EX-99.1 2 a17647exv99w1.htm EXHIBIT 99.1 exv99w1
 

EXHIBIT 99.1
     
AT THE COMPANY:
 Bruce T. Quigley
 Vice President of Business Development
 and Investor Relations
 949-362-5800
 bquigley@smithmicro.com
  IR INQUIRIES:
 Charles Messman, Todd Kehrli
 MKR Group
 818-556-3700
 ir@mkr-group.com
 
FOR IMMEDIATE RELEASE
SMITH MICRO SOFTWARE REPORTS YEAR-END AND RECORD
2005 FOURTH QUARTER FINANCIAL RESULTS
Annual Revenue Increased 52% To $20.3 Million;
Pro-Forma Net Income Increased 60% To A Record $5.5 Million;
Company Continues To Broaden Wireless Software Product Offering;
Reports Record Backlog of $4 Million Entering First Quarter 2006
Aliso Viejo, Calif., February 21, 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 2005 fourth quarter and year-end financial results.
2005 Key Results:
  •   Revenue increased to $20.3 million, up 52% from 2004.
  •   Pro forma net income increased to $5.5 million, up 60% from 2004.
  •   Pro forma earnings per diluted share were $0.24 on 22.8 million shares compared to $0.19 on 18.5 million shares in fiscal 2004.
  •   Free Cash Flow from operations was $2.5 million for the year.
  •   Record backlog going into the first quarter of 2006 of $4.0 million.
For the quarter ended December 31, 2005, the company reported total net revenue of $8.0 million, a 93% increase over the $4.2 million reported in the fourth quarter of 2004. Pro forma net income for the fourth quarter, which excludes amortization of intangibles associated with the 2005 acquisition of Allume Systems, was $2.6 million, or $0.11 per fully diluted share, a 59% increase over the $1.6 million, or $.0.09 per fully diluted share, reported in the
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Smith Micro Year-End 2005 Financial Results   Page 2 of 8
year ago quarter. Fourth quarter fully diluted comparative results take into account a significant increase in the company’s share count year over year. Fully diluted shares outstanding as of December 31, 2005 were 23.9 million versus 19.1 million shares in the fourth quarter of 2004.
For the year 2005, the company reported revenue of $20.3 million, a 52% increase over $13.3 million in the previous year and pro-forma earnings of $5.5 million, a 60% increase when compared to the $3.5 million reported in 2004. Fiscal 2005 pro-forma earnings per diluted share were $0.24 on 22.8 million shares compared to $0.19 on 18.5 million shares in fiscal 2004. Cash and cash equivalents as of December 31, 2005 were $21.2 million, an increase of $12.6 million or 146% over the $8.6 million reported in 2004. The company also reported a backlog entering into the first quarter of 2006 of $4.0 million.
“We believe our strong financial results, which include a 52% increase in revenue and a 60% increase in comparable earnings over our previous 2004 record earnings, demonstrates that our business plan is clearly on track,” said William W. Smith, Jr., President and Chief Executive Officer of Smith Micro Software. “Furthermore, we continue to build upon the strong momentum of the wireless broadband data market place. During the year we took a significant step in broadening our product reach and intellectual properties with the acquisition of Allume Systems. We are very pleased with the progress we have made in integrating and developing new products using our patent-pending compression technology. We believe these new offerings will be of significant interest to our wireless carrier and handset customers, and will provide a significant growth opportunity for us in the near future.
“Additionally, our relationship with Verizon Wireless, the leader in the wireless broadband data market in North America, remains very strong and presents continued opportunity for us to expand our wireless software product reach. In January of this year, we announced the launch of our V CAST Music Essentials Kit, our value added software application that complements Verizon Wireless’ recently released V CAST Music service. This application enables Verizon customers to manage and transfer music files to their V CAST Music phones
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Smith Micro Year-End 2005 Financial Results   Page 3 of 8
from their Windows PC’s and is now available in Verizon Wireless stores coast to coast and on verizonwireless.com. This new product highlights our ability to provide wireless carriers with value added software and services and is another important step in our close working relationship with Verizon as they continue to roll out new product offerings to their wireless customers.
“As we enter 2006, we believe we are extremely well positioned to capitalize on the growing mobile broadband marketplace with our new and existing product offerings and we believe we are well positioned to enjoy continued strong growth through organic growth and acquisitions in 2006,” Mr. Smith concluded.
Investor Conference Call
Smith Micro will hold an investor conference call to discuss the company’s results at 4:30 p.m. EST, today, February 21, 2006. The call can be accessed by dialing (800)-219-6110 and giving the pass code “SMSI.” Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. Also, the conference call will be available over the Internet at www.smithmicro.com in the Investor Relations section, or at http://phx.corporate-ir.net/playerlink.zhtml?c=107760&s=wm&e=1199542,
About Smith Micro Software
Smith Micro Software, Inc., headquartered in Aliso Viejo, CA, is a developer and marketer of wireless communication, broadband, eCommerce and utility software products for multiple OS platforms. The company designs integrated cross platform, easy-to-use software for personal computing and business solutions around the world. With a focus on Wireless and Broadband and Internet technologies, the company’s products and services enable wireless communications, eCommerce, eBusiness, Internet communications (voice-over-IP), video conferencing, network fax, and traditional computer telephony. Smith Micro’s complete line of products is available through original equipment manufacturers (OEMs), direct sales, retail stores, and value-added
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Smith Micro Year-End 2005 Financial Results   Page 4 of 8
resellers (VARs). Smith Micro’s common stock trades on The NASDAQ Stock Market® under the symbol SMSI. For more information, contact Smith Micro at (949) 362-5800.
This release may contain forward-looking statements that involve risks and uncertainties, including without limitation risks and uncertainties relating to the company’s financial prospects and projections, the company’s plans for returning to sustained profitability and the company’s ability to increase its business in the Wireless and Broadband segments. These forward-looking statements speak only as of the date hereof and are based upon the information currently available to the company. Such information is subject to change, and the company will not necessarily inform you of such changes. 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, unforeseen delays in the timing of orders from OEM customers, new and continuing adverse economic conditions, and the company’s ability to compete effectively with other software companies. These and other factors could cause actual results to differ materially from those presented in any forward-looking statement and are discussed in the company’s filings with the Securities and Exchange Commission including its recent filings on Forms 10-K and 10-Q.
Smith Micro and the Smith Micro logo 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 Year-End 2005 Financial Results   Page 5 of 8
Smith Micro Software, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share amounts)
                 
