Attached files
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| 8-K - FORM 8-K - AUTHENTEC INC | auth_8k-080812.htm |
Exhibit 99.1
| Press Release |  |
AuthenTec Reports Second Quarter 2012 Financial Results
MELBOURNE, Fla., August 8, 2012 -- AuthenTec (NASDAQ:AUTH), a leading provider of mobile and network security, today reported financial results for the second quarter ended June 29, 2012.
Second Quarter Highlights:
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Posted revenue of $20.5 million
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Achieved fourth consecutive quarter of non-GAAP profitability
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AuthenTec Added to the Russell 3000 and Global Indexes
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AuthenTec achieved revenue of $20.5 million for the second quarter of 2012, which was comprised of approximately $12.7 million from Smart Sensor Solutions and $7.9 million from Embedded Security Solutions.
GAAP Results:
Under Generally Accepted Accounting Principles in the United States of America (GAAP), consolidated net loss for the second quarter of 2012 was $1.2 million, or $0.03 per diluted share. This compares to GAAP net loss of $1.5 million, or $0.03 per diluted share, in the first quarter of 2012 and a GAAP net loss of $4.8 million, or $0.11 per diluted share, in the second quarter of 2011.
GAAP gross margin in the second quarter was 57.4 percent, compared to 57.5 percent reported in the first quarter of 2012 and 47.8 percent in the second quarter of 2011. Total operating expenses on a GAAP basis in the second quarter were $12.8 million, compared to $11.4 million in the first quarter of 2012, and $12.3 million in the second quarter of 2011. The $1.4 million sequential increase in operating expenses was due to fees incurred to support M&A activities as well as increased R&D investments in our Embedded Security business.
Non-GAAP Results:
On a non-GAAP basis, consolidated net income for the second quarter of 2012 was $1.3 million, or $0.03 per diluted share. Non-GAAP results exclude certain legal and other costs, stock-based compensation, as well as the amortization of acquired intangible assets. The second quarter net income compares to non-GAAP net income of $0.3 million, or $0.01 per diluted share, in the first quarter of 2012 and a non-GAAP net loss of $1.9 million, or $0.04 per diluted share, in the second quarter of 2011.
Non-GAAP gross margin in the second quarter was 58.4 percent, compared to 58.7 percent in the first quarter of 2012 and 53.7 percent in the second quarter of 2011.
Total operating expenses on a non-GAAP basis were $10.6 million, an increase from the $9.8 million reported in the first quarter of 2012 and the $10.4 million in the second quarter of 2011. A reconciliation of second quarter GAAP to non-GAAP results is provided in Table 2 following the text of this press release.
As of June 29, 2012, AuthenTec had approximately $25.3 million in cash and investments, up from the $22.8 million cash and investments at the end of the first quarter of 2012, and had no debt.
Recent Business Highlights:
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Posted sequential and year-over-year growth in both business segments. Smart Sensor revenue of $12.7 million was driven by growth of sensors for wireless to support new smartphone programs and was partially offset by a decrease in government programs. Embedded Security revenue of $7.9 million was driven by increased license revenue from new contracts.
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Began production of smart fingerprint sensors during the quarter to support new Android smartphones from Fujitsu.
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Announced that Samsung has chosen AuthenTec’s QuickSec™ VPN security for use in new Android smartphone and tablet models, giving device users built-in security that enables easier, more secure connections to enterprise networks.
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Supported the launch of multiple new mobile content delivery programs that utilize the Company’s DRM content protection.
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Pending Merger Transaction:
On July 27, AuthenTec filed a Form 8-K with the U.S. Securities and Exchange Commission disclosing that it has entered into an agreement and plan of merger with Apple Inc. pursuant to which Apple will acquire all of the outstanding shares of common stock of AuthenTec for $8.00 per share in cash. The transaction is subject to customary closing conditions, including regulatory approval and AuthenTec stockholder approval. Additional details will be provided in the proxy statement AuthenTec will file with the U.S. Securities and Exchange Commission.
