Ron et al: Just out
Tom D.
Attention Business/Financial Editors:
Certicom Reports Fiscal 2002 Second Quarter Results
Q2 Revenue of $2.7 Million and Pro Forma Net Loss of $0.22 Per Share
Better than Guided Expectations
HAYWARD, CA, Nov. 29 /CNW/ - Certicom Corporation (Nasdaq: CERT; TSE:
CIC), a leading provider of mobile e-business security, today announced
revenue of $2.7 million for the second quarter of fiscal 2002 ended October
31, 2001. The Company had previously stated that it expected to generate at
least $2.5 million in revenue in fiscal Q2. Revenue results reflect a change
in the Company's licensing model implemented during the first fiscal quarter.
Under the Company's new subscription licensing model, revenue is recognized
ratably over the term of the license agreement rather than upon shipment.
Certicom reported a pro forma net loss (excluding non-operating and
restructuring charges) of $7.0 million, or $(0.22) per share, for the second
quarter of fiscal 2002. The Company had previously stated that it expected the
pro forma net loss to be approximately $8.0 million, or $(0.26) per share, in
fiscal Q2. The net loss was smaller than expected due to higher revenue and
lower costs. Total pro forma costs and operating expenses were $9.7 million
compared with guided expectations of $10.5 million.
On an as-reported basis, including restructuring charges of $12.0 million
and non-operating charges of $3.2 million in depreciation and amortization,
$0.5 million for deferred compensation, and $0.5 million for inventory write-
downs, Certicom reported a net loss of $23.2 million, or $(0.74) per share for
the second quarter of fiscal 2002.
"With the new fiscal disciplines we have put in place, we have been able
to exceed all of our stated financial goals in Q2," said Greg Capitolo,
Certicom's Chief Financial Officer. "We generated more revenue, controlled
costs better than our guidance and ended the quarter with more cash on hand
than guided. While the economic environment remains very challenging, we are
confident that we have put in place the appropriate mechanisms to manage our
operations towards profitability by October 2002," Capitolo continued.
Cash and cash equivalents, restricted cash, and short-term investments
("Cash") totaled $30.9 million at the end of Q2 compared with guided
expectations of approximately $20 million. Cash balances were higher due to
the restructured payment schedule of capital expenditures related to leasehold
obligations, improved productivity of collections, lower costs and expenses,
cost-saving decisions related to unoccupied office space, and cash outlays for
restructuring initiatives that were less than conservatively estimated.
For the first six months of fiscal 2002, Certicom reported revenue of
$5.3 million. Certicom reported a pro forma net loss (excluding non-operating
and restructuring charges) of $16.6 million, or $(0.54) per share for the
first six months of fiscal 2002.
On an as-reported basis, including restructuring charges of $21.6 million
and non-operating charges of $9.4 million for goodwill impairment, $6.8-
million in depreciation and amortization, $1.0 million for deferred
compensation, and $0.5 million for inventory write-downs. Certicom reported a
net loss of $55.8 million, or $(1.80) per share, for the first six months of
fiscal 2002.
Q2 FY 2002 Highlights
Enabling Technologies: Certicom expanded relationships with key partners
Palm and Verizon. Certicom has already provided Palm with security for the
Palm VII, its popular wireless handheld, and the Palm Mobile Internet Kit,
which enables Palm users to connect wirelessly to the Internet. In addition,
Certicom is working closely with Palm's Solutions Group to provide application
and VPN security for an array of products for Palm Powered devices. Certicom
signed a multi-year contract with Verizon to provide advanced security for a
disaster recovery program that was launched after the events of September
11th. Certicom also announced key wins with wireless innovators Aether
Systems, Mobile Airways, Motient, ThinAirApps, Visto, and a multi-faceted
relationship with Intel.
Trust Services: Certicom launched the MobileTrust(TM) PKI Express Program
and other exclusive new enhancements to its complete public-key infrastructure
(PKI) offering that further reduce the complexities and costs associated with
PKI. Certicom's offering -- the industry's first PKI solution to extend e-
business security investments to the wireless world -- continued to gain
support from leading vendors, including 724 Solutions, Cysive, Funk Software,
MedQuist, Motorola, VeriSign and others.