    Three Months Ended  
    December 31  
    (unaudited)  
    2005     2004  
Net Revenues:
                
Products
   $ 7,856     $ 3,980  
Services
     146       175  
 
            
Total Net Revenues
     8,002       4,155  
Cost of Revenues:
                
Products
     1,983       728  
Services
     65       87  
 
            
Total Cost of Revenues
     2,048       815  
 
            
Gross Margin
     5,954       3,340  
Operating Expenses:
                
Selling & Marketing
     1,307       354  
Research & Development
     1,325       634  
General & Administrative
     1,254       712  
 
            
Total Operating Expenses
     3,886       1,700  
 
            
Operating Income
     2,068       1,640  
Interest Income
     192       25  
 
            
Income Before Income Tax
     2,260       1,665  
Income Tax Expense
     49       34  
 
            
Net Income
   $ 2,211     $ 1,631  
 
            
Net Income per share, basic
   $ 0.10     $ 0.09  
 
            
Weighted average shares outstanding, basic
     22,106       17,706  
 
            
Net Income per share, fully diluted
   $ 0.09     $ 0.09  
 
            
Weighted average shares outstanding, fully diluted
     23,900       19,125  
 
            

 

 

Smith Micro Year-End 2005 Financial Results   Page 6 of 8
Smith Micro Software, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share amounts)
                 
