Certicom Reports Year-end Results for Fiscal 2008



    Management sets new strategic direction to improve company performance

    
    Highlights for the Year:

    -   New, permanent Chief Executive Officer appointed

    -   IBM and Certicom signed multi-year, multi-million dollar technology
        agreement

    -   Certicom established firm stance on intellectual property protection
        through pursuit of Sony patent infringement lawsuit

    -   Bally Technologies licensed Certicom technology for gaming security

    -   Aristocrat Technologies licensed Certicom technology for gaming
        security

    -   Continental Airlines selected Certicom technology for mobile
        ticketing security solution

    -   Texas Instruments licensed Certicom's ECC technology for improved
        security in next-generation, government-issued identification
        documents

    -   Certicom opened design centre in Silicon Valley dedicated to
        development of hardware-based cryptographic technologies

    -   Certicom launched UMA Device Software for mobility market, Security
        Builder API for Open Source and .NET, Device Certificate Authority

    Subsequent to Year-End:

    -   Micronas licensed Certicom's KeyInject solution for securing silicon
        chips in consumer electronics

    -   Certicom launched device authentication service for ZigBee Smart
        Energy to secure wireless data communications and authenticate smart
        meter devices

    -   Qualcomm Inc. announced the use of Certicom's advanced cryptographic
        modules to achieve Suite B compliance for BREW

    -   ClearCommerce Corporation, a Fidelity National Information Services
        company, selected Certicom's ECC technology to support secure payment
        processing
    

    MISSISSAUGA, ON, June 4 /CNW/ - Certicom Corp. (TSX: CIC) ("Certicom" or
the "Company") today reported results for the fiscal year and fourth quarter
ended April 30, 2008. All figures are in U.S. dollars and in accordance with
Canadian Generally Accepted Accounting Principles (GAAP) except where
otherwise noted.
    Revenue for the year was $16.6 million compared to $21.4 million for
fiscal 2007. For the fourth quarter, revenue was $3.5 million, compared to
$6.5 million in the fourth quarter of fiscal 2007.
    Certicom closed a multi-year, multi-million dollar agreement with IBM on
April 30, 2008. Under the terms of the agreement, the Company is entitled to
an immediate first payment of $2 million and this was received in early May.
In accordance with GAAP, the Company will recognize the revenue related to
this payment prospectively using the subscription accounting method, in which
$500,000 will be recorded in each quarter of fiscal 2009. Revenue from
subsequent payment commitments from the IBM agreement will also be recognized
using the subscription method.
    "The IBM agreement is a clear endorsement of our IP portfolio and its
underlying value, and represents a major event in accelerating the adoption of
ECC in the marketplace," said Karna Gupta, Chief Executive Officer. "In
addition to this endorsement, several events occurred during fiscal 2008 that
further strengthened our position for future growth. These included the launch
of patent infringement litigation against Sony, the signing of multiple
contracts in the gaming vertical, the introduction of several innovative
security solutions, and finally the completion of our three-year strategic
growth plan."

    Full Year Financial Review

    Total operating expenses(1) for the year were $21.9 million, compared to
$20.1 million in fiscal 2007. The increase was mainly due to legal expenses
related to the Sony litigation. However, these expenses, which totaled
$2.4 million for the year, were lower than expected. The Company posted a net
loss on a GAAP basis of $10.5 million, or $0.24 per basic and diluted share
for the year, compared to a net loss of $3.1 million, or $0.08 per basic and
diluted share, in fiscal 2007.
    The Company reports that recurring revenue for the year was $8.0 million,
consistent with fiscal 2007. With the completion of the IBM agreement and
other initiatives relating to the new strategic growth plan, management
expects recurring revenue to increase in fiscal 2009.
    Certicom had $38.5 million in cash(2) at year-end compared to
$38.6 million at January 31, 2008 and $43.2 million at year-end fiscal 2007.
The Company has no debt.

