EX-99.1 2 a27884exv99w1.htm EXHIBIT 99.1 exv99w1
 

EXHIBIT 99.1
(SmithMicro Software)
     
AT THE COMPANY:
Bruce T. Quigley
Vice President of Corporate Development and
Investor Relations
949-362-5800
bquigley@smithmicro.com
  IR INQUIRIES:
Charles Messman, Todd Kehrli
MKR Group
323-468-2300
ir@mkr-group.com
 
NOT FOR IMMEDIATE RELEASE
SMITH MICRO SOFTWARE REPORTS RECORD FOURTH QUARTER AND FISCAL 2006 RESULTS
Fiscal 2006 Revenue Increased 169% to $54.5 Million
Fiscal 2006 Pro Forma Earnings Increased 219% to $17.5 Million or $0.69 per Diluted Share;
Fourth Quarter Revenue Increase of 115% to $17.2 Million
Fourth Quarter Pro Forma Earnings Increased 168% to $7.0 Million or $0.26 per Diluted Share
Aliso Viejo, Calif., February 28, 2006 — Smith Micro Software, Inc. (NASDAQ: SMSI), a developer and marketer of a wide range of software solutions for the wireless market, today reported its 2006 fourth quarter and 2006 financial results.
Fourth Quarter 2006 Key Financial Results:
  •   Revenue increased to a record $17.2 million, up 115% year-over-year.
 
  •   Pro Forma Net Income was a record $7.0 million, compared to pro forma net income of $2.6 million in the fourth quarter of 2005.
 
  •   Pro Forma earnings were a record $0.26 per diluted share on 26.7 million shares, compared to pro forma earnings of $0.11 per diluted share in the fourth quarter of 2005 on 23.9 million shares.
Fiscal Year 2006 Key Financial Results:
  •   Revenue increased to a record $54.5 million, up 169% year-over-year.
  •   Pro Forma Net Income was a record $17.5 million, compared to pro forma net income of $5.5 million for fiscal 2005.

 

 

Smith Micro 2006 Fourth Quarter and Year-End Financial Results   Page 2 of 12
  •   Pro Forma earnings were a record $0.69 per diluted share on 25.3 million shares, compared to pro forma earnings of $0.24 per diluted share in Fiscal 2005 on 22.8 million shares.
  •   Cash Flow from operations was $14.8 million, up $12.3 million from Fiscal 2005, or 499%.
Financial Discussion:
“We are very pleased with the fourth quarter and year-end 2006 financial results,” said William W. Smith, Jr., President and CEO of Smith Micro Software, Inc. “During the fiscal year we achieved several milestones as we continue to position the Company as the leader in the wireless software marketplace. Not only did we achieve record financials results on both the top and bottom line for the seventh quarter in a row, we also significantly expanded our product solutions both internally and through acquisitions. On the acquisitions front we acquired Photags, Inc. in April 2006, which expanded our multimedia platform. We also announced two additional acquisitions, Ecutel Systems Inc., and Insignia Solutions, plc. Ecutel, whose product line adds significant technology of persistent IP roaming for our connectivity products, provides additional security and device management features for our enterprise solutions. On February 11th we also announced an agreement to acquire the assets of Insignia Solutions plc, which will bring additional wireless data services to our product offerings such as firmware update over the air, and device management. Another significant synergy is Insignia’s strong worldwide customer base which provides attractive cross-selling opportunities. As a whole, these acquisitions bring us instant international expansion, an expanded sales force presence, and several new development teams to drive product development.”
Mr. Smith continued, “As well as acquiring new technologies and products solutions, we also launched several new products which have driven our sales growth. In September 2006, we launched our flagship product “Quicklinkâ Music”, which has been a significant revenue generator for the company. To date we have signed on two carriers, and we will continue to work hard to sign additional carriers both domestically and internationally in the coming year. We also expanded our Stuffitâ Wireless solution and continue to make progress with our sales efforts with major handset manufacturers.”

