LaserCard Corporation (NASDAQ:LCRD), a leading provider of
secure ID solutions, today announced the financial results for its
fiscal 2011 second quarter ended October 1, 2010.
Revenues for the second quarter of fiscal 2011 were $12.7
million, compared with $11.6 million in the prior quarter and $15.7
million in the same quarter a year ago. GAAP net income for the
second quarter of fiscal 2011 was $0.8 million, or $0.07 per
diluted share, compared with GAAP net income of $0.4 million, or
$0.04 per diluted share, in the prior quarter, and GAAP net income
of $1.8 million, or $0.15 per diluted share, in the same quarter a
year ago.
LaserCard® optical security media card revenues for the quarter
were $9.0 million compared with $11.9 million in the second
quarter of fiscal 2010. Revenues from specialty cards and printers
totaled $3.7 million compared with $3.8 million from the same
quarter a year ago. Optical security media card backlog at October
1, 2010 was $9.6 million.
LaserCard Corporation’s cash, cash equivalents, and investments
were $36.2 million at October 1, 2010. Debt at October 1, 2010
totaled $0.1 million.
Non-GAAP Results
Non-GAAP net income for the second quarter of fiscal 2011 was
$1.3 million, or $0.10 per diluted share, compared to non-GAAP net
income of $0.9 million, or $0.07 per diluted share, in the prior
quarter, and a non-GAAP net income of $1.9 million, or $0.15 per
diluted share, in the same quarter a year ago.
Non-GAAP net income and net income per diluted share exclude
expenses related to ASC 718 (formerly SFAS123R) stock-based
compensation, the unrealized income relating to the fair value
adjustment of auction rate securities and our UBS put option
agreement, and exclude the gain related to the termination of a
contract.
“We have achieved profitability over the past seven quarters due
to the ongoing contributions from our core customer programs and
the previously implemented refinements to our cost model,” said
Robert DeVincenzi, President and CEO of LaserCard. “As is typical
in our business and industry, our program revenue and financial
results will continue to be subject to fluctuations on a quarterly
basis.”
Earnings Results Conference Call
LaserCard will hold a conference call to discuss its fiscal 2011
second quarter results today, October 28, 2010, at
approximately 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time. For
access to the conference call, please call 773-799-3302 by 1:50
p.m. Pacific Time. A taped replay of the call will be available for
one week. To access the replay, please call 203-369-1160. You will
need to reference the passcode “LaserCard” and the conference
leader “Robert DeVincenzi.” To listen to the call via the Internet,
please log on to: www.lasercard.com or www.investorcalendar.com.
The Internet Webcast will be archived for one year. A copy of this
press release will be furnished to the Securities and Exchange
Commission on a Form 8-K and be posted to our web site prior to the
conference call.
About LaserCard Corporation
LaserCard Corporation, together with its subsidiaries, is a
leading provider of secure ID solutions to governments and
commercial clients worldwide. It develops, manufactures, and
integrates LaserCard® optical security media cards,
multi-technology cards, encoders, peripherals, smart and specialty
cards, biometrics, and modular software. The Company’s cards and
systems are used in various applications, including citizen
identification, border security, government service delivery, and
facility access.
For more information, please go to www.lasercard.com.
Forward Looking Statement Disclaimer
All statements contained in this press release that are not
historical facts are forward-looking statements made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and are not historical facts or guarantees of
future performance or events. Rather, they are based on current
expectations, estimates, beliefs, assumptions, goals and objectives
and are subject to uncertainties that are difficult to predict. As
a result, our actual results may differ materially from the
statements made. Often such statements can be identified by the use
of words such as “may,” “will,” “intends,” “plans,” “believes,”
“anticipates,” “visualizes,” “expects,” and “estimates.” Examples
of forward-looking statements in this release include our belief
that quarterly results will fluctuate. This and other
forward-looking statements in this press release are based upon our
assumptions about and assessment of the future, which may or may
not prove true, and involve a number of risks and uncertainties
including, but not limited to whether projected orders or scheduled
delivery dates are rescheduled or canceled in whole or in part,
that the complex nature of the secure ID business will continue to
subject our results to fluctuations on a quarterly basis, and
whether our other customers continue orders as currently expected
as well as the other risk factors detailed in our Forms 10-K and
10-Q filings with the Securities and Exchange Commission under the
caption “Risk Factors” and elsewhere in such reports. Due to these
and other risks, future actual results could differ materially from
our expectations. These forward-looking statements speak only as to
the date of this release, and, except as required by law, we
undertake no obligation to publicly release updates or revisions to
these statements whether as a result of new information, future
events, or otherwise.
About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which
statements are prepared and presented in accordance with GAAP, we
use the following non-GAAP financial measures: non-GAAP net income
and non-GAAP EPS. The presentation of this financial information is
not intended to be considered in isolation or as a substitute for,
or superior to, the financial information prepared and presented in
accordance with GAAP. For more information on these non-GAAP
financial measures, please see the tables captioned
"Reconciliations of non-GAAP results of operations measures to the
nearest comparable GAAP measures" included at the end of this
release.