    Fourth Quarter Financial Review

    Total operating expenses(1) for the fourth quarter were $6.2 million,
compared to $6.3 million for the same period last year. This included
$1.1 million for expenses related to the Sony litigation and $0.3 million for
one-time restructuring costs. The Sony litigation expenses were higher than
the guidance given last quarter due to the timing of legal activities as the
case progresses. Excluding the Sony litigation expenses and the one-time
restructuring costs, total operating expenses for the fourth quarter were
within the guidance given last quarter.
    The Company posted a net loss on a GAAP basis of $4.1 million for the
quarter, or $0.09 per basic and diluted share, compared to a net loss of
$1.2 million, or $0.03 per basic and diluted share for the same period last
year.

    Outlook: A New Strategic Direction

    Management has completed Certicom's new three-year strategic growth plan
and will be addressing several strategic priorities that build on the
Company's current strengths in patent position, brand recognition, human
capital and technology development. Of these strategic priorities, Certicom
has identified the following four as the most critical:

    
    1.  Aggressively transitioning from toolkits to complete security
        solutions for solving specific business problems

    2.  Sharpening focus on more defined market verticals: Consumer
        Electronics/Mobility, Semiconductors, Energy/Utilities, Gaming and
        Defense/Aerospace

    3.  Increasing international market presence in high potential geographic
        areas

    4.  Aggressively improving the efficiencies of the Company's underlying
        cost structure
    

    "We secured 25 design wins during the year, which reflects the continued
momentum in the adoption of Certicom's technology," said Mr. Gupta. "However,
I will point out that our new focus is less on the quantity of annual design
wins and more on the long term revenue potential of each design win. This is
consistent with our new strategic direction, which calls for greater
concentration on securing high value contracts based on comprehensive security
solutions. I am pleased to advise you that we are currently working with
several marquee global accounts in addition to the IBM and Micronas agreements
that we recently closed."
    Mr. Gupta continued, "Our recent design wins for complete security
solutions in gaming, semiconductor manufacturing and utilities demonstrate the
headway we're making in the transition from toolkits to total solutions, and
we look forward to continuing progress towards this and our other strategic
priorities in fiscal 2009. Our commitment to these strategic priorities will
provide a solid basis for achieving our ultimate goal of sustainable,
profitable growth for shareholders."
    Operating expenses(1) for the first quarter of fiscal 2009, excluding
expenses related to the Sony litigation, cost of revenue, depreciation and
amortization, and stock-based compensation, are expected to range from $4.7 to
$5.0 million. The expenses related to the Sony litigation for the quarter are
expected to be approximately $1.5 million.

    Sony Patent Infringement Litigation

    Certicom continues to progress through the broad discovery phase of the
Sony litigation case, which requires both parties to provide specific
documentation. As stated previously, the claims construction hearing of the
litigation case (known as a Markman hearing) has been set for June 11, 2009
and the trial date has been set for September 8, 2009. The Company remains
confident of its legal position and ability to pursue this litigation to a
successful conclusion.

    
    Conference Call

    -------------------------------------------------------------------------
    Conference Call and Webcast       June 5 2008, 10 a.m. ET (7 a.m. PT)
    -------------------------------------------------------------------------
    Participant Numbers               416-644-3414 or 1-800-733-7560
    -------------------------------------------------------------------------
    

    The conference call will be webcast live with supporting slides and
subsequently archived at www.certicom.com. To listen to the webcast,
participants will require Windows Media Player(TM) which can be downloaded
from Certicom's website prior to the event. An archived recording will be
available from 12 p.m. (ET) on June 5 until 12 a.m. (ET) on June 12, 2008. To
access the archive, please call 416-640-1917 or 1-877-289-8525 and enter
passcode 21271281 followed by the number sign.