 

 

Smith Micro 2006 Fourth Quarter and Year-End Financial Results   Page 3 of 12
Mr. Smith concluded, “Although we have made significant strides with our business case in 2006, I believe we have only begun to touch the surface of the opportunity that lies ahead of us. We look to 2007 and expect to see a continuation of strong financial results, continued roll out of new solutions for our growing customer base, and expansion into new market opportunities as we continue to build our leadership position in the wireless software space.
Smith Micro reported record net revenue of $17.2 million for the fourth quarter ended December 31, 2006, a 115% increase when compared to the $8.0 million recorded in the fourth quarter of 2005. Fiscal year 2006 revenue was a record $54.5 million, as compared to $20.3 million for fiscal 2005.
Pro forma net income (which excludes amortization of intangible assets associated with acquisitions, stock compensation related expenses and non-cash tax expenses) for the fourth quarter of 2006 was $7.0 million, or $0.26 per diluted share, compared to pro forma net income of $2.6 million or $0.11 per diluted share in the fourth quarter of 2005. Diluted shares outstanding as of December 31, 2006 increased significantly to 26.7 million as compared to the 23.9 million shares outstanding in the fourth quarter of 2005.
Pro forma net income for fiscal 2006 was $17.5 million or $0.69 per diluted share as compared to $5.5 million or $0.24 per diluted share for fiscal 2005. Diluted shares attributed to fiscal 2006 were 25.3 million as compared to 22.8 million in fiscal 2005.
On a GAAP basis, the company earned $0.14 per diluted share for the fourth quarter of 2006 as compared to $0.09 per diluted share in the fourth quarter of 2005. GAAP diluted EPS for fiscal 2006 was $0.35 as compared to $0.21 for fiscal 2005.
Total cash and equivalents at December 31, 2006 increased significantly to $92.6 million, compared to $21.2 million at December 31, 2005. The company successfully completed a secondary offering which brought the company an additional $55.0 million in December.
The Company uses pro forma reconciliation of its condensed consolidated statements of income in the presentation of financial results in this press release. Management believes that this presentation may be more meaningful in analyzing our results of operations and income

 

 

Smith Micro 2006 Fourth Quarter and Year-End Financial Results   Page 4 of 12
generation, since amortization of intangibles from acquisitions, amortization of deferred stock-based compensation and impairment gains and losses on investments, and non-cash tax expense are excluded from the pro forma earnings calculation. This presentation may be considered more indicative of our ongoing operational performance. The tables below present the differences between pro forma earnings and net income on an absolute and per share basis.
Investor Conference Call
Smith Micro will hold an investor conference call to discuss the company’s fourth quarter results at 4:30 p.m. Eastern time today, February 28, 2007. The call can be accessed by dialing (800) 218-4007 and giving the pass code “SMSI.” Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. In addition, the conference call will be available over the Internet at www.smithmicro.com in the Investor Relations section.
About Smith Micro Software:
Smith Micro Software, Inc., headquartered in Aliso Viejo, CA, is a developer and marketer of wireless communications and utility software products for multiple OS platforms. The company designs easy-to-use software for personal computing and business solutions around the world. With a focus on wireless and broadband technologies and the Internet, the company’s products and services enable wireless communications, file and image compression, digital image and music management. In addition, Smith Micro develops and publishes award-winning software solutions for Windows and Macintosh, empowering users in the areas of information access, removal, recovery, security, and Internet distribution. Smith Micro’s leading brands are QuickLink®, StuffIt®, CheckIt®, Internet Cleanup™ and Spring Cleaning®. Smith Micro’s complete line of products is available through retail stores, Value-Added Resellers (VARs), Smith Micro’s consumer, enterprise, wireless OEM sales groups and the company’s websites. Smith Micro’s common stock trades on The NASDAQ Global Market® under the symbol SMSI.
Safe Harbor Statement: This release may contain forward-looking statements that involve risks and uncertainties, including without limitation forward-looking statements relating to the company’s financial prospects and projections, the company’s ability to increase its business and the anticipated timing and financial performance of new products and potential acquisitions. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are new and changing technologies, customer acceptance of those technologies, fluctuations or cancellations in orders from customers, new and continuing adverse economic conditions, and the company’s ability to

 

 