Enterprise Application Software: Certicom started shipping movianVPN(TM)
2.0, the industry's first VPN solution for wireless devices using 802.11b (Wi-
Fi) networks. movianVPN 2.0 adds support for leading VPN gateways by Avaya,
the Hewlett-Packard Company (HP), Lucent, NetScreen and Secure Computing as
well as popular handheld device platforms including Microsoft Windows Powered
Handheld PC 2000 and Pocket PC, PalmOS(R) (3.5 and above), and Microsoft's
newly launched Pocket PC 2002. In addition, Certicom announced key movianVPN
bundling agreements with HP, Sierra Wireless and Palm. Certicom's movian
product line continued to gain industry support and registered key wins in the
Fortune 100, Government, Finance, and Healthcare sectors.
"We were pleased with the activity last quarter that enabled us to return
to sequential revenue growth, even with over 75% of our software licenses
coming in subscriptions," said Robert Williams, leader of the Office of the
President. "Our strategy of enhancing our cryptographic toolkit portfolio with
protocol toolkits and application-level products continues to gain traction.
Now that there are signs of renewed growth in the wireless world, we believe
that the opportunities for our complete range of offerings will continue to
expand," Williams concluded.
Q3 FY 2002 Outlook
The following statements are forward looking, and actual results may
differ materially. Please consult the Company's recent disclosures (including
its most recent Form 10-K) on file with the Securities and Exchange Commission
(SEC) and the Ontario Securities Commission (OSC) for a further discussion of
risks.
- Revenue in Q3 FY 2002 is expected to be approximately $3.0 million.
- Total pro forma costs of revenue and operating expenses are expected
to decline from $9.7 million in Q2 to approximately $8.0 million in
Q3. Operating expenses are expected to continue to decline as the cost
savings anticipated from the Company's restructuring initiative
announced on November 9th accrue towards the latter part of the
quarter, as transitions are completed and payroll is reduced.
- The pro forma net loss (including an estimated interest expense of
$0.3 million, and excluding restructuring, non-operating, and any
other non-recurring charges) is expected to decline from $7.0 million
in Q2 to approximately $5.3 million in Q3, or approximately ($0.17)
per share.
- Cash and cash equivalents, short-term investments and restricted cash
are expected to total approximately $17 million at the end of Q3.
- The Company expects to achieve profitability by the end of Q2 FY 2003
(October 2002).
The targets set forth above represent the Company's expectations only as
of the date of this release and should not be viewed as a statement about the
Company's expectations after this date. Although this release may remain
available on the Company's website, its continued availability does not
indicate that the Company is reaffirming or confirming its continued validity.
The Company will not report on its progress during the quarter or comment to
analysts or investors on, or otherwise update, such targets until it releases
its quarterly results.
Conference Call
Certicom will host a conference call to discuss these results. All
parties are invited to listen to the call.
Topic: Q2 FY 2002 Earnings Release
Date: November 29, 2001
Time: 2:00 PM Pacific (5:00 PM Eastern)
Dial-in: 1-800-360-9865 (U.S. and Canada)
1-973-694-6836 (International)
Password "Certicom"
(please dial in at least ten minutes prior to the scheduled
start time)
Webcast: certicom.com
Replay: (Available November 29 7:00 PM Pacific to November 30
12:00 AM Pacific)
1-800-428-6051 (U.S. and Canada)
1-973-709-2089 (International)
Password "217359"
Archive: certicom.com
About Certicom
Certicom is a leading provider of information security software and
services, specializing in solutions for mobile e-business. The company's
products and services are specifically designed to address the challenges
imposed by a wireless data environment. Certicom's solutions incorporate its
efficient encryption technology and are based on industry standards for
information security that utilize public-key cryptography. Certicom's products
are currently licensed to more than 200 customers including Cisco Systems,
Inc., Handspring Inc., Motorola, Inc., Nortel Networks, Openwave Systems,
Inc., Palm, Inc., QUALCOMM, Inc., Research In Motion Ltd., Sony International
(Europe) GmbH and Verizon Communications Inc. Certicom's headquarters and
worldwide sales and marketing operations are based in the Silicon Valley in
Hayward. For more information, visit Certicom's Web site at
certicom.com.
