UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal period ended March 31, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 000-50223
ACTIVCARD CORP.
(Exact name of Registrant as specified in its charter)
| Delaware | 450485038 | |
| (State or other jurisdiction of incorporation of organization) |
(I.R.S. Employer Identification Number) |
6623 Dumbarton Circle, Fremont, California 94555
(Address of principal executive offices including Zip code)
(510) 574-0100
(Registrant’s telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). YES x NO ¨
The number of shares of the Registrant’s Common Stock outstanding on April 30, 2004 was 42,205,761.
TABLE OF CONTENTS
| Page | ||||
| 3 | ||||
| Item 1 |
3 | |||
| Condensed Consolidated Statements of Operations | 3 | |||
| Condensed Consolidated Balance Sheets | 4 | |||
| Condensed Consolidated Statements of Cash Flows | 5 | |||
| Notes to Condensed Consolidated Financial Statements | 6 | |||
| Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 | ||
| Item 3 |
28 | |||
| Item 4 |
29 | |||
| 30 | ||||
| Item 1 |
30 | |||
| Item 2 |
30 | |||
| Item 3 |
30 | |||
| Item 4 |
30 | |||
| Item 5 |
30 | |||
| Item 6 |
30 | |||
| 30 | ||||
| EXHIBIT INDEX |
||||
2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
| Three months ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Revenue |
||||||||
| Hardware |
$ | 3,797 | $ | 5,485 | ||||
| Software |
1,997 | 6,196 | ||||||
| Maintenance and support |
1,509 | 1,386 | ||||||
| 7,303 | 13,067 | |||||||
| Cost of revenue |
||||||||
| Hardware |
1,816 | 3,793 | ||||||
| Software |
731 | 1,079 | ||||||
| Maintenance and support |
478 | 300 | ||||||
| 3,025 | 5,172 | |||||||
| Gross margin |
4,278 | 7,895 | ||||||
| Operating expenses |
||||||||
| Research and development |
4,384 | 4,550 | ||||||
| Sales and marketing |
6,125 | 5,253 | ||||||
| General and administrative |
1,378 | 1,400 | ||||||
| Amortization of acquired intangible assets |
114 | 152 | ||||||
| Restructuring and business realignment expenses |
1,187 | 947 | ||||||
| Re-incorporation expenses |
— | 945 | ||||||
| Total operating expenses |
13,188 | 13,247 | ||||||
| Loss from operations |
(8,910 | ) | (5,352 | ) | ||||
| Interest income |
1,016 | 1,245 | ||||||
| Foreign exchange gain (loss) |
410 | (216 | ) | |||||
| Loss from continuing operations before income taxes and minority interest |
(7,484 | ) | (4,323 | ) | ||||
| Income tax expense |
(55 | ) | (62 | ) | ||||
| Minority interest |
35 | 49 | ||||||
| Equity in net loss of Aspace Solutions Limited |
(1,572 | ) | — | |||||
| Loss from continuing operations |
(9,076 | ) | (4,336 | ) | ||||
| Loss from discontinued operations |
— | (228 | ) | |||||
| Net loss |
$ | (9,076 | ) | $ | (4,564 | ) | ||
| Basic and diluted loss per common share: |
||||||||
| From continuing operations |
$ | (0.22 | ) | $ | (0.10 | ) | ||
| From discontinued operations |
— | $ | (0.01 | ) | ||||
| $ | (0.22 | ) | $ | (0.11 | ) | |||
| Shares used in the calculation of loss per common share: |
||||||||
| Basic and diluted |
42,144,295 | 40,614,240 | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| March 31, 2004 |
December 31, 2003 |
|||||||
| ASSETS |
||||||||
| Current assets |
||||||||
| Cash and equivalents |
$ | 45,638 | $ | 33,599 | ||||
| Short-term investments |
176,386 | 195,135 | ||||||
| Accounts receivable (net of allowance for doubtful accounts of $42 at March 31, 2004 and December 31, 2003) |
3,037 | 3,364 | ||||||
| Other receivables |
2,048 | 2,372 | ||||||
| Inventories |
2,470 | 2,744 | ||||||
| Other current assets |
760 | 1,082 | ||||||
| Total current assets |
230,339 | 238,296 | ||||||
| Restricted investments |
566 | 551 | ||||||
| Property and equipment |
4,512 | 4,498 | ||||||
| Investment in Aspace Solutions Limited |
4,439 | 5,816 | ||||||
| Goodwill |
15,322 | 15,322 | ||||||