Smith Micro 2006 Fourth Quarter and Year-End Financial Results   Page 5 of 12
compete effectively with other software companies. These and other factors discussed in the company’s filings with the Securities and Exchange Commission, including its filings on Forms 10-K and 10-Q, could cause actual results to differ materially from those presented in any forward-looking statements. Smith Micro assumes no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of this press release.
Smith Micro, the Smith Micro logo, QuickLink and StuffIt are trademarks or registered trademarks of Smith Micro Software, Inc. All other trademarks and product names are the property of their respective companies.
Note: Financial Schedules Attached

 

 

Smith Micro 2006 Fourth Quarter and Year-End Financial Results   Page 6 of 12
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Three Months Ended December 31, 2006
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc. and PhoTags, Inc., stock compensation and non-cash income tax expenses)
(in thousands, except per share amounts)
                         
    Per GAAP     Adjustments     Proforma  
NET REVENUE
                        
Products
   $ 17,082     $ —     $ 17,082  
Services
     146       —       146  
 
                  
Total Net Revenues
     17,228       —       17,228  
COST OF SALES
                        
Products
     5,504       (260 )     5,244  
Services
     60       0       60  
 
                  
Total Cost of Sales
     5,564       (260 )     5,304  
GROSS PROFIT
                        
Products
     11,578       260       11,838  
Services
     86       —       86  
 
                  
Total Gross Profit
     11,664       260       11,924  
OPERATING EXPENSES
                        
Selling & Marketing
     2,517       (684 )     1,833  
Research & Development
     2,274       (295 )     1,979  
General & Administrative
     2,701       (1,022 )     1,679  
 
                  
Total Operating Expenses
     7,492       (2,001 )     5,491  
 
                  
Operating Income
     4,172       2,261       6,433  
Interest Income
     532               532  
 
                  
Income Before Income Taxes
     4,704       2,261       6,965  
Income Tax Expense
     1,094       (1,094 )     —  
 
                  
Net Income
   $ 3,610     $ 3,355     $ 6,965  
 
                  
 
                        
Income Per Share, Basic
   $ 0.14             $ 0.28  
 
                    
 
                        
Weighted Average Shares Outstanding, Basic
     24,930               24,930  
 
                    
 
                        
Income Per Share, Diluted
   $ 0.14             $ 0.26  
 
                    
 
                        
Weighted Average Shares Outstanding, Diluted
     26,687               26,691  
 
                    

 

 

Smith Micro 2006 Fourth Quarter and Year-End Financial Results   Page 7 of 12
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Three Months Ended December 31, 2005
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc.)
(in thousands, except per share amounts)
                         
    Per GAAP     Adjustments     Proforma  
NET REVENUE
                        
Products
   $ 7,856     $ —     $ 7,856  
Services
     146       —       146  
 
                  
Total Net Revenues
     8,002       —       8,002  
COST OF SALES
                        
Products
     1,983       (267 )     1,716  
Services
     65       0       65  
 
                  
Total Cost of Sales
     2,048       (267 )     1,781  
GROSS PROFIT
                        
Products
     5,873       267       6,140  
Services
     81       —       81  
 
                  
Total Gross Profit
     5,954       267       6,221  
OPERATING EXPENSES
                        
Selling & Marketing
     1,307       (118 )     1,189  
Research & Development
     1,325               1,325  
General & Administrative
     1,254               1,254  
 
                  
Total Operating Expenses
     3,886       (118 )     3,768  
 
                  
Operating Income
     2,068       385       2,453  
Interest Income
     192               192  
 
                  
Income Before Income Taxes
     2,260       385       2,645  
Income Tax Expense
     49               49  
 
                  
Net Income
   $ 2,211     $ 385     $ 2,596  
 
                  
 
                        
Income Per Share, Basic
   $ 0.10             $ 0.12  
 
                    
 
                        
Weighted Average Shares Outstanding, Basic
     22,106               22,106  
 
                    
 
                        
Income Per Share, Diluted
   $ 0.09             $ 0.11  
 
                    
 
                        
Weighted Average Shares Outstanding, Diluted
     23,900               23,900  
 
                    

 

 