Use of GAAP and Non-GAAP Financial Metrics:
To supplement AuthenTec’s consolidated financial statements presented in accordance with GAAP, the Company uses non-GAAP financial measures that exclude from the statement of operations the effects of stock-based compensation, certain acquisition-related charges, amortization of certain intangible assets, impairments on investments, and costs related to a reduction in workforce. AuthenTec uses the above non-GAAP financial measures internally to understand, manage and evaluate the business. Management believes it is useful for itself and investors to review, as applicable, both GAAP information and the non-GAAP measures in order to assess the performance of continuing operations and for planning and forecasting in future periods. The presentation of these non-GAAP measures is intended to provide investors with an understanding of AuthenTec’s operational results and trends that enables them to analyze the base financial and operating performance and facilitate period-to-period comparisons and analysis of operational trends. AuthenTec believes the presentation of these non-GAAP financial measures is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered substitutes for or superior to GAAP results. In addition, our non-GAAP financial measures may not be comparable to similarly titled measures utilized by other companies since such other companies may not calculate such measures in the same manner as we do.
Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which is provided in Table 2 after the text of this release. For additional information regarding these non-GAAP financial measures, and management's explanation of why it considers such measures to be useful, refer to the filings made from time to time with the Securities and Exchange Commission.
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Forward Looking Statements:
This press release contains statements that may relate to expected future results and business trends that are based upon AuthenTec’s current estimate, expectations, and projections about the industry, and upon management’s beliefs, and certain assumptions it has made that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “guidance,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “should,” “will,” “prospects,” “outlook,” “forecast,” and variations of these words or similar expressions are intended to identify “forward-looking statements.” In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances, including any underlying assumptions, are “forward-looking statements.” Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, AuthenTec’s actual results may differ materially and adversely from those expressed in any “forward-looking statement” as a result of various factors. These factors include, but are not limited to: disruptions caused by the announcement and pendency of Apple Inc.’s acquisition of AuthenTec, including, potential losses or disruptions of customers, vendors or other commercial relationships prior to the completion of Apple’s pending acquisition of AuthenTec and potential negative effects on AuthenTec’s ability to retain management, technical, sales and other key personnel as a result of the announcement of the pending acquisition, AuthenTec’s ability to integrate acquired businesses and operate such businesses profitably, demand for, and market acceptance of, new and existing fingerprint sensors, identity management software and embedded security products, AuthenTec’s ability to secure design wins for enterprise and consumer laptops, wireless devices and products aimed at Government markets, customer design wins materializing into production programs, the timely introduction of new products, the rate at which AuthenTec increases its activity and opportunities in the wireless market, and additional opportunities in various markets for applications that might use AuthenTec’s products, AuthenTec’s ability to develop and capitalize on its NFC solutions and changes in product mix, as well as other risks detailed from time to time in its SEC filings, including those described in AuthenTec’s annual report on Form 10-K filed with the SEC on March 9, 2012. These “forward-looking statements” are made only as of the date hereof, and AuthenTec undertakes no obligation to update or revise the “forward-looking statements,” whether as a result of new information, future events or otherwise.
Additional Information and Where to Find It:
In connection with the proposed merger, AuthenTec will prepare a proxy statement to be filed with the U.S. Securities and Exchange Commission (the “SEC”). When completed, a definitive proxy statement and a form of proxy will be mailed to the stockholders of AuthenTec. AUTHENTEC’S STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT REGARDING THE PROPOSED MERGER BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. AuthenTec’s stockholders will be able to obtain, without charge, a copy of the proxy statement (when available) and other relevant documents filed with the SEC from the SEC’s website at http://www.sec.gov. AuthenTec’s stockholders will also be able to obtain, without charge, a copy of the proxy statement and other relevant documents (when available) by directing a request by mail or telephone to AuthenTec, Inc., 100 Rialto Place, Suite 100, Melbourne, Florida 32901, Attention: Corporate Secretary, or from the Company’s website, http://www.authentec.com.
