AuthenTec Reports Second Quarter Financial Results

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, including, without limitation, statements relating to integration of our TrueSuite identity management software on additional consumer notebook models by year end, the timing of volume production from design wins for 2011 and 2012, our growth opportunities in the NFC market, revenue, operating expenses and non-GAAP net income in our third quarter, growth opportunities for our technologies and software, annual cost-savings from the UPEK acquisition and revenue growth, profitability and continued success in the second half of 2011. 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, the Company’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: the Company’s ability to integrate the UPEK business, the Company’s ability to operate the acquired business profitably, demand for, and market acceptance of, new and existing fingerprint sensors, identity management software and embedded security products, the Company’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 the Company increases its activity and opportunities in the wireless market, and additional opportunities in various markets for applications that might use AuthenTec’s products, the Company’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 17, 2011. These “forward-looking statements” are made only as of the date hereof, and the Company undertakes no obligation to update or revise the “forward-looking statements,” whether as a result of new information, future events or otherwise.

About AuthenTec

AuthenTec is the world’s #1 provider of fingerprint sensors, identity management software, and embedded security solutions. AuthenTec solutions address enterprise, consumer and government applications for a growing base of top tier global customers. Already shipped on hundreds of millions of devices, the Company's smart sensor products, software and embedded security solutions are used virtually everywhere, from the PC on your desk to the mobile device in your hand to the server in the cloud. AuthenTec offers developers and users secure and convenient ways to manage today's rapidly evolving digital identities and security needs. For more information, visit  www.authentec.com or follow us at twitter.com/authentecnews.

AuthenTec, Inc.          
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Table 1
Three months ended Six months ended
July 1, April 1, July 2, July 1, July 2,
2011   2011   2010   2011   2010  
 
Revenue $   16,211 $   15,476 $   10,721 $   31,687 $   19,897
 
Cost of revenue 8,464 8,051 5,210 16,515 9,936
 
Gross profit 7,747 7,425 5,511 15,172 9,961
47.8 % 48.0 % 51.4 % 47.9 % 50.1 %
Operating expenses:
Research and development 6,477 5,887 4,742 12,364 8,728
Selling and marketing 4,077 3,990 3,306 8,067 5,572
General and administrative 1,740 2,457 2,073 4,198 5,026
Restructuring and impairment related charges     39       283       -       322       -  
Total operating expenses 12,333 12,617 10,121 24,951 19,326
         
Operating loss (4,586 ) (5,192 ) (4,610 ) (9,779 ) (9,365 )
 
Other income (expense):
Other expenses (146 ) (303 ) - (449 ) -
Earnout adjustment - - 729 - 729
Interest income     29       29       44       58       84  
Total other income (expense), net (117 ) (274 ) 773 (391 ) 813
 
Provision for income taxes 141 136 63 276 63
         
Net Loss $   (4,844 ) $   (5,602 ) $   (3,900 ) $   (10,446 ) $   (8,615 )
 
Net loss per share:
Basic $   (0.11 ) $   (0.13 ) $   (0.13 ) $   (0.24 ) $   (0.29 )
Diluted $   (0.11 ) $ (0.13 ) $   (0.13 ) $   (0.24 ) $   (0.29 )
 
Shares used in computing net loss per common share:
Basic     43,753       43,600       29,912       43,677       29,532  
Diluted     43,753       43,600       29,912       43,677       29,532  
 
 
Three months ended Six months ended
July 1, April 2, July 2, July 1, July 2,
2011   2010   2010   2011   2010  
Other Financial Metrics:
Stock-based compensation expense:
Cost of revenue 21 153 50 174 114
Research and development 164 339 173 503 402
Selling and marketing 135 274 200 409 448
General and administrative 90 378 202 468 447
Costs related to reduction in workforce
Cost of revenue 50 - - 50 -
Research and development 370 - - 370 -
Selling and marketing 102 - 415 102 415
Legal and acquisition related costs
Selling and marketing 72 83 155
General and administrative 309 249 601 558 1,937
Amortization of purchased tangible and intangible assets
Cost of revenue 895 569 291 1,464 380
Research and development 234 236 65 470 96
Selling and marketing 464 465 130 929 155
 
