LaserCard: Fiscal 2Q09 Financial Results

LaserCard Corporation announced the financial results for its fiscal 2009 second quarter ended September 30, 2008.

Revenues for the second quarter of fiscal 2009 were $13.5 million, compared with $10.7 million in both the prior quarter and the same quarter a year ago. The net profit for the second quarter of fiscal 2009 was $239,000, or $0.02 per diluted share, compared with a net loss of $1.3 million or ($0.11) per diluted share in the prior quarter, and a net loss of $498,000, or ($0.04) per diluted share in the same quarter a year ago.

LaserCard optical memory card revenues for the quarter were $8.63 million, up from $5.91 million in the first quarter of fiscal 2009. Revenues from specialty cards and printers totaled $3.93 million, compared with $3.63 million recorded in the previous quarter. Drives, systems and services segment revenue for the quarter was $0.91 million, compared with $1.18 million in the first quarter.

Cash
LaserCard Corporation’s cash, cash equivalents, and investments were $22.9 million at September 30, 2008 compared with $18.5 million at March 31, 2008. Cash provided by operating activities in the second quarter totaled about $10 million due to increased collections of accounts receivable and the $5.8 million received as an advance payment on the order from our newest customer.

Deferred Revenue and Advanced Payments
The optical memory card license and factory equipment project for Prevent Global/GIG of Slovenia is now expected to be completed within twelve months. As a result, LaserCard is classifying the deferred revenue and advance payments totaling $27.7 million for this project as current liabilities and the equipment held for resale to GIG valued at $6.9 million as current assets. Deferred revenue and advance payments do not represent an obligation on our part to make a future cash payment; instead, will be recognized in revenue when the contract is completed. The advance payments received are not refundable. The classification of these large amounts as current assets and liabilities will affect our working capital and current ratio measures until the project is complete and the revenues and costs are recorded in the statement of operations.

Auction Rate Securities (ARS)
We have $13.5 million invested in ARS that currently is valued at $12.4 million on our balance sheet. UBS AG has issued a prospectus dated October 7, 2008 describing a ‘Rights’ offering whereby UBS is offering to purchase certain ARS it placed, including those we hold, at par or face value. UBS will have the ‘Right’ to purchase our ARS at par at any time and LaserCard will have the ‘Right’ to sell our ARS at par to UBS beginning June 30, 2010. As part of the offering, UBS would provide us a line of credit expected to be about 75% of the par value of the ARS until they are purchased by UBS. The line of credit has certain restrictions described in the prospectus. The ‘Rights’ expire on July 3, 2012. LaserCard has accepted the ‘Rights’ offering.

"We are pleased with our solid financial performance in the second quarter," said Robert DeVincenzi, chief executive officer of LaserCard. "We achieved profitability, with revenues broadly dispersed across our customer base.

"In my initial five months at LaserCard, a key focus has been the company’s evolution toward becoming a full solutions provider which can configure its offerings to meet specific project needs and to complement the offerings of our partners," continued DeVincenzi. "Our enabling services strategy, in conjunction with our initiative to sell across a broad credentialing solutions portfolio, is yielding results."