    Twelve Months Ended  
    December 31  
    (unaudited)  
    2005     2004  
Net Revenues:
                
Products
   $ 19,637     $ 12,394  
Services
     621       922  
 
            
Total Net Revenues
     20,258       13,316  
Cost of Revenues:
                
Products
     3,818       2,530  
Services
     285       380  
 
            
Total Cost of Revenues
     4,103       2,910  
 
            
Gross Margin
     16,155       10,406  
Operating Expenses:
                
Selling & Marketing
     3,410       1,519  
Research & Development
     3,963       2,556  
General & Administrative
     4,621       2,868  
 
            
Total Operating Expenses
     11,994       6,943  
 
            
Operating Income
     4,161       3,463  
Interest Income
     667       53  
 
            
Income Before Income Tax
     4,828       3,516  
Income Tax Expense
     104       71  
 
            
Net Income
   $ 4,724     $ 3,445  
 
            
Net Income per share, basic
   $ 0.22     $ 0.20  
 
            
Weighted average shares outstanding, basic
     21,351       17,352  
 
            
Net Income per share, fully diluted
   $ 0.21     $ 0.19  
 
            
Weighted average shares outstanding, fully diluted
     22,806       18,497  
 
            

 

 

Smith Micro Year-End 2005 Financial Results   Page 7 of 8
Smith Micro Software, Inc.
Pro-forma results exclude amortization of intangibles
associated with the acquisition of Allume Systems, Inc.
(in thousands, except per share amounts)
                         
    GAAP           Pro-forma
    Quarter Ended           Quarter Ended
    Dec-05   Adjustments   Dec-05
Revenue
   $ 8,002             $ 8,002  
Cost of Revenue
     2,048       -267       1,781  
Gross Profit
     5,954               6,221  
Operating Expense
     3,886       -118       3,768  
Operating Income
     2,068               2,453  
Net Income
   $ 2,211             $ 2,596  
EPS
   $ 0.10             $ 0.12  
EPS (fd)
   $ 0.09             $ 0.11  
                         
    GAAP           Pro-forma
    Year Ended           Year Ended
    Dec-05   Adjustments   Dec-05
Revenue
   $ 20,258             $ 20,258  
Cost of Revenue
     4,103       -534       3,569  
Gross Profit
     16,155               16,689  
Operating Expense
     11,994       -236       11,758  
Operating Income
     4,161               4,931  
Net Income
   $ 4,724             $ 5,494  
EPS
   $ 0.22             $ 0.26  
EPS (fd)
   $ 0.21             $ 0.24  

 

 

Smith Micro Year-End 2005 Financial Results   Page 8 of 8
Smith Micro Software, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands)
                 
    December 31,     December 31,  
    2005     2004  
    (unaudited)  
ASSETS
                
Current Assets:
                
Cash & Cash Equivalents
   $ 21,215     $ 8,634  
Accounts Receivable, (Net)
     6,786       2,024  
Income Tax Receivable
             35  
Inventory
     530       47  
Prepaid & Other Assets
     556       203  
 
            
Total Current Assets
     29,087       10,943  
Equipment & Improvements, Net
     241       113  
Goodwill
     9,288       1,715  
Intangible Assets, Net
     4,093       —  
Other Assets
     7       57  
 
            
TOTAL ASSETS
   $ 42,716     $ 12,828  
 
            
LIABILITIES & STOCKHOLDERS’ EQUITY
                
Current Liabilities:
                
Accounts Payable
   $ 2,383     $ 939  
Accrued Liabilities
     1,376       790  
 
            
Total Current Liabilities
     3,759       1,729  
 
            
Common Stock
     22       18  
Additional Paid In Capital
     50,880       27,750  
Accumulated Deficit
     (11,945 )     (16,669 )
 
            
Total Stockholders’ Equity
     38,957       11,099  
 
            
TOTAL LIABILITIES & EQUITY
   $ 42,716     $ 12,828  
 
            
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