AuthenTec and its directors and officers may be deemed to be participants in the solicitation of proxies from AuthenTec’s stockholders with respect to the special meeting of stockholders that will be held to consider the proposed merger. Information about AuthenTec’s directors and executive officers and their ownership of AuthenTec’s common stock is set forth in AuthenTec’s Annual Report on Form 10-K, which was filed with the SEC on March 9, 2012 and subsequently amended on April 25, 2012. Stockholders may obtain additional information regarding the interests of AuthenTec and its directors and executive officers in the proposed merger, which may be different than those of AuthenTec’s stockholders generally, by reading the proxy statement and other relevant documents regarding the proposed merger, when filed with the SEC.
About AuthenTec
AuthenTec is a leading provider of mobile and network security. The Company's diverse product and technology offering helps protect individuals and organizations through secure networking, content and data protection, access control and strong fingerprint security on PCs and mobile devices. AuthenTec encryption technology, fingerprint sensors and identity management software are deployed by the leading mobile device, networking and computing companies, content and service providers, and governments worldwide. AuthenTec's products and technologies provide security on hundreds of millions of devices, and the Company has shipped more than 100 million fingerprint sensors for integration in a wide range of portable electronics including over 20 million mobile phones. Top tier customers include Alcatel-Lucent, Cisco, Fujitsu, HBO, HP, Lenovo, LG, Motorola, Nokia, Orange, Samsung, Sky, and Texas Instruments. Learn more at authentec.com or follow us on twitter.com/authentecnews.
# # #
Investor Contact:
Shelton Group
Brett L Perry, Director of Investor Relations
P: +1-972-239-5119 ext 159
E: bperry@sheltongroup.com
Media Contact:
AuthenTec
Brent Dietz, Director of Communications
P: +1-321-308-1320
E: brent.dietz@authentec.com
3
AuthenTec, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Table 1
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Three months ended
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Six months ended
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June 29,
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March 30,
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July 1,
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June 29,
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July 1,
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2012
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2012
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2011
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2012
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2011
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Revenue
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$ | 20,547 | $ | 17,460 | $ | 16,211 | $ | 38,007 | $ | 31,687 | ||||||||||
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Cost of revenue
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8,755 | 7,421 | 8,464 | 16,176 | 16,515 | |||||||||||||||
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Gross profit
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11,792 | 10,039 | 7,747 | 21,831 | 15,172 | |||||||||||||||
| 57.4 | % | 57.5 | % | 47.8 | % | 57.4 | % | 47.9 | % | |||||||||||
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Operating expenses:
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Research and development
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6,047 | 5,729 | 6,477 | 11,776 | 12,364 | |||||||||||||||
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Selling and marketing
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4,333 | 3,898 | 4,077 | 8,231 | 8,067 | |||||||||||||||
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General and administrative
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2,442 | 1,758 | 1,740 | 4,201 | 4,198 | |||||||||||||||
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Restructuring and impairment related charges
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- | - | 39 | - | 322 | |||||||||||||||
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Total operating expenses
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12,822 | 11,385 | 12,333 | 24,208 | 24,951 | |||||||||||||||
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Operating loss
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(1,030 | ) | (1,346 | ) | (4,586 | ) | (2,377 | ) | (9,779 | ) | ||||||||||
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Other income (expenses)
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105 | (71 | ) | (117 | ) | 34 | (391 | ) | ||||||||||||
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Income before Taxes
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(925 | ) | (1,417 | ) | (4,703 | ) | (2,343 | ) | (10,170 | ) | ||||||||||
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Provision for income taxes
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306 | 100 | 141 | 406 | 276 | |||||||||||||||
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Net loss
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$ | (1,231 | ) | $ | (1,517 | ) | $ | (4,844 | ) | $ | (2,749 | ) | $ | (10,446 | ) | |||||
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Net loss per share:
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Basic
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$ | (0.03 | ) | $ | (0.03 | ) | $ | (0.11 | ) | $ | (0.06 | ) | $ | (0.24 | ) | |||||
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Diluted
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$ | (0.03 | ) | $ | (0.03 | ) | $ | (0.11 | ) | $ | (0.06 | ) | $ | (0.24 | ) | |||||
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Shares used in computing net income (loss) per common share:
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Basic
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44,608 | 44,401 | 43,753 | 44,505 | 43,677 | |||||||||||||||
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Diluted
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44,608 | 44,401 | 43,753 | 44,505 | 43,677 | |||||||||||||||
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Three months ended
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Six months ended
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June 29,
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March 30,
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July 1,
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June 29,
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July 1,
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2012
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2012
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2011
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2012
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2011