    Annual General Meeting of Shareholders

    Certicom will hold its Annual General Meeting of shareholders on
Wednesday, September 24, 2008 at 10 a.m. ET at The Gallery of the TSX
Broadcast & Conference Centre located at The Exchange Tower, 130 King Street
West in Toronto. The audio of the meeting will also be simulcast live at
Certicom's web site at www.certicom.com.

    About Certicom

    Certicom manages and protects the value of content, applications and
devices with government-approved security. Adopted by the National Security
Agency (NSA) for government communications, Elliptic Curve Cryptography (ECC)
provides the most security per bit of any known public-key scheme. As the
global leader in ECC, Certicom's security offerings are currently licensed to
hundreds of multinational technology companies, including IBM, General
Dynamics, Motorola, Oracle and Research In Motion. Founded in 1985, Certicom's
corporate offices are in Mississauga, Ontario, Canada with worldwide sales and
marketing headquarters in Reston, Virginia and offices in Europe and Asia.
Visit www.certicom.com

    Certicom, Certicom Security Architecture, Certicom Trust Infrastructure,
Certicom CodeSign, Certicom KeyInject, Security Builder, Security Builder API,
Security Builder BSP, Security Builder Crypto, Security Builder ETS, Security
Builder GSE, Security Builder IPSec, Security Builder NSE, Security Builder
PKI and Security Builder SSL are trademarks or registered trademarks of
Certicom Corp. All other companies and products listed herein are trademarks
or registered trademarks of their respective holders. Information subject to
change.

    
    ENDNOTES:
    ---------

    (1) This news release contains references to operating expenses. Certicom
        defines operating expenses as total operating expenses excluding cost
        of revenues, depreciation and amortization and stock-based
        compensation. It also excludes interest income, other income
        (expense) and withholding tax expense.

                                  --------------------- ---------------------
                                    Three months ended   Twelve months ended
                                    ------------------   -------------------
                                          April 30,             April 30,

                                       2008       2007       2008       2007
                                  --------------------- ---------------------
    Sales and marketing            $  1,738   $  2,635   $  7,688   $  9,211
    Product development
     and engineering                  1,802      1,878      6,964      6,213
    General and administrative        2,611      1,813      7,294      4,686
                                  --------------------- ---------------------
    Total operating expenses       $  6,151   $  6,326   $ 21,946   $ 20,110
                                  --------------------- ---------------------
                                  --------------------- ---------------------

    (2) This news release contains references to cash, which is defined as
        cash and cash equivalents, short term and long term marketable
        securities and restricted cash.

                                       April 30, 2008   April 30, 2007

           Cash and cash equivalents      $     1,641      $     3,397
           Marketable securities               25,980           26,752
           Long-term marketable
            securities                         10,832           13,013
                                         ------------------------------
           Total Cash                     $    38,453      $    43,162
                                         ------------------------------
    

    Except for historical information contained herein, this news release
contains forward-looking statements that involve risks and uncertainties.
Forward-looking information includes information concerning the Company's
future financial performance, business strategy, plans, goals and objectives.
When used in such documents, the words "plans", "expects", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates", "will",
"believes" or variations of such words and phrases often, but not always,
identify forward looking statements. Factors which could cause actual results
or events to differ materially from current expectations include, among other
things: the ability of the Company to successfully implement its strategic
initiatives and whether such strategic initiatives will yield the expected
benefits; the ability of the Company to develop, promote and protect its
proprietary technology security breaches or defects in the Company's products;
competitive conditions in the businesses in which the Company participates;
changes in consumer spending; the outcome of legal proceedings as they arise;
general economic conditions and normal business uncertainty; consolidation in
the Company's industry and by its customers; customer preferences towards
product offerings; the risk that customers may cancel their contracts with the
Company; reliance on a limited number of customers; demand for ECC-based
technology; performance of the Company's management team and the Company's
ability to attract and retain skilled employees; operating the Company's
business profitably; fluctuations in revenue and foreign currency exchange
rates; interest rate fluctuations and other changes in borrowing costs; the
ability to develop and maintain strategic relationships; and other factors
identified under the heading "Risk Factors" in the Company's annual
information form dated July 26, 2007 and filed on SEDAR at www.sedar.com.
    While the Company believes that its forecasts and assumptions are
reasonable, results or events predicted in this forward-looking information
may differ materially from actual results or events. In particular but without
limitation, there is no assurance that the Company will achieve all or a
portion of the goals outlined in its three year strategic growth plan within
the time limits specified therein or at all.