Smith Micro 2006 Fourth Quarter and Year-End Financial Results   Page 8 of 12
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Twelve Months Ended December 31, 2006
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc. and PhoTags, Inc., stock compensation and non-cash income tax expenses)
(in thousands, except per share amounts)
                         
    Per GAAP     Adjustments     Proforma  
NET REVENUE
                        
Products
   $ 53,773     $ —     $ 53,773  
Services
     696       —       696  
 
                  
Total Net Revenues
     54,469       —       54,469  
COST OF SALES
                        
Products
     19,989       (1,119 )     18,870  
Services
     270       0       270  
 
                  
Total Cost of Sales
     20,259       (1,119 )     19,140  
GROSS PROFIT
                        
Products
     33,784       1,119       34,903  
Services
     426       —       426  
 
                  
Total Gross Profit
     34,210       1,119       35,329  
OPERATING EXPENSES
                        
Selling & Marketing
     9,057       (2,560 )     6,497  
Research & Development
     7,899       (1,088 )     6,811  
General & Administrative
     8,467       (2,605 )     5,862  
 
                  
Total Operating Expenses
     25,423       (6,253 )     19,170  
 
                  
Operating Income
     8,787       7,372       16,159  
Interest Income
     1,403               1,403  
 
                  
Income Before Income Taxes
     10,190       7,372       17,562  
Income Tax Expense
     1,234       (1,182 )     52  
 
                  
Net Income
   $ 8,956     $ 8,554     $ 17,510  
 
                  
 
                        
Income Per Share, Basic
   $ 0.38             $ 0.74  
 
                    
 
                        
Weighted Average Shares Outstanding, Basic
     23,753               23,753  
 
                    
 
                        
Income Per Share, Diluted
   $ 0.35             $ 0.69  
 
                    
 
                        
Weighted Average Shares Outstanding, Diluted
     25,330               25,330  
 
                    

 

 

Smith Micro 2006 Fourth Quarter and Year-End Financial Results   Page 9 of 12
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Twelve Months Ended December 31, 2005
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc. )
(in thousands, except per share amounts)
                         
    Per GAAP     Adjustments     Proforma  
NET REVENUE
                        
Products
   $ 19,637     $ —     $ 19,637  
Services
     621       —       621  
 
                  
Total Net Revenues
     20,258       —       20,258  
COST OF SALES
                        
Products
     3,818       (534 )     3,284  
Services
     285       0       285  
 
                  
Total Cost of Sales
     4,103       (534 )     3,569  
GROSS PROFIT
                        
Products
     15,819       534       16,353  
Services
     336       —       336  
 
                  
Total Gross Profit
     16,155       534       16,689  
OPERATING EXPENSES
                        
Selling & Marketing
     3,410       (236 )     3,174  
Research & Development
     3,963               3,963  
General & Administrative
     4,621               4,621  
 
                  
Total Operating Expenses
     11,994       (236 )     11,758  
 
                  
Operating Income
     4,161       770       4,931  
Interest Income
     667               667  
 
                  
Income Before Income Taxes
     4,828       770       5,598  
Income Tax Expense
     104               104  
 
                  
Net Income
   $ 4,724     $ 770     $ 5,494  
 
                  
 
                        
Income Per Share, Basic
   $ 0.22             $ 0.26  
 
                    
 
                        
Weighted Average Shares Outstanding, Basic
     21,351               21,351  
 
                    
 
                        
Income Per Share, Diluted
   $ 0.21             $ 0.24  
 
                    
 
                        
Weighted Average Shares Outstanding, Diluted
     22,806               22,806  
 
                    

 

 

Smith Micro 2006 Fourth Quarter and Year-End Financial Results   Page 10 of 12
Smith Micro Software, Inc.
Statement of Operations for the Three Months Ended December 31, 2006 and 2005
(in thousands, except per share amounts)
                 