Certicom, MobileTrust, movian and movianVPN are trademarks of Certicom
Corp. All other companies and products listed herein are trademarks or
registered trademarks of their respective holders.
Except for historical information contained herein, this press release
contains forward-looking statements that involve risks and uncertainties.
Actual results may differ materially. Factors that might cause a difference
include, but are not limited to, those relating to the acceptance of mobile
and wireless devices and the continued growth of e-commerce and m-commerce,
the continued acceptance by our customers of our subscription license model,
our ability to implement our restructuring initiatives and our ability to
realize resulting cost savings, the increase of the demand for mutual
authentication in m-commerce transactions, the acceptance of Elliptic Curve
Cryptography (ECC) technology as an industry standard, the market acceptance
of our principal products and sales of our customer's products, the impact of
competitive products and technologies, the possibility of our products
infringing patents and other intellectual property of fourth parties, and
costs of product development. Certicom will not update these forward-looking
statements to reflect events or circumstances after the date hereof. More
detailed information about potential factors that could affect Certicom's
financial results is included in the documents Certicom files from time to
time with the Securities and Exchange Commission and Canadian securities
regulatory authorities.
<<
CERTICOM CORP.
Pro Forma Condensed Consolidated Statements of Operations
(In thousands of U.S. dollars, except per share data)
(unaudited)
-------------------------------------------------------------------------
Three months ended Six months ended
October October October October
31, 31, 31, 31,
2001(1) 2000(2) 2001(3) 2000(4)
-------------------- --------------------
Revenues:
Products $ 1,052 $ 4,619 $ 2,002 $ 9,015
Services 1,656 1,682 3,250 2,339
--------- --------- --------- ---------
Total revenues 2,708 6,301 5,252 11,354
Cost of revenues:
Products 71 223 147 455
Services 1,505 1,588 3,214 2,716
--------- --------- --------- ---------
Total cost of revenues 1,576 1,811 3,361 3,171
Gross Margin 1,132 4,490 1,891 8,183
Operating expenses:
Selling and marketing 3,546 4,232 9,156 7,264
Product development and
engineering 1,888 3,020 4,414 5,448
General and administrative 2,673 2,760 5,650 5,231
--------- --------- --------- ---------
Total operating expenses 8,107 10,012 19,220 17,943
--------- --------- --------- ---------
Loss from operations (6,975) (5,522) (17,329) (9,760)
Interest income, expense
& other 40 833 756 1,785
--------- --------- --------- ---------
Loss before provisions for
income taxes (6,935) (4,689) (16,573) (7,975)
Provision for income taxes 45 55 45 135
--------- --------- --------- ---------
Net loss $ (6,980) $ (4,744) $(16,618) $ (8,110)
--------- --------- --------- ---------
--------- --------- --------- ---------
Basic and diluted net loss
per common share $ (0.22) $ (0.18) $ (0.54) $ (0.31)
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average shares
outstanding (thousands) 31,346 25,974 31,059 25,770
---------------------------
1 The above Pro Forma Condensed Consolidated Statement of Operations
for the quarter ended October 31, 2001 have been adjusted to exclude
restructuring charges of $12.0 million, depreciation and amortization
of $3.2 million, and deferred compensation of $0.5 million, and an
inventory write-down of $0.5 million.
2 The above Pro Forma Condensed Consolidated Statement of Operations for
the quarter ended October 31, 2000 have been adjusted to exclude
depreciation and amortization of $3.0 million, and deferred
compensation of $1.4 million.
3 The above Pro Forma Condensed Consolidated Statement of Operations for
the six months ended October 31, 2001 have been adjusted to exclude
restructuring charges of $21.6 million, goodwill impairment of
$9.4 million, depreciation and amortization of $6.8 million, deferred
compensation of $1.0 million and an inventory write-down of
$0.5 million.
4 The above Pro Forma Condensed Consolidated Statement of Operations for
the six months ended October 31, 2000 have been adjusted to exclude
depreciation and amortization of $5.7 million, deferred compensation
of $1.5 million, and a non-cash interest charge of $0.4 million.
CERTICOM CORP.
