate valuation techniques to assess the fair value of impaired investments and the fair value of undelivered elements in multiple element arrangements.

Conference Call Details

ActivIdentity will host its Fourth Quarter conference call on Thursday, November 19, at 9:00 a.m. Eastern Standard Time / 6:00 a.m. Pacific Standard Time.

To access the conference call within the U.S. or Canada, please dial (866) 393-1796 and enter conference ID 35100820. To access the conference call outside the U.S. or Canada please dial (706) 679-9681 and enter conference ID 35100820.

A replay of the conference call will be available approximately two hours after the conclusion of the call at www.actividentity.com.

About ActivIdentity

ActivIdentity Corporation is a global leader in credential management and strong authentication, providing solutions to confidently establish a person's identity when interacting digitally. For more than two decades the company's experience has been leveraged by security-minded organizations in large-scale deployments such as the U.S. Department of Defense, Nissan, and Saudi Aramco. The company's customers have issued more than 100 million credentials, securing the holder's digital identity. ActivIdentity is headquartered in Silicon Valley, California. For more information, visit www.actividentity.com.

ActivIdentity is a registered trademark in the United States and / or other countries. All other trademarks are the property of their respective owners in the United States and / or other countries.

Safe Harbor Statement

The statements in this press release that are not historical facts are forward-looking statements that involve risks and uncertainties including, but not limited to, statements regarding ActivIdentity's ability to achieve its fiscal year guidance and continued customer acceptance of its products. These risks and uncertainties include risks relating to uncertainty in the economy and its impact on customer deployments of our products, customer adoption of ActivIdentity's new products, continued expense reductions from ActivIdentity's various cost control measures, changes to our management team, the use of estimates and assumptions in our financial reporting, and other risks identified under the caption "Risk Factors" in our most recent Annual Report on Form 10-K, and as may be amended in subsequent Quarterly Reports on Form 10-Q, which are filed with the United States Securities and Exchange Commission (SEC). Copies of these filings are available from us and on the SEC website at www.sec.gov. Actual results, events and performance may differ materially from our forward-looking statements and final results may vary from our preliminary reports. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. ActivIdentity disclaims any intention to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.


                        ACTIVIDENTITY CORPORATION
              CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS
                              (In thousands)


                                              September 30,  September 30,
                                                  2009           2008
                                              -------------  -------------
                                                                  (1)
ASSETS
Current assets:
  Cash and cash equivalents                   $      75,624  $      70,173
  Short-term investments                              3,100          9,656
  Accounts receivable, net of allowance
   for doubtful accounts of $261 and $317            13,983         11,792
  Inventories, net                                      701          1,760
  Prepaid and other current assets                      556          1,696
                                              -------------  -------------
    Total current assets                             93,964         95,077
Restricted cash                                       1,746             --
Investments                                          11,752         11,752
Property and equipment, net                           2,353          2,877
Other intangible assets, net                          1,842          4,150
Other long-term assets                                2,920          3,745
                                              -------------  -------------
    Total assets                              $     114,577  $     117,601
                                              =============  =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                            $       1,853  $       1,652
  Accrued compensation and related benefits           5,507          5,935
  Current portion of accrued restructuring
   liability                                            642            616
  Accrued and other current liabilities               3,493          3,682
  Current portion of deferred revenue                12,574         11,024
                                              -------------  -------------
    Total current liabilities                        24,069         22,909
Deferred revenue, net of current portion              1,240          1,125
Accrued restructuring liability, net of
 current portion                                        325            962
Long-term deferred rent                                 114            430
Other long-term liabilities                             582          2,517
                                              -------------  -------------
    Total liabilities                                26,330         27,943
                                              -------------  -------------
Minority interest                                       311            304
Commitments and contingencies                            --             --
Stockholders' equity:
  Preferred stock, $0.001 par value:
   10,000 shares authorized, none
   issued and outstanding                                --             --
  Common stock, $0.001 par value: 75,000
   shares authorized, 45,866 and 45,786
   issued and outstanding                                46             46
  Additional paid-in capital                        429,105        426,141
  Accumulated deficit                              (328,599)      (323,053)
  Accumulated other comprehensive loss              (12,616)       (13,780)
                                              -------------  -------------
    Total stockholders' equity                       87,936         89,354
                                              -------------  -------------
    Total liabilities and stockholders'
     equity                                   $     114,577  $     117,601
                                              =============  =============

(1) Derived from Audited Consolidated Financial Statements





                        ACTIVIDENTITY CORPORATION
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
                                   LOSS
                  (In thousands, except per share data)