We use these non-GAAP financial measures for financial and
operational decision making and as a means to evaluate
period-to-period comparisons. Our management believes that these
non-GAAP financial measures provide meaningful supplemental
information regarding our performance by excluding certain expenses
and expenditures that may not be indicative of our "recurring core
business operating results," meaning our operating performance
excluding not only non-cash charges, such as stock-based
compensation, but also discrete cash charges or gains that are
infrequent in nature. We believe that both management and investors
benefit from referring to these non-GAAP financial measures in
assessing our performance and when planning, forecasting and
analyzing future periods. These non-GAAP financial measures also
facilitate management's internal comparisons to our historical
performance as well as comparisons to our competitors' results. We
believe these non-GAAP financial measures are useful to investors
both because (1) they allow for greater transparency with respect
to key metrics used by management in its financial and operational
decision making and (2) they are used by our institutional
investors and the analyst community to help them analyze the health
of our business. These non-GAAP financial measures may be different
than those used by other companies, including our competitors.
Non-GAAP net income and EPS. We define non-GAAP net income as
net income plus stock-based compensation, and unrealized fair-value
adjustments less the related tax effects of such items plus other
nonrecurring gains or losses. We define non-GAAP EPS as non-GAAP
net income divided by the weighted average outstanding shares, on a
fully-diluted basis. We consider these non-GAAP financial measures
to be a useful metric for management and investors. However, in
order to provide a complete picture of our recurring core business
operating results, we exclude from non-GAAP net income and non-GAAP
EPS the tax effects associated with stock-based compensation and
the impairment charges. Without excluding these tax effects,
investors would only see the gross effect that excluding these
expenses had on our operating results. There are a number of
limitations related to the use of non-GAAP net income versus net
income calculated in accordance with GAAP. First, non-GAAP net
income excludes some recurring costs, namely stock-based
compensation. Stock-based compensation has been and will continue
to be for the foreseeable future a significant recurring expense in
our business. Second, stock-based compensation is an important part
of our employees' compensation and impacts their performance.
Third, the components of the costs that we exclude in our
calculation of non-GAAP operating income may differ from the
components that our peer companies exclude when they report their
results of operations. Management compensates for these limitations
by providing specific information regarding the GAAP amounts
excluded from non-GAAP net income and non-GAAP EPS and evaluating
non-GAAP net income and non-GAAP EPS together with net income and
EPS calculated in accordance with GAAP.
The accompanying tables have more details on the GAAP financial
measures that are most directly comparable to non-GAAP financial
measures and the related reconciliations between these financial
measures.
LASERCARD CORPORATION AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands,
except per share amounts) Three Months Ended
Six Months Ended October 1, October 2, October 1,
October 2, 2010 2009 2010 2009 Revenues $ 12,743 $
15,716 $ 24,344 $ 32,024 Cost of sales 7,233
8,927 14,303 18,632 Gross profit 5,510
6,789 10,041
13,392 Operating expenses: Selling, general, and
administrative expenses 4,039 4,278 7,740 8,352 Research and
development expenses 319 296 605
667 Total operating expenses 4,358 4,574
8,345 9,019 Operating income 1,152 2,215 1,696 4,373
Other income (expense), net (7 ) 518 6
700 Income before income taxes 1,145 2,733 1,702
5,073 Provision for income tax 301 886
426 1,283 Net income $ 844 $ 1,847 $
1,276 $ 3,790 Net income per share: Basic $ 0.07 $
0.15 $ 0.10 $ 0.31 Diluted $ 0.07 $ 0.15 $ 0.10 $ 0.31
Weighted-average shares of common
stock
used in computing net income per share: Basic 12,281
12,172 12,263 12,143 Diluted 12,358
12,318 12,354 12,207 LASERCARD
CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) (In thousands) October 1, April 2,
2010 2010* ASSETS Current assets: Cash and cash equivalents $
25,171 $ 33,180 Short-term investments 11,038 11,907 Accounts
receivable, net of allowance of $31 at October 1, 2010
and $37 at April 2, 2010
3,944
4,157
Inventories, net of reserves of $917 at October 1, 2010
and $2,143 at April 2, 2010
10,607
11,326
Deferred contract costs 275 213 Prepaid and other current assets
980 1,280 Total current assets
52,015 62,063 Property, plant and
equipment, net of accumulated depreciation of $25,134 at October 1,
2010 8,770 9,409 and $23,904 at April 2, 2010 Equipment held for