    
                               CERTICOM CORP.
                         CONSOLIDATED BALANCE SHEETS
                       (In thousands of U.S. dollars)

                                                              April 30,
                                                           2008       2007
                                                        ---------- ----------
    ASSETS

    Current assets:
      Cash and cash equivalents........................  $  1,641   $  3,397
      Marketable securities............................    25,980     26,752
      Accounts receivable, net.........................     5,426      6,008
      Unbilled receivables.............................       503        559
      Prepaid expenses and other current assets........       659        758
                                                        ---------- ----------
        Total current assets...........................    34,209     37,474

    Long-term marketable securities....................    10,832     13,013

    Property and equipment, net........................     1,173      1,250

    Patents, net.......................................     2,776      2,222

    Other assets.......................................        24         24

                                                        ---------- ----------
        Total assets...................................  $ 49,014   $ 53,983
                                                        ---------- ----------
                                                        ---------- ----------

    LIABILITIES

    Current liabilities:
      Accounts payable.................................  $  2,255   $  2,170
      Accrued liabilities..............................     2,332      2,878
      Deferred revenue.................................     5,123      3,378
      Obligation under capital lease...................        17          -
      Current portion of lease inducements.............        52         52
                                                        ---------- ----------
        Total current liabilities......................     9,779      8,478

    Other long-term payables...........................       718        491
    Obligation under capital lease, long-term..........        30          -
    Lease inducements, net of current portion..........        35         87
                                                        ---------- ----------
        Total liabilities..............................    10,562      9,056

    SHAREHOLDERS' EQUITY

      Share capital....................................    38,624     36,514
      Contributed surplus..............................     9,021      7,044
      Retained earnings (deficit)......................    (9,131)     1,369
      Accumulated other comprehensive loss.............       (62)         -
                                                        ---------- ----------
        Total shareholders' equity.....................    38,452     44,927
                                                        ---------- ----------
        Total liabilities and shareholders' equity.....  $ 49,014   $ 53,983
                                                        ---------- ----------
                                                        ---------- ----------



                               CERTICOM CORP.
         CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
         -----------------------------------------------------------
         (In thousands of U.S. dollars, except number of shares and
                               per share data)

                                                   Years ended April 30,
                                             --------------------------------
                                                2008       2007       2006
                                             ---------- ---------- ----------
    Revenues................................  $ 16,615   $ 21,353   $ 15,135
                                             ---------- ---------- ----------

    Costs and expenses:
      Cost of product and intellectual
       property sales.......................        18        207        126
      Cost of services......................     3,301      2,614      1,648
      Sales and marketing...................     7,688      9,211      7,017
      Product development and engineering...     6,964      6,213      4,873
      General and administrative............     7,294      4,686      3,315
      Depreciation of property
       and equipment........................       827        703        570
      Amortization of patents...............       389        428        400
      Stock-based compensation..............     2,293      1,742      1,030
                                             ---------- ---------- ----------
        Total costs and expenses............    28,774     25,804     18,979
                                             ---------- ---------- ----------

    Loss from operations....................   (12,159)    (4,451)    (3,844)

    Other income (expense):
      Interest income.......................     1,846      1,814        766
      Interest expense and
       other income, net....................        57        (22)       (76)
                                             ---------- ---------- ----------
        Total other income..................     1,903      1,792        690