                                              Year Ended September 30,
                                         ---------------------------------
                                           2009        2008        2007
                                         ---------   ---------   ---------
Revenue:
  Software                               $  23,975   $  19,589   $  19,363
  Hardware                                  15,784      15,078      16,894
  Service                                   22,562      24,342      23,296
                                         ---------   ---------   ---------
    Total revenue                           62,321      59,009      59,553
                                         ---------   ---------   ---------
Cost of revenue:
  Software                                   4,179         963       1,303
  Hardware                                   7,954       9,551       9,036
  Service                                    7,677      10,779       7,267
  Amortization of acquired developed
   technology and patents                    2,168       2,380       2,949
                                         ---------   ---------   ---------
    Total cost of revenue                   21,978      23,673      20,555
                                         ---------   ---------   ---------
Gross profit                                40,343      35,336      38,998
                                         ---------   ---------   ---------
Operating expenses:
  Sales and marketing                       19,572      25,602      25,282
  Research and development                  15,053      18,867      19,935
  General and administration                12,769      11,380      12,124
  Restructuring expense (net of
   adjustments)                                 --         (70)         --
  Amortization of acquired intangible
   assets                                      140         165         186
  Write-down of goodwill                        --      35,874          --
                                         ---------   ---------   ---------
    Total operating expenses                47,534      91,818      57,527
                                         ---------   ---------   ---------
Loss from operations                        (7,191)    (56,482)    (18,529)
                                         ---------   ---------   ---------
Other income (expense):
  Interest income, net                       1,710       4,659       6,208
  Other income (expense), net                 (508)    (25,190)      3,440
                                         ---------   ---------   ---------
    Total other income (expense), net        1,202     (20,531)      9,648
                                         ---------   ---------   ---------
Loss before income tax and minority
 interest                                   (5,989)    (77,013)     (8,881)
Income tax provision                           344         506        (429)
Minority interest                               99          50          12
                                         ---------   ---------   ---------
Net loss                                 $  (5,546)  $ (76,457)  $  (9,298)
                                         =========   =========   =========
Net loss per share                       $   (0.12)  $   (1.67)  $   (0.20)
Shares used to compute basic and
 diluted net loss per share                 45,814      45,770      45,694
Other comprehensive income (loss):
  Net loss                               $  (5,546)  $ (76,457)  $  (9,298)
  Unrealized gain (loss) on short-term
   investment, net                             152      (1,075)        394
  Reclassification of unrealized loss
   on short-term investments                    --         945          --
  Foreign currency translation gain
   (loss)                                    1,012       1,748      (3,321)
  Reclassification of currency
   translation loss on liquidation of
   investments in foreign entity                --       1,946          --
                                         ---------   ---------   ---------
Comprehensive loss                       $  (4,382)  $ (72,893)  $ (12,225)
                                         ---------   ---------   ---------





                        ACTIVIDENTITY CORPORATION
        CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS
                              (In thousands)


                                              Year Ended September 30,
                                         ---------------------------------
                                           2009        2008        2007
                                         ---------   ---------   ---------
Cash flows from operating activities:
  Net loss                               $  (5,546)  $ (76,457)  $  (9,298)
  Adjustments to reconcile net loss
   to net cash used in operating
   activities:
    Depreciation and amortization
     of fixed assets                         1,243       1,566       1,576
    Amortization of acquired developed
     technology and patents                  2,168       2,380       2,949
    Un-realized foreign exchange
     (gain) loss                             1,558       1,782      (3,610)
    Amortization of acquired intangible
     assets                                    140         165         186
    Stock-based compensation expense         3,074       2,874       2,518
    Loss on disposal of property and
     equipment                                  45          24          25
    Currency translation loss on
     liquidation of investments in
     foreign entity                             --       1,946          --
    Goodwill impairment charge                  --      35,874          --
    Investment impairment charge                --      21,209          --
    Minority interest in ActivIdentity
     Europe S.A.                               (99)        (50)        (12)
    Changes in:
      Accounts receivable                   (1,854)      2,643       4,254
      Inventories                            1,044         402        (313)
      Prepaid and other current assets      (1,542)        872         924
      Long-term income taxes receivable      2,428      (3,074)         --
      Accounts payable                         163        (444)       (135)
      Accrued compensation and related
       benefits                               (485)       (838)          4
      Accrued restructuring liability         (611)       (729)       (710)
      Accrued and other liabilities         (2,447)      2,598      (1,896)
      Deferred revenue                       1,395        (872)     (2,065)
                                         ---------   ---------   ---------
    Net cash provided (used) in
     operating activities                      674      (8,129)     (5,603)
                                         ---------   ---------   ---------
Cash flows from investing activities:
  Purchases of property and equipment
   (net)                                      (760)       (307)     (2,099)
  Purchases of short-term investments           --     (37,245)   (156,721)
  Proceeds from sales and maturities
   of short-term investments                 6,525      85,165     182,795
  Restricted Cash Long Term                 (1,458)         --          --
  Other long-term assets                        25         136         (83)
                                         ---------   ---------   ---------
    Net cash provided by investing
     activities                              4,332      47,749      23,892
Cash flows from financing activities:
  Proceeds from exercise of options,
   rights and warrants                          --          25         191
Effects of exchange rate changes on
 cash and cash equivalents                     445        (111)        682
                                         ---------   ---------   ---------
Net increase (decrease) in cash and
 cash equivalents                            5,451      39,534      19,162
Cash and cash equivalents, beginning
 of period                                  70,173      30,639      11,477
                                         ---------   ---------   ---------
Cash and cash equivalents, end of
 period                                  $  75,624   $  70,173   $  30,639
                                         =========   =========   =========
Supplemental disclosures:
  Cash paid (refund received)
   for income taxes, net                 $     186   $     (11)  $     360