resale 7,155 7,155 Restricted cash 142 - Patents and other
intangibles, net 263 307 Notes receivable 232 230 Deferred contract
costs 79 79 Other non-current assets 48 48
Total assets $ 68,704 $ 79,291
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $ 1,544 $ 1,236 Accrued liabilities 4,314 4,539 Deferred
income tax liability 189 191 Advance payments from customers 2,028
6,525 Short-term debt - 7,865 Deferred revenue 675 533 Deferred
rent 286 270 Capital lease obligation 83 76
Total current liabilities
9,119 21,235 Capital lease
obligation, net of current portion 23 77 Advance payments from
customers, net of current portion 24,505 24,505 Deferred revenue,
net of current portion 3,306 3,306 Deferred rent, net of current
portion 810 954 Income tax payable - 308
Total liabilities 37,763 50,385
Stockholders' equity: Preferred stock, $0.01 par value:
Authorized - 2,000,000 shares Issued - none
-
-
Common stock, $0.01 par value Authorized - 30,000,000 shares Issued
and outstanding - 12,348,904 shares at October 1, 2010 and
12,234,882 shares at April 2, 2010 123 122 Additional paid-in
capital 70,192 69,492 Accumulated deficit (39,538 ) (40,815 )
Accumulated other comprehensive income 164 107
Total stockholders' equity 30,941
28,906 Total liabilities and stockholders’ equity $
68,704 $ 79,291 *Amounts derived from audited
consolidated financial statements LASERCARD CORPORATION AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) (In thousands) Six
Months Ended October 1, October 2, 2010 2009 Cash flows from
operating activities: Net income $ 1,276 $ 3,790 Adjustments to
reconcile net income to net cash provided by (used in) operating
activities: Depreciation and amortization 1,296 1,331 Fixed asset
disposal - 20 Provision (recovery) for doubtful accounts receivable
(19 ) 47 Provision for excess and obsolete inventory 13 951
Provision for warranty reserve (51 ) (13 ) Stock-based compensation
787 1,131 Put option, loss on fair value - (68 ) Mark to market,
trading - (193 ) Changes in operating assets and liabilities:
Decrease in accounts receivable 246 3,326 Decrease in inventories
722 1,435 Decrease (increase) in deferred contract costs (62 ) 635
Decrease in other current assets 335 200 Increase in equipment held
for resale - (89 ) Decrease in other non-current assets - 60
Increase (decrease) in accounts payable and accrued liabilities
(187 ) 2,451 Decrease in deferred income tax (4 ) (61 ) Increase
(decrease) in deferred revenue 142 (603 ) Decrease in deferred rent
(128 ) (111 ) Decrease in advance payments from customers
(4,507 ) (3,575 ) Net cash provided by (used in) operating
activities (141 ) 10,664 Cash flows from
investing activities: Purchases of property and equipment (640 )
(605 ) Acquisition of patents (5 ) (13 ) Maturities of marketable
securities 12,907 - Purchases of marketable securities (12,038 ) -
Changes in restricted cash balance (142 ) -
Net cash provided by (used in) investing activities 82
(618 ) Cash flows from financing activities: Proceeds
from sale of common stock through stock plans - 228 Tax benefit on
carryforward of gain from exercise of common stock options - 858
Employee's taxes withheld and paid for restricted stock (86 ) (98 )
Borrowing (repayment) on revolving credit agreement (7,865 ) 373
Principal payments on capital lease obligation (48 )
(39 ) Net cash provided by (used in) financing activities
(7,999 ) 1,322 Effect of exchange rate changes on
cash and cash equivalents 49 (49 ) Net
increase (decrease) in cash and cash equivalents (8,009 ) 11,319
Cash and cash equivalents: Beginning of period $ 33,180 $
15,912 End of period $ 25,171 $ 27,231
Supplemental disclosures - cash payments for: Income taxes $ 40
$ 60 Interest expense $ 35 $ 92
Supplemental schedule of non-cash investing activities: Unrealized
gain in fair value of investments in earnings $ - $ (261 )
LASERCARD CORPORATION AND SUBSIDIARIES RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES TO MOST DIRECTLY COMPARABLE FINANCIAL
MEASURES (UNAUDITED) (In thousands, except per share amounts)
Three Months Ended Six Months Ended
October 1, October 2, October 1, October 2, 2010 2009
2010 2009
Non-GAAP net
income:
GAAP net income $ 844 $ 1,847 $ 1,276 $ 3,790 Stock-based
compensation 373 560 786 1,131 Gain on fair value of investment -
41 - (193 ) Loss related to the Put-Right option - (83 ) - (68 )
Contract termination - (495 ) - (495 ) Income tax effect of
non-GAAP adjustments 44 (7 ) 76 (95 )
Non-GAAP net income
$ 1,261 $ 1,863 $ 2,138 $ 4,070
Non-GAAP
EPS:
Net income per share: Basic $ 0.10 $ 0.15 $ 0.17 $ 0.34
Diluted $ 0.10 $ 0.15 $ 0.17 $ 0.33
Weighted-average shares of common stock used in computing net
income per share: Basic 12,281 12,172
12,263 12,143 Diluted 12,358 12,318
12,354 12,207
As reported
GAAP:
Net income per share: Basic $ 0.07 $ 0.15 $ 0.10 $ 0.31
Diluted $ 0.07 $ 0.15 $ 0.10 $ 0.31
Weighted-average shares of common stock used in computing net
income per share: Basic 12,281 12,172
12,263 12,143 Diluted 12,358 12,318
12,354 12,207
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