    2006     2005  
NET REVENUE
                
Products
   $ 17,082     $ 7,856  
Services
     146       146  
 
            
Total Net Revenues
     17,228       8,002  
COST OF SALES
                
Products
     5,504       1,983  
Services
     60       65  
 
            
Total Cost of Sales
     5,564       2,048  
GROSS PROFIT
                
Products
     11,578       5,873  
Services
     86       81  
 
            
Total Gross Profit
     11,664       5,954  
OPERATING EXPENSES
                
Selling & Marketing
     2,517       1,307  
Research & Development
     2,274       1,325  
General & Administrative
     2,701       1,254  
 
            
Total Operating Expenses
     7,492       3,886  
 
            
Operating Income
     4,172       2,068  
Interest Income
     532       192  
 
            
Income Before Income Taxes
     4,704       2,260  
Income Tax Expense
     1,094       49  
 
            
Net Income
   $ 3,610     $ 2,211  
 
            
 
                
Income Per Share, Basic
   $ 0.14     $ 0.10  
 
            
 
                
Weighted Average Shares Outstanding, Basic
     24,930       22,106  
 
            
 
                
Income Per Share, Diluted
   $ 0.14     $ 0.09  
 
            
 
                
Weighted Average Shares Outstanding, Diluted
     26,687       23,900  
 
            

 

 

Smith Micro 2006 Fourth Quarter and Year-End Financial Results   Page 11 of 12
Smith Micro Software, Inc.
Statement of Operations for the Twelve Months Ended December 31, 2006 and 2005
(in thousands, except per share amounts)
                 
    2006     2005  
NET REVENUE
                
Products
   $ 53,773     $ 19,637  
Services
     696       621  
 
            
Total Net Revenues
     54,469       20,258  
COST OF SALES
                
Products
     19,989       3,818  
Services
     270       285  
 
            
Total Cost of Sales
     20,259       4,103  
GROSS PROFIT
                
Products
     33,784       15,819  
Services
     426       336  
 
            
Total Gross Profit
     34,210       16,155  
OPERATING EXPENSES
                
Selling & Marketing
     9,057       3,410  
Research & Development
     7,899       3,963  
General & Administrative
     8,467       4,621  
 
            
Total Operating Expenses
     25,423       11,994  
 
            
Operating Income
     8,787       4,161  
Interest Income
     1,403       667  
 
            
Income Before Income Taxes
     10,190       4,828  
Income Tax Expense
     1,234       104  
 
            
Net Income
   $ 8,956     $ 4,724  
 
            
 
                
Income Per Share, Basic
   $ 0.38     $ 0.22  
 
            
 
                
Weighted Average Shares Outstanding, Basic
     23,753       21,351  
 
            
 
                
Income Per Share, Diluted
   $ 0.35     $ 0.21  
 
            
 
                
Weighted Average Shares Outstanding, Diluted
     25,330       22,806  
 
            

 

 

Smith Micro 2006 Fourth Quarter and Year-End Financial Results   Page 12 of 12
Smith Micro Software, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
                 
    December 31,     December 31,  
    2006     2005  
ASSETS
                
Current Assets:
                
Cash & Cash Equivalents
   $ 92,564     $ 21,215  
Accounts Receivable, (Net)
     9,828       6,786  
Income Taxes Receivable
     122       —  
Deferred Tax Asset — Current
     90       —  
Inventory
     857       530  
Prepaid & Other Assets
     308       556  
 
            
Total Current Assets
     103,769       29,087  
Equipment & Improvements, Net
     417       241  
Deferred Tax Asset — Long Term
     7,786       —  
Goodwill
     15,266       9,288  
Intangible Assets, Net
     3,788       4,093  
Other Assets
     —       7  
 
            
TOTAL ASSETS
   $ 131,026     $ 42,716  
 
            
 
                
LIABILITIES & STOCKHOLDERS’ EQUITY
                
Current Liabilities:
                
Accounts Payable
   $ 2,941     $ 2,383  
Accrued Liabilities
     2,028       1,376  
 
            
Total Current Liabilities
     4,969       3,759  
 
            
Common Stock
     28       22  
 
                
Additional Paid In Capital
     129,018       50,880  
Accumulated Deficit
     (2,989 )     (11,945 )
 
            
Total Stockholders’ Equity
     126,057       38,957  
 
            
TOTAL LIABILITIES & EQUITY
   $ 131,026     $ 42,716  
 
            
####