Smith Micro Software Reports Fourth Quarter and Fiscal Year 2012 Financial Results

  Smith Micro Software Reports Fourth Quarter and Fiscal Year 2012 Financial
  Results

Business Wire

ALISO VIEJO, Calif. -- February 13, 2013

Smith Micro Software, Inc. (NASDAQ:SMSI), a leading provider of wireless and
mobility solutions, today reported financial results for the fourth quarter
and full year ended December 31, 2012.

“Our fourth quarter revenues of $12.0 million were up 7.1% from the same
period last year, and up 9.3% from the third quarter of 2012, primarily due to
continued growth in our CommSuite solutions, which allow wireless carriers to
capitalize on the convenience and stickiness of Visual Voicemail and
Voice-to-Text applications,” said William W. Smith Jr., President and CEO of
Smith Micro Software. “Our fourth quarter non-GAAP loss per share of $0.06 was
cut in half from last year’s $0.12 loss per share due to higher revenues and
on-going cost containment efforts. While we were disappointed in our total
year revenue decline in 2012 versus 2011, we are encouraged by the
year-over-year increase of $6.9 million in our newer NetWise and CommSuite
product lines and the sequential growth of revenue throughout 2012.”

Smith Micro reported revenues of $12.0 million for the fourth quarter ended
December 31, 2012, a 7.1% increase from revenues of $11.2 million reported in
the fourth quarter of 2011.

Fourth quarter 2012 gross profit on a GAAP and non-GAAP basis (which excludes
stock compensation) was $9.7 million compared to $8.5 million reported in the
fourth quarter of 2011.

GAAP gross profit as a percentage of revenues was 80.6% for the fourth quarter
of 2012 compared to 75.7% for the fourth quarter of 2011. Non-GAAP gross
profit as a percentage of revenues was 80.6% for the fourth quarter of 2012
compared to 75.8% for the same quarter last year.

GAAP net loss for the fourth quarter of 2012 was $4.1 million, or $0.12 loss
per diluted share compared to GAAP net loss of $9.5 million, or $0.27 loss per
diluted share for the fourth quarter of 2011.

Non-GAAP net loss (which excludes stock compensation and non-cash tax expense)
for the fourth quarter of 2012 was $2.2 million, or $0.06 loss per diluted
share compared to a non-GAAP net loss of $4.2 million, or $0.12 loss per
diluted share for the fourth quarter of 2011.

For the fiscal year ended December 31, 2012, the Company reported revenues of
$43.3 million, a 25% decrease from revenues of $57.8 million reported for
fiscal year 2011.

Fiscal year 2012 gross profit on a GAAP basis was $34.9 million compared to
$44.0 million reported for fiscal year 2011. On a non-GAAP basis (which
excludes stock compensation for both years and amortization of intangibles for
2011), gross profit was $34.9 million for the fiscal year 2012 compared to
$47.8 million for the fiscal year 2011.

GAAP gross profit as a percentage of revenues was 80.5% for fiscal year 2012
compared to 76.2% for the fiscal year 2011. Non-GAAP gross profit as a
percentage of revenues was 80.5% for fiscal year 2012 compared to 82.8% for
fiscal year 2011.

GAAP net loss for the fiscal year ended December 31, 2012 was $25.5 million,
or $0.71 loss per diluted share compared to a net loss of $159.6 million, or
$4.48 loss per diluted share for fiscal year 2011. In fiscal year 2011, we
took an after-tax impairment charge for goodwill and other long-lived assets
and deferred tax allowances of $124.3 million.

Non-GAAP net loss (which excludes stock compensation and non-cash tax expense
for both years and amortization of intangibles and impairment of goodwill and
long-lived assets for 2011) for the fiscal year ended December 31, 2012 was
$13.4 million, or $0.37 loss per diluted share compared to a non-GAAP net loss
of $23.9 million, or $0.67 loss per diluted share for fiscal year 2011.

Total cash and cash equivalents and short-term investments at December 31,
2012 were $32.2 million.

The Company uses a non-GAAP reconciliation of gross profit, loss before
provision for income taxes, net loss and loss per share in the presentation of
financial results in this press release. Management believes that this
presentation may be more meaningful in analyzing our income generation, since
amortization of intangibles from acquisitions, stock-based compensation,
goodwill and long-lived asset impairment and non-cash tax expense are excluded
from the non-GAAP earnings calculation. Since we are in a loss position, the
non-GAAP income tax benefit for the year ended December 31, 2012 was computed
by using a tax rate of 37.7% using the Company’s combined U.S. federal, state
and foreign statutory tax rates less various tax adjustments. This
presentation may be considered more indicative of our ongoing operational
performance. The tables below present the differences between non-GAAP
earnings and net loss on an absolute and per-share basis. Non-GAAP financial
measures should not be considered in isolation from, or as a substitute for,
financial information presented in compliance with GAAP, and the non-financial
measures as reported by Smith Micro Software may not be comparable to
similarly titled amounts reported by other companies.

Investor Conference Call:

Smith Micro Software will hold an investor conference call today to discuss
the Company’s fourth quarter and fiscal year 2012 results at 4:30 p.m. ET,
February 13, 2013. To access the call, dial 877-941-9205 and when prompted
provide 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 on the Smith Micro website in
the Investor Relations section.

About Smith Micro Software, Inc.:

Smith Micro Software provides solutions that simplify, secure and enhance the
mobile experience. Our portfolio includes a wide range of applications that
manage broadband connectivity, data traffic, devices, voice and video
communications over wireless networks. With 30 years of experience developing
world-class client and server software, Smith Micro helps the leading mobile
network operators, device manufacturers and enterprises increase efficiency
and capitalize on the growth of mobile-connected consumers and workforces. For
more information, visit smithmicro.com.