Supplemental Financial Measures -- Adjusted EBITDA

In this press release and our related earnings conference call, we intend to provide investors with a better understanding of operating results and underlying trends to assess our performance and liquidity. We evaluate our operating performance based on several measures, including the non-GAAP financial measure of Adjusted EBITDA (defined as Operating Income adjusted for non-recurring and non-cash items such as stock-based compensation expenses, depreciation, amortization of intangibles, severance and asset impairments). We believe Adjusted EBITDA is a useful supplemental financial measure for investors because it facilitates investors' ability to evaluate the operational strength of the company's business. Adjusted EBITDA, however, is not calculated in accordance with GAAP and should not be considered a substitute for net income as an indicator of operating performance. A reconciliation of Adjusted EBITDA to operating income from continuing operations is presented below.


                        ActivIdentity Corporation
  Unaudited Reconciliation from GAAP Operating Income (Loss) to Adjusted
                                  EBITDA
                              (In thousands)


                            Three Months Ended         Twelve Months Ended
                      ------------------------------   -------------------
                       Sep 30     Jun 30     Sep 30     Sep 30     Sep 30
                        2009       2009       2008       2009       2008
                      --------   --------   --------   --------   --------
Operating Income
 (Loss)               $ (1,335)  $ (1,069)  $ (4,539)  $ (7,191)  $(56,482)

Add back depreciation
 expense                   270        282        342      1,243      1,566

Add back amortization
 expense                   406        634        634      2,308      2,545

Add back stock
 compensation expense      922        521        747      3,074      2,874

Add back severance
 expense                   199        502        818      2,841      2,716
Add back impairment
 related expense             0          0          0          0     35,874
                      --------   --------   --------   --------   --------

Adjusted EBITDA       $    462   $    870   $ (1,998)  $  2,275   $(10,907)
                      ========   ========   ========   ========   ========


Supplemental Financial Measures -- Non-GAAP Results

This press release contains non-GAAP financial measures. The following table reconciles the non-GAAP financial measures in the press release to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP measures include non-GAAP costs of revenue, operating expenses, other expenses, net loss and net loss per share amounts.

Non-GAAP financial measures should not be considered as a substitute for, or superior to, GAAP financial measures, which should be considered as the primary financial metrics for evaluating our financial performance. Significantly, non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. Instead, they are based on subjective determinations by management designed to supplement our GAAP financial measures. They are subject to a number of important limitations and should be considered only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our non-GAAP financial measures differ from GAAP measures with the same names, may vary over time, and may differ from non-GAAP financial measures with the same or similar names used by other companies. Accordingly, investors should exercise caution when evaluating our non-GAAP financial measures.

Despite these limitations, we believe our non-GAAP financial measures provide meaningful supplemental information about our operating results, primarily because they exclude goodwill and investment impairments as well as costs and expenses that we do not believe are indicative of the ongoing operating performance of our business and our senior management. Although these items should properly be considered in our GAAP financial measures, we believe they should be excluded when evaluating our current operating performance. The non-GAAP financial measures disclosed in the accompanying press release are used by our Board of Directors and senior management to evaluate our current operating performance, are used in evaluating the performance of our senior management, and are used in our budget and planning processes. We believe that our non-GAAP financial measures are helpful to investors by facilitating comparisons of our current and prior operating results and by facilitating comparisons of our operating results with those of other software companies.


