LaserCard Corporation Reports Financial Results for FY10 Second Quarter

LaserCard Corporation (NASDAQ:LCRD), a leading provider of secure ID solutions, today announced the financial results for its fiscal 2010 second quarter ended September 30, 2009.

Revenues for the second quarter of fiscal 2010 were $15.7 million, compared with $16.3 million in the prior quarter and $13.5 million in the same quarter a year ago. Net income for the second quarter of fiscal 2010 was $1.8 million, or $0.15 per diluted share, compared with net income of $1.9 million, or $0.16 per diluted share, in the prior quarter, and net income of $0.2 million, or $0.02 per diluted share, in the same quarter a year ago.

LaserCard® optical memory card revenues for the quarter were $11.9 million compared with $8.6 million in the second quarter of fiscal 2009. Revenues from specialty cards and printers totaled $3.7 million compared with $3.9 million from the same quarter a year ago. Drives, systems and services segment revenue for the quarter was $0.1 million, compared with $0.9 million in the second quarter of the prior year.

Cash

LaserCard Corporation’s cash, cash equivalents, and investments were $40.7 million at September 30, 2009 compared with $29.3 million at March 31, 2009. Debt at September 30, 2009 totaled $9.3 million compared with $8.9 million at March 31, 2009.

Non-GAAP Results

The non-GAAP net income for the second quarter of fiscal 2010 was $1.9 million, or $0.15 per diluted share, compared to non-GAAP net income of $2.2 million, or $0.18 per diluted share, in the prior quarter, and a non-GAAP net income of approximately $0.8 million, or $0.07 per diluted share, in the same quarter a year ago.

Non-GAAP net income and net income per diluted share exclude expenses related to SFAS123R stock-based compensation, the unrealized income relating to the fair value adjustment of auction rate securities and UBS put option agreement, and exclude the gain related to the termination of a contract.

"We are pleased to have achieved such strong operating results over the past three quarters,” said Robert DeVincenzi, President and CEO of LaserCard. "Our performance in the first half of our current fiscal year represents the result of reductions in our overall expense levels combined with the benefit of unusually high demand in a couple of our key programs. Our program revenue and financial results will continue to be subject to fluctuations on a quarterly basis.”

From a program standpoint, we have successfully made the transition from planning to implementation in the Angola National ID program with our initial shipments of credentials in the quarter. We are on track for delivery of the $8.8 million initial card order scheduled to be completed this fiscal year.”

Earnings Results Conference Call

LaserCard will hold a conference call to discuss its fiscal 2010 second quarter results today, October 29, 2009, at approximately 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time. For access to the conference call, please call 773-799-3302 by 1:50 p.m. Pacific Time. A taped replay of the call will be available for one week. To access the replay, please call 203-369-2029. You will need to reference the passcode "LaserCard” and the conference leader "Robert DeVincenzi.” To listen to the call via the Internet, please log on to: www.lasercard.com or www.investorcalendar.com. The Internet Webcast will be archived for one year. A copy of this press release will be furnished to the Securities and Exchange Commission on a Form 8-K and be posted to our web site prior to the conference call.

About LaserCard Corporation

LaserCard Corporation, together with its subsidiaries, is a leading provider of secure ID solutions to governments and commercial clients worldwide. It develops, manufactures, and integrates LaserCard® optical memory cards, multi-technology cards, encoders, peripherals, smart and specialty cards, biometrics, and modular software. The company’s cards and systems are used in various applications, including citizen identification, border security, government service delivery, and facility access.

For more information, please go to www.lasercard.com.

Forward Looking Statement Disclaimer

All statements contained in this press release that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are not historical facts or guarantees of future performance or events. Rather, they are based on current expectations, estimates, beliefs, assumptions, goals and objectives and are subject to uncertainties that are difficult to predict. As a result, our actual results may differ materially from the statements made. Often such statements can be identified by the use of words such as may, will, intends, plans, believes, anticipates, visualizes, expects, and estimates. Examples of forward-looking statements in this release include our belief that quarterly results will fluctuate. This and other forward-looking statements in this press release are based upon our assumptions about and assessment of the future, which may or may not prove true, and involve a number of risks and uncertainties including, but not limited to whether projected orders or scheduled delivery dates are rescheduled or canceled in whole or in part, that the complex nature of the secure ID business will continue to subject our results to fluctuations on a quarterly basis, and whether our other customers continue orders as currently expected as well as the other risk factors detailed in the Company's Forms 10-K and 10-Q filings with the Securities and Exchange Commission under the caption "Risk Factors” and elsewhere in such reports. Due to these and other risks, future actual results could differ materially from the Company’s expectations. These forward-looking statements speak only as to the date of this release, and, except as required by law, the Company undertakes no obligation to publicly release updates or revisions to these statements whether as a result of new information, future events, or otherwise.

About Non-GAAP Financial Measures

To supplement our consolidated financial statements, which statements are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP net income and non-GAAP EPS. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures" included at the end of this release.

We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses and expenditures that may not be indicative of our "recurring core business operating results," meaning our operating performance excluding not only non-cash charges, such as stock-based compensation, but also discrete cash charges or gains that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance as well as comparisons to our competitors' results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business. These non-GAAP financial measures may be different than those used by other companies, including our competitors.

Non-GAAP net income and EPS. We define non-GAAP net income as net income plus stock-based compensation, and unrealized fair-value adjustments less the related tax effects of such items plus other nonrecurring gains or losses. We define non-GAAP EPS as non-GAAP net income divided by the weighted average outstanding shares, on a fully-diluted basis. We consider these non-GAAP financial measures to be a useful metric for management and investors. However, in order to provide a complete picture of our recurring core business operating results, we exclude from non-GAAP net income and non-GAAP EPS the tax effects associated with stock-based compensation and the impairment charges. Without excluding these tax effects, investors would only see the gross effect that excluding these expenses had on our operating results. There are a number of limitations related to the use of non-GAAP net income versus net income calculated in accordance with GAAP. First, non-GAAP net income excludes some recurring costs, namely stock-based compensation. Stock-based compensation has been and will continue to be for the foreseeable future a significant recurring expense in our business. Second, stock-based compensation is an important part of our employees' compensation and impacts their performance. Third, the components of the costs that we exclude in our calculation of non-GAAP operating income may differ from the components that our peer companies exclude when they report their results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP EPS and evaluating non-GAAP net income and non-GAAP EPS together with net income and EPS calculated in accordance with GAAP.

The accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.