(Source: PRNewswire)
SANTA ANA, Calif. and ISMANING, Germany, Aug. 14 /PRNewswire- FirstCall/ -- SCM Microsystems, Inc. (Nasdaq: SCMM, Prime Standard: SMY), a leading provider of solutions for secure access, secure identity and secure exchange, today announced results for its second quarter ended June 30, 2009. Despite continued sluggishness of security and identity programs in the U.S., Japan and Europe, revenue grew nearly 70% year over year as a result of successful strategic initiatives, including the Company's merger with Hirsch Electronics Corporation and investments made in key markets and regions. All figures are reported in accordance with U.S. GAAP, except as noted.
"Our merger with Hirsch is proving a strategic success, as it has strengthened our financial performance across multiple metrics, our ability to capture new and existing sales opportunities and our overall business profile. With only two months of operating results from our Hirsch subsidiary included in the second quarter, sales doubled in our Security and Identity Solutions business, overall gross profit margin increased by eight percentage points and the Hirsch subsidiary generated operating profit on a standalone basis," said Felix Marx, chief executive officer of SCM Microsystems. "The integration of Hirsch and SCM is proceeding as planned. Sales and marketing cross training is under way and we have already secured our first joint sales win. Integrated finance systems, including reporting processes, are in place or in process, and the move of our U.S. headquarters to Santa Ana, California is nearly complete."
"We also charted significant progress in our strategy to regionally expand and diversify our customer base in the second quarter. Strategic sales programs and a systematic focus on the development of new customers and sales channels resulted in record sales in Asia, other than Japan, primarily to new PC OEM customers," continued Marx. "In Europe, we continued to ship desktop eHealth terminals and recorded our first sales of mobile terminals for the German electronic health card program, under which deployments began in April. Additionally, we leveraged the investments made in the technology underlying these terminals to supply solutions for emerging applications outside the healthcare sector."
Second Quarter Results
On April 30, 2009, SCM completed its merger with Hirsch Electronics Corporation, and financial results for the 2009 second quarter include two months of operating results for the Hirsch subsidiary.
SCM's primary business segment, which includes operations from the Hirsch subsidiary, is Security and Identity Solutions, which provides contact, contactless and mobile smart card reader technology, digital identity and transaction platforms and access control systems to enable security, identity, contactless payment, e- health and electronic government services. Second-quarter revenue from the Security and Identity Solutions business was $10.0 million, up more than 100% from $4.9 million in the same quarter a year earlier. The primary reason for this increase was the inclusion of two months of revenue from the Hirsch subsidiary. On a standalone basis, revenue in the Hirsch subsidiary was up both sequentially and year over year in the second quarter, led by sales of access control systems and strong government agency deployments. SCM's organic smart card reader revenue increased 12%, driven by record sales in Asia (excluding Japan), which offset declines in Europe and Japan.
Revenue from SCM's Digital Media and Connectivity business decreased 43% to $0.9 million in the second quarter, compared with $1.6 million in the same quarter of 2008, primary as a result of variability in the timing of orders from major customers.
In aggregate, total revenue in the second quarter of 2009 was $11.0 million, up nearly 70% from $6.5 million in the second quarter of 2008.
Gross profit margin in the second quarter was positively impacted by higher-margin sales made by the Hirsch subsidiary, and increased to 51% of revenue, compared with 43% in the same quarter a year ago.
As expected, operating expenses in the second quarter increased year over year as a result of adding two months of expenses for the Hirsch subsidiary, from $5.1 million in the second quarter of 2008 to $7.4 million in the current-year period, an increase of 45%. Operating expenses in the second quarter of 2009 included approximately $0.5 million in transaction-related costs. Aside from Hirsch subsidiary and merger-related expenses, operating expenses decreased both sequentially and year over year across all major categories..
Operating loss decreased to $(1.9) million in the second quarter, compared with operating loss of $(2.3) million in the same quarter of 2008. Additionally, the Company recorded other expenses and loss on investments of $0.5 million, as well as tax benefit of $1.7 million in the second quarter related to the accounting for taxes following the Hirsch transaction.
Loss from continuing operations in the second quarter of 2009 was $(0.6) million, or $(0.03) per share, compared with loss from continuing operations of $(2.0) million, or $(0.13) per share in the prior year period.