Condensed Consolidated Statements of Operations
(In thousands of U.S. dollars, except per share data)
(unaudited)
-------------------------------------------------------------------------
Three months ended Six months ended
October October October October
31, 2001 31, 2000 31, 2001 31, 2000
--------------------- ---------------------
Revenues:
Products $ 1,052 $ 5,052 $ 2,002 $ 9,015
Services 1,656 1,249 3,250 2,339
--------- --------- --------- ---------
Total revenues 2,708 6,301 5,252 11,354
Cost of revenues:
Products 557 223 633 455
Services(1) 2,021 2,341 4,504 3,360
--------- --------- --------- ---------
Total cost of revenues 2,578 2,564 5,137 3,815
Gross Margin 130 3,737 115 7,539
Operating expenses:
Selling and marketing 3,546 4,340 9,156 7,479
Product development and
engineering 1,888 3,020 4,414 5,448
General and administrative(2) 2,673 3,258 5,339 5,840
Depreciation and amortization 3,190 2,986 6,779 5,735
Goodwill impairment - - 9,352 -
Restructuring costs 12,047 - 21,580 -
--------- --------- --------- ---------
Total operating expenses 23,344 13,604 56,620 24,502
--------- --------- --------- ---------
Loss from operations (23,214) (9,867) (56,505) (16,963)
Interest income, expense
& other 40 833 756 1,362
--------- --------- --------- ---------
Loss before provision for
income taxes (23,174) (9,034) (55,749) (15,601)
Provision for income taxes 45 55 45 135
--------- --------- --------- ---------
Net loss $(23,219) $ (9,089) $(55,794) $(15,736)
--------- --------- --------- ---------
--------- --------- --------- ---------
Basic and diluted net loss
per common share $ (0.74) $ (0.35) $ (1.80) $ (0.61)
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average shares
outstanding (thousands) 31,346 25,974 31,059 25,770
------------------------------
1 Cost of services includes deferred compensation amortization expense
of $0.5 million and $0.9 million for the quarters and ended
October 31, 2001 and October 31, 2000 respectively, and $1.3 million
and $0.9 million for the six months ended October 31, 2001 and
October 31, 2000 respectively.
2 General and administrative expenses include a deferred compensation
expense of $0.5 million for the quarter ended October 31, 2000, and a
credit of $0.3 million for the six months ended October 31, 2001, and
an expense of $0.6 million for the six months ended October 31, 2000.
CERTICOM CORP.
Condensed Consolidated Balance Sheets
(In thousands of U.S. dollars)
(unaudited)
-------------------------------------------------------------------------
October 31, April 30,
2001 2001
----------- -----------
ASSETS
Current assets:
Cash $ 610 $ 1,942
Marketable securities, available for sale 28,292 50,310
Accounts receivable, net 3,385 7,149
Prepaid expenses, deposits,
and other 1,984 3,428
-------------------------
Total current assets 34,271 62,829
Property and equipment, net 17,991 18,288
Intangibles, net 13,753 26,348
Other assets, net 710 -
Restricted cash 1,956 2,009
-------------------------
Total assets $ 68,681 $ 109,474
-------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,055 $ 9,240
Accrued liabilities 2,455 3,106
Accrued restructuring charges 5,165 -
Deferred revenue 2,736 2,168
-------------------------
Total current liabilities 15,411 14,514
Other payables 510 510
Accrued restructuring charges 797 -
Lease Inducements 672 1,093
Notes payable 8,488 -
-------------------------
Total liabilities 25,878 16,117
-------------------------
Shareholders' equity:
Common stock 183,875 175,151
Additional paid-in capital 13,088 19,945
Deferred compensation expense (688) (4,314)
Accumulated other comprehensive loss (2,713) (2,460)
Retained deficit (150,759) (94,965)
-------------------------
Total shareholders' equity 42,803 93,357
-------------------------
Total liabilities and shareholders' equity $ 68,681 $ 109,474
-------------------------
>>
%SEDAR: 00003865E
-30-
For further information: Investors and Financial Analysts -
Gregory M. Capitolo, Chief Financial Officer, Certicom Corp., (510) 780-5084,
gcapitolo@certicom.com; Media - Lorraine Kauffman, Corporate
Communications, Certicom Corp., (510) 780-5417, lkauffman@certicom.com
CERTICOM CORP. has 182 releases in this database. |