                        ActivIdentity Corporation
          Unaudited Reconciliation from GAAP to Non-GAAP Expenses
                              (In thousands)


                            Three Months Ended         Twelve Months Ended
                      ------------------------------   -------------------
                       Sep 30     Jun 30     Sep 30     Sep 30     Sep 30
                        2009       2009       2008       2009       2008
                      --------   --------   --------   --------   --------
COST OF REVENUE
 (GAAP)               $  5,039   $  5,030   $  6,203   $ 21,978   $ 23,673
  Subtract
   depreciation
   expense                 (14)       (17)       (27)       (72)      (112)
  Subtract
   amortization
   expense                (389)      (593)      (593)    (2,168)    (2,380)
  Subtract stock
   compensation
   expense                 (39)       (14)       (38)      (148)      (233)
  Subtract severance
   expense                   0        (20)      (166)       (37)      (162)
                      --------   --------   --------   --------   --------
COST OF REVENUE
 (NON-GAAP)              4,597      4,386      5,379     19,553     20,786


OPERATING EXPENSES
Sales & Marketing
 (GAAP)                  4,400      4,868      6,054     19,572     25,602
  Subtract
   depreciation
   expense                 (27)       (30)       (47)      (127)      (192)
  Subtract stock
   compensation
   expense                (126)      (148)      (141)      (591)      (627)
  Subtract severance
   expense                (182)      (459)      (334)    (1,794)      (769)
                      --------   --------   --------   --------   --------
Sales & Marketing
 (Non-GAAP)              4,065      4,231      5,532     17,060     24,014

Research &
 Development (GAAP)      3,363      3,398      4,775     15,053     18,867
  Subtract
   depreciation
   expense                 (38)       (42)       (57)      (178)      (233)
  Subtract stock
   compensation
   expense                (205)       (34)      (240)      (695)      (868)
  Subtract severance
   expense                 (17)        (5)      (128)      (801)      (694)
                      --------   --------   --------   --------   --------
Research & Development
 (Non-GAAP)              3,103      3,317      4,350     13,379     17,072

General &
 Administration
 (GAAP)                  3,037      3,101      3,113     12,769     11,380
  Subtract
   depreciation
   expense                (191)      (193)      (211)      (866)    (1,029)
  Subtract stock based
   compensation
   expense                (552)      (325)      (328)    (1,640)    (1,146)
  Subtract severance
   expense                   0        (18)      (190)      (209)    (1,091)
                      --------   --------   --------   --------   --------
General &
 Administration
 (Non-GAAP)              2,294      2,565      2,384     10,054      8,114

Amortization of
 intangibles expense        17         41         41        140        165
Subtract amortization
 expense                   (17)       (41)       (41)      (140)      (165)

Restructuring related
 expenses                    0          0          0          0        (70)

Impairment related
 expense                     0          0          0          0     35,874
Subtract impairment
 related expense             0          0          0          0    (35,874)

OPERATING EXPENSES
 (GAAP)               $ 10,817   $ 11,408   $ 13,983   $ 47,534   $ 91,818
OPERATING EXPENSES
 (Non-GAAP)           $  9,462   $ 10,113   $ 12,266   $ 40,493   $ 49,130
                      ========   ========   ========   ========   ========


Discussion of Specific Items Excluded from Non-GAAP Financial Measures

We exclude the below items in our non-GAAP financial measures because we believe they are not closely related to the ongoing operating performance of our business and management and are generally excluded from our budget and planning process. In addition, we believe our non-GAAP financial measures are helpful to investors by facilitating comparisons of our operating results over different time periods and by facilitating comparisons of our financial performance with that of other companies. Except for costs and expenses related to restructuring and severance, these items are non-cash and do not affect cash flows.

1. Amortization of acquired intangible assets -- In accordance with GAAP, we amortize intangible assets acquired in connection with acquisitions over the estimated useful lives of the assets. We exclude these amortization costs in our non-GAAP financial measures because they (i) result from prior acquisitions, rather than the ongoing operating performance of our business, and (ii) absent additional acquisitions, are expected to decline over time as the remaining carrying amounts of these assets are amortized. We believe excluding these costs helps investors compare our financial performance with that of other companies with different acquisition histories. However, as with impairment charges, we recognize that amortization costs provide a helpful measure of the financial impact and performance of prior acquisitions and investors should consider our non-GAAP financial measures in conjunction with our GAAP financial results that include amortization costs.

2. Stock-based compensation -- We exclude stock based compensation expense associated with stock options and restricted stock units granted to employees and non-executive directors in our non-GAAP financial measures. While stock based compensation is a significant component of our expenses, we believe that investors wish to be able to exclude the effects of stock based compensation expenses in comparing our financial performance with that of other companies.

3. Restructuring and severance -- We exclude restructuring and severance in our non-GAAP financial measures because these costs are unrelated to our ongoing operations. We believe excluding restructuring and severance expenses help investors compare our operating performance with that of other companies. We recognize, however, that restructuring and severance will impact cash flows and that we and investors should carefully consider the impact of these costs on future cash flows.

Contact Information