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Other Financial Metrics:
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Stock-based compensation expense:
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Cost of revenue
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25 | 29 | 21 | 54 | 174 | |||||||||||||||
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Research and development
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153 | 158 | 164 | 311 | 503 | |||||||||||||||
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Selling and marketing
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133 | 156 | 135 | 289 | 409 | |||||||||||||||
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General and administrative
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148 | 156 | 90 | 304 | 468 | |||||||||||||||
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Costs related to reduction in workforce
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Cost of revenue
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- | - | 50 | - | 50 | |||||||||||||||
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Research and development
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- | - | 370 | - | 370 | |||||||||||||||
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Selling and marketing
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- | - | 102 | - | 102 | |||||||||||||||
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Legal and acquisition related costs
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Research and development
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171 | 171 | - | 342 | - | |||||||||||||||
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Selling and marketing
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99 | 100 | 72 | 199 | 155 | |||||||||||||||
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General and administrative
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696 | 34 | 309 | 730 | 558 | |||||||||||||||
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Provision for income taxes
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85 | - | - | 85 | - | |||||||||||||||
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Amortization of purchased tangible and intangible assets
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Cost of revenue
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177 | 177 | 895 | 354 | 1,464 | |||||||||||||||
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Research and development
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300 | 300 | 234 | 600 | 470 | |||||||||||||||
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Selling and marketing
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499 | 499 | 464 | 998 | 929 | |||||||||||||||
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Restructuring and impairment related charges
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- | - | 39 | - | 322 | |||||||||||||||
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AuthenTec, Inc.
Non-GAAP Financial Information - Consolidated
(In thousands, except per share amounts)
(Unaudited)
Table 2
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Three months ended
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Six months ended
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June 29,
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March 30,
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July 1,
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June 29,
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July 1,
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2012
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2012
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2011
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2012
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2011
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Net loss on GAAP basis:
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$ | (1,231 | ) | $ | (1,517 | ) | $ | (4,844 | ) | $ | (2,749 | ) | $ | (10,446 | ) | |||||
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Stock-based compensation expense
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459 | 499 | 410 | 958 | 1,554 | |||||||||||||||
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Costs related to reduction in workforce
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- | - | 522 | - | 522 | |||||||||||||||
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Legal and acquisition related costs
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966 | 305 | 381 | 1,271 | 713 | |||||||||||||||
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Amortization of purchased tangible and intangible assets
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976 | 976 | 1,593 | 1,952 | 2,863 | |||||||||||||||
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Restructuring and impairment related charges
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- | - | 39 | - | 322 | |||||||||||||||
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Tax Provision
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85 | - | - | 85 | - | |||||||||||||||
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Net income (loss) on non-GAAP basis:
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$ | 1,255 | $ | 263 | $ | (1,899 | ) | $ | 1,517 | $ | (4,472 | ) | ||||||||
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Non-GAAP basic earnings per share
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$ | 0.03 | $ | 0.01 | $ | (0.04 | ) | $ | 0.03 | $ | (0.10 | ) | ||||||||
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Non-GAAP diluted earnings per share
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$ | 0.03 | $ | 0.01 | $ | (0.04 | ) | $ | 0.03 | $ | (0.10 | ) | ||||||||
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Three months ended
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Six months ended
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June 29,
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March 30,
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July 1,
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June 29,
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July 1,
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2012
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2012
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2011
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2012
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2011
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Gross profit on GAAP basis:
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$ | 11,792 | $ | 10,039 | $ | 7,747 | $ | 21,831 | $ | 15,172 | ||||||||||
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Stock-based compensation expense
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25 | 29 | 21 | 54 | 174 | |||||||||||||||
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Costs related to reduction in workforce