                                             ---------- ---------- ----------
    Loss before income taxes................   (10,256)    (2,659)    (3,154)

    Income tax expense......................       244        474          -
                                             ---------- ---------- ----------
    Net loss for the year...................   (10,500)    (3,133)    (3,154)

    Retained earnings, beginning of year....     1,369      4,502      7,656
                                             ---------- ---------- ----------
    Retained earnings (deficit),
     end of year............................  $ (9,131)  $  1,369   $  4,502
                                             ---------- ---------- ----------
                                             ---------- ---------- ----------

    Basic and diluted net loss per
     common share...........................  $  (0.24)  $  (0.08)  $  (0.08)
                                             ---------- ---------- ----------
                                             ---------- ---------- ----------

    Weighted average shares used in
     computing basic and diluted net loss
     per common share (000's)...............    43,544     41,453     38,162
                                             ---------- ---------- ----------
                                             ---------- ---------- ----------



                               CERTICOM CORP.
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE GAIN (LOSS)
                       (In thousands of U.S. dollars)

                                                   Years ended April 30,
                                             --------------------------------
                                                2008       2007       2006
                                             ---------- ---------- ----------
    Net loss for the period.................  $(10,500)  $ (3,133)  $ (3,154)
    Other comprehensive income:
      Net unrealized loss on derivatives
       designated as cash flow hedges.......      (402)         -          -
                                             ---------- ---------- ----------
    Comprehensive loss......................  $(10,902)  $ (3,133)  $ (3,154)
                                             ---------- ---------- ----------
                                             ---------- ---------- ----------



                               CERTICOM CORP.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (In thousands of U.S. dollars)

                                                   Years ended April 30,
                                             --------------------------------
                                                2008       2007       2006
                                             ---------- ---------- ----------
    Cash provided by (used in):

    Operating activities:
      Net loss for the year.................  $(10,500)  $ (3,133)  $ (3,154)
      Items not affecting cash:
        Depreciation of property
         and equipment......................       827        703        570
        Amortization of patents.............       389        428        400
        Stock-based compensation............     2,293      1,742      1,030
        Amortization of lease inducements...       (52)       (52)       (63)
      Net change in non-cash operating
       working capital......................     2,233     (2,056)       365
                                             ---------- ---------- ----------
        Net cash used in operating
         activities.........................    (4,810)    (2,368)      (852)

    Investing activities:
      Purchase of property and equipment....      (750)      (874)      (475)
      Purchase of patents...................      (942)      (762)      (660)
      Maturity (purchase) of marketable
       securities, net......................     2,953    (17,062)      (154)
      Decrease in restricted cash...........         -          -        617
                                             ---------- ---------- ----------
        Net cash provided by (used in)
         investing activities...............     1,261    (18,698)      (672)

    Financing activities:
      Proceeds from issuance of
       common stock, net....................     2,100     22,419        872
      Common shares repurchased.............      (306)         -          -
                                             ---------- ---------- ----------
        Net cash provided by financing
         activities.........................     1,794     22,419        872

    Effect of exchange rate on cash and
     cash equivalents.......................        (1)         -          9
                                             ---------- ---------- ----------

    Increase (decrease) in cash and
     cash equivalents.......................    (1,756)     1,353       (643)

    Cash and cash equivalents,
     beginning of year......................     3,397      2,044      2,687
                                             ---------- ---------- ----------
    Cash and cash equivalents,
     end of year............................  $  1,641   $  3,397   $  2,044
                                             ---------- ---------- ----------
                                             ---------- ---------- ----------
    





For further information:

For further information: Investors and Financial Analysts: Hervé Séguin,
Chief Financial Officer, Certicom Corp., (905) 501-3827, hseguin@certicom.com;
Media: John Callahan, Director, Public Relations & Marketing Communications,
Certicom Corp., (703) 234-2357, jcallahan@certicom.com; www.certicom.com

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CERTICOM CORP.

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