Restructuring and impairment related charges 39 283 - 322 -
Earnout adjustment - - (729 ) - (729 )
AuthenTec, Inc.          
Non-GAAP Financial Information - Consolidated
(In thousands, except per share amounts)
(Unaudited)
Table 2
Three months ended Six months ended
July 1, April 1, July 2, July 1, July 2,
2011   2011   2010   2011   2010  
 
Net loss on GAAP basis: $ (4,844 ) $ (5,602 ) $ (3,900 ) $ (10,446 ) $ (8,615 )
Stock-based compensation expense 410 1,144 625 1,554 1,411
Costs related to reduction in workforce 522 - 415 522 415
Legal and acquisition related costs 381 332 601 713 1,937
Amortization of purchased tangible and intangible assets 1,593 1,270 486 2,863 631
Earnout adjustment - - (729 ) - (729 )
Restructuring and impairment related charges   39     283     -     322     -  
Net loss on non-GAAP basis: $ (1,899 ) $ (2,573 ) $ (2,502 ) $ (4,472 ) $ (4,950 )
 
Non-GAAP basic earnings per share $ (0.04 ) $ (0.06 ) $ (0.08 ) $ (0.10 ) $ (0.17 )
Non-GAAP diluted earnings per share $ (0.04 ) $ (0.06 ) $ (0.08 ) $ (0.10 ) $ (0.17 )
 
 
Three months ended Six months ended
July 1, April 1, July 2, July 1, July 2,
2011   2011   2010   2011   2010  
 
Gross profit on GAAP basis: $ 7,747 $ 7,425 $ 5,511 $ 15,172 $ 9,961
Stock-based compensation expense 21 153 50 174 114
Costs related to reduction in workforce 50 - - 50 -
Amortization of purchased tangible and intangible assets   895     569     291     1,464     380  
Gross profit on non-GAAP basis: $ 8,713   $ 8,147   $ 5,852   $ 16,860   $ 10,455  
 
Non-GAAP gross margin 53.7 % 52.6 % 54.6 % 53.2 % 52.5 %
 
 
 
Three months ended Six months ended
July 1, April 1, July 2, July 1, July 2,
  2011     2011     2010     2011     2010  
 
Operating expenses on GAAP basis: $

12,333

$ 12,617 $ 10,121 $ 24,951 $ 19,326
Stock-based compensation expense (389 ) (991 ) (575 ) (1,380 ) (1,297 )
Costs related to reduction in workforce (472 ) - (415 ) (472 ) (415 )
Legal and acquisition related costs (381 ) (332 ) (601 ) (713 ) (1,937 )
Amortization of purchased tangible and intangible assets (698 ) (701 ) (195 ) (1,399 ) (251 )
Restructuring and impairment related charges   (39 )   (283 )   -     (322 )   -  
Operating expenses on non-GAAP basis: $

10,354

  $ 10,310   $ 8,335   $ 20,665   $ 15,426  
AuthenTec, Inc.    
Consolidated Balance Sheets
(In thousands)
(Unaudited)
Table 3
   
As of
July 1, December 31,
2011   2010  
Assets
Current assets
Cash and cash equivalents $ 6,965 $ 13,280
Short-term investments 9,875 15,176
Accounts receivable, net of allowances of $276 and $150, respectively 11,539 9,678
Inventory 7,054 5,460
Other current assets 1,932   1,993  
Total current assets 37,365 45,587
Long-term investments 3,393 3,323
Purchased intangible assets 21,245 24,033
Goodwill 2,729 2,729
Property and equipment, net 4,083   4,430  
Total assets $ 68,815   $ 80,102  
 
Liabilities and stockholders’ equity
Current liabilities
Accounts payable $ 7,277 $ 6,907
Accrued compensation and benefits 3,546 3,640
Accrued litigation related legal fees 1,078 1,802
Other accrued liabilities 2,988 4,002
Deferred revenue 3,382   4,678  
Total current liabilities 18,271 21,029
Deferred rent 472  

 

546  
Total liabilities 18,743   21,575  
 
 
 
Stockholders’ equity
Common stock 438 436
Additional paid-in capital 190,802 189,205
Other comprehensive income 446 54
Accumulated deficit (141,614 ) (131,168 )
Total stockholders’ equity $ 50,072   $ 58,527  
Total liabilities and stockholders’ equity $ 68,815   $ 80,102  

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