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- | - | 50 | - | 50 | |||||||||||||||
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Amortization of purchased tangible and intangible assets
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177 | 177 | 895 | 354 | 1,464 | |||||||||||||||
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Gross profit on non-GAAP basis:
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$ | 11,994 | $ | 10,245 | $ | 8,713 | $ | 22,239 | $ | 16,860 | ||||||||||
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Non-GAAP gross margin
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58.4 | % | 58.7 | % | 53.7 | % | 58.5 | % | 53.2 | % | ||||||||||
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Three months ended
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Six months ended
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June 29,
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March 30,
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July 1,
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June 29,
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July 1,
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2012
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2012
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2011
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2012
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2011
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Operating expenses on GAAP basis:
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$ | 12,822 | $ | 11,385 | $ | 12,333 | $ | 24,208 | $ | 24,951 | ||||||||||
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Stock-based compensation expense
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(434 | ) | (470 | ) | (389 | ) | (904 | ) | (1,380 | ) | ||||||||||
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Costs related to reduction in workforce
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- | - | (472 | ) | - | (472 | ) | |||||||||||||
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Legal and acquisition related costs
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(966 | ) | (305 | ) | (381 | ) | (1,271 | ) | (713 | ) | ||||||||||
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Amortization of purchased tangible and intangible assets
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(799 | ) | (799 | ) | (698 | ) | (1,598 | ) | (1,399 | ) | ||||||||||
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Restructuring and impairment related charges
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- | - | (39 | ) | - | (322 | ) | |||||||||||||
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Operating expenses on non-GAAP basis:
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$ | 10,623 | $ | 9,811 | $ | 10,354 | $ | 20,435 | $ | 20,665 | ||||||||||
5
AuthenTec, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
Table 3
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As of
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June 29,
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December 30,
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2012
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2011
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Assets
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Current assets
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Cash and cash equivalents
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$ | 21,316 | $ | 17,200 | ||||
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Restricted Cash
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750 | - | ||||||
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Accounts receivable
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9,617 | 9,444 | ||||||
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Inventory
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9,704 | 8,111 | ||||||
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Other current assets
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1,690 | 1,716 | ||||||
| Total current assets | 43,077 | 36,471 | ||||||
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Long-term investments
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3,236 | 3,249 | ||||||
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Purchased intangibles
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18,413 | 20,287 | ||||||
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Goodwill
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3,501 | 3,501 | ||||||
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Property and equipment, net
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3,452 | 3,640 | ||||||
| Total assets | $ | 71,679 | $ | 67,148 | ||||
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Liabilities and stockholders’ equity
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Current liabilities
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Accounts payable
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$ | 7,920 | $ | 3,539 | ||||
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Accrued compensation and benefits
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3,163 | 4,399 | ||||||
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Deferred revenue
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5,970 | 4,145 | ||||||
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Accrued litigation related legal fees
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- | 114 | ||||||
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Other accrued liabilities
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4,256 | 2,634 | ||||||
| Total current liabilities | 21,309 | 14,831 | ||||||
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Long-term liabilities
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Deferred rent
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308 | 398 | ||||||
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Other liabilities
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354 | 768 | ||||||
| Total long-term liabilities | 662 | 1,166 | ||||||
| Total liabilities | 21,971 | 15,997 | ||||||
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Stockholders’ equity
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Common stock
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448 | 443 | ||||||
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Additional paid-in capital
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194,022 | 192,694 | ||||||
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Accumulated other comprehensive income
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23 | 50 | ||||||
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Accumulated deficit
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(144,785 | ) | (142,036 | ) | ||||
| Total stockholders’ equity | $ | 49,708 | $ | 51,151 | ||||
| Total liabilities and stockholders’ equity | $ | 71,679 | $ | 67,148 | ||||
6