| Other intangible assets |
1,668 | 1,825 | ||||||
| Other long-term assets |
792 | 793 | ||||||
| $ | 257,638 | $ | 267,101 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities |
||||||||
| Accounts payable and accrued liabilities |
$ | 9,570 | $ | 11,179 | ||||
| Current portion of restructuring and business realignment accruals |
1,222 | 892 | ||||||
| Income taxes payable |
20 | 148 | ||||||
| Deferred revenue |
3,696 | 2,875 | ||||||
| Total current liabilities |
14,508 | 15,094 | ||||||
| Long-term portion of restructuring and business realignment accruals |
3,720 | 3,859 | ||||||
| Other long-term liabilities |
1,136 | 1,056 | ||||||
| Total long-term liabilities |
4,856 | 4,915 | ||||||
| Minority interest |
1,477 | 1,513 | ||||||
| Commitments and contingencies |
||||||||
| Shareholders’ equity |
||||||||
| Preferred shares, $0.001 par value, none issued |
— | — | ||||||
| Common shares, $0.001 par value, 42,206 and 42,115 shares issued and outstanding at March 31, 2004 and December 31, 2003, respectively |
42 | 42 | ||||||
| Additional paid-in capital |
398,344 | 397,962 | ||||||
| Accumulated other comprehensive loss |
(12,971 | ) | (12,816 | ) | ||||
| Deferred stock compensation |
(144 | ) | (211 | ) | ||||
| Accumulated deficit |
(148,474 | ) | (139,398 | ) | ||||
| Total shareholders’ equity |
236,797 | 245,579 | ||||||
| $ | 257,638 | $ | 267,101 | |||||
See accompanying notes to unaudited condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three months ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Operating activities |
||||||||
| Loss from continuing operations |
$ | (9,076 | ) | $ | (4,336 | ) | ||
| Adjustments to reconcile loss from continuing operations to net cash used in continuing operations: |
||||||||
| Depreciation and amortization |
577 | 827 | ||||||
| Amortization of acquired intangible assets |
114 | 152 | ||||||
| Amortization of deferred stock compensation |
61 | 298 | ||||||
| Non-cash restructuring and business realignment expenses |
— | 520 | ||||||
| Minority interest |
(35 | ) | (49 | ) | ||||
| Equity in net loss of Aspace Solutions Limited |
1,572 | — | ||||||
| Other non-cash items, net |
38 | 208 | ||||||
| Increase (decrease) in cash, net of the effects of business combinations, from: |
||||||||
| Accounts receivable |
304 | (1,623 | ) | |||||
| Other receivables |
317 | (678 | ) | |||||
| Inventories |
222 | (695 | ) | |||||
| Other current assets |
(93 | ) | (78 | ) | ||||
| Accounts payable and accrued liabilities |
(1,495 | ) | 1,651 | |||||
| Restructuring and business realignment accruals |
191 | (198 | ) | |||||
| Deferred revenue |
854 | (640 | ) | |||||
| Income taxes payable |
(128 | ) | — | |||||
| Net cash used in continuing operations |
(6,577 | ) | (4,641 | ) | ||||
| Net cash used in discontinued operations |
— | (106 | ) | |||||
| Net cash used in operating activities |
(6,577 | ) | (4,747 | ) | ||||
| Investing activities |
||||||||
| Purchases of property and equipment |
(625 | ) | (385 | ) | ||||
| Purchases of short term investments |
(55,061 | ) | (136,935 | ) | ||||
| Proceeds from sales and maturities of short term investments |
73,854 | 24,748 | ||||||
| Other long-term assets |
60 | (29 | ) | |||||
| Net cash provided by (used in) investing activities |
18,228 | (112,601 | ) | |||||
| Financing activities |
||||||||
| Proceeds from exercise of stock options |
387 | 1,637 | ||||||
| Increase in long-term liabilities |
57 | — | ||||||
| Repayment of long-term liabilities |
— | (13 | ) | |||||
| Net cash provided by financing activities |
444 | 1,624 | ||||||
| Effect of exchange rate changes on cash and equivalents |
(56 | ) | 473 | |||||
| Net increase (decrease) in cash and equivalents |
12,039 | (115,251 | ) | |||||
| Cash and equivalents, beginning of period |
33,599 | 158,880 | ||||||
| &n | ||||||||