Safe Harbor Statement:

This release contains forward-looking statements that involve risks and
uncertainties, including without limitation, forward-looking statements
relating to the company’s financial prospects and other projections of its
performance, the existence of new market opportunities and interest in the
company’s products and solutions, and the company's ability to increase its
revenue and regain profitability by capitalizing on these new market
opportunities and interest and introducing new products and solutions. Among
the important factors that could cause actual results to differ materially
from those expressed or implied in the forward-looking statements are changes
in demand for the company’s products from its customers and their end-users,
new and changing technologies, customer acceptance and timing of deployment of
those technologies, new and continuing adverse economic conditions, and the
company's ability to 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 expressed or implied in any
forward-looking statements. The forward-looking statements contained in this
release are made on the basis of the views and assumptions of management
regarding future events and business performance as of the date of this
release, and the company does not undertake any obligation to update these
statements to reflect events or circumstances occurring after the date of this
release.

Smith Micro, NetWise, CommSuite and the Smith Micro logo are registered
trademarks or 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 Software, Inc.
Reconciliation of GAAP to Non-GAAP Results
(in thousands, except per share amounts) - unaudited

                                                                     Goodwill &
                                   Stock                             Long-Lived Assets             Non-
                  GAAP             Compensation     Amortization     Impairment     Taxes          GAAP
Three
Months
Ended
12/31/12:
Gross             $ 9,695          $    4           $    -           $  -           $ -            $ 9,699
profit
Loss before
provision         $ (4,545   )     $    1,005       $    -           $  -           $ -            $ (3,540  )
for income
taxes
Net loss          $ (4,143   )     $    1,005       $    -           $  -           $ 933          $ (2,205  )
EPS-diluted       $ (0.12    )     $    0.03        $    0.00        $  0.00        $ 0.03         $ (0.06   )
                                                                                                   
Three
Months
Ended
12/31/11:
Gross             $ 8,513          $    4           $    -           $  -           $ -            $ 8,517
profit
Loss before
provision         $ (11,592  )     $    1,655       $    -           $  -           $ -            $ (9,937  )
for income
taxes
Net loss          $ (9,525   )     $    1,655       $    -           $  -           $ 3,666        $ (4,204  )
EPS-diluted       $ (0.27    )     $    0.05        $    0.00        $  0.00        $ 0.10         $ (0.12   )
                                                                                                   
Twelve
Months
Ended
12/31/12:
Gross             $ 34,881         $    13          $    -           $  -           $ -            $ 34,894
profit
Loss before
provision         $ (25,697  )     $    4,203       $    -           $  -           $ -            $ (21,494 )
for income
taxes
Net loss          $ (25,463  )     $    4,203       $    -           $  -           $ 7,870        $ (13,390 )
EPS-diluted       $ (0.71    )     $    0.12        $    0.00        $  0.00        $ 0.22         $ (0.37   )
                                                                                                   
Twelve
Months
Ended
12/31/11:
Gross             $ 44,006         $    31          $    3,775       $  -           $ -            $ 47,812
profit
Loss before
provision         $ (165,535 )     $    8,230       $    6,084       $  112,904     $ -            $ (38,317 )
for income
taxes
Net loss          $ (159,606 )     $    8,230       $    6,084       $  124,257     $ (2,836 )     $ (23,871 )
EPS-diluted       $ (4.48    )     $    0.23        $    0.17        $  3.49        $ (0.08  )     $ (0.67   )
                                                                                                   
                                                                                                   

                                                                   
Smith Micro Software, Inc.
Statements of Comprehensive Loss for the Three and Twelve Months Ended December 31, 2012 and
2011
(in thousands, except per share amounts) - unaudited
                                                                                  
                         For the Three Months                   For the Twelve Months
                         Ended December 31,                     Ended December 31,
                         2012             2011                  2012              2011
Revenues                 $ 12,032         $ 11,239              $ 43,329          $ 57,767
Cost of revenues          2,337          2,726               8,448           13,761   
Gross profit               9,695            8,513                 34,881            44,006
                                                                                  
Operating
expenses:
Selling and                4,058            4,679                 16,666            26,594
marketing
Research and               5,645            8,019                 24,767            41,711
development
General and                4,547            5,240                 20,211            25,279
administrative
Restructuring              -                2,200                 238               3,184
expenses
Goodwill and
long-lived asset          -              -                   -               112,904  
impairment
Total operating           14,250         20,138              61,882          209,672  
expenses
Operating loss             (4,555 )         (11,625 )             (27,001 )         (165,666 )
Non-operating
income:
Change in fair
value of                   -                -                     1,210             -
contingent
liability
Interest and other        10             33                  94              131      
income, net
Loss before
provision for             (4,545 )        (11,592 )            (25,697 )        (165,535 )
income taxes
Provision for             (402   )        (2,067  )            (234    )        (5,929   )
income tax benefit
Net loss                 $ (4,143 )       $ (9,525  )           $ (25,463 )       $ (159,606 )
                                                                                  
Other
comprehensive
income (loss),
before tax:
Unrealized holding
gains (losses) on          (12    )         25                    33                (24      )
available-for-sale
securities
Income tax expense
(benefit) related
to items of other         -              20                  6               1        
comprehensive
income
Other
comprehensive             (12    )        5                   27              (25      )
income (loss), net
of tax
Comprehensive loss       $ (4,155 )       $ (9,520  )           $ (25,436 )       $ (159,631 )
                                                                                  
Loss per share:
Basic and diluted        $ (0.12  )       $ (0.27   )           $ (0.71   )       $ (4.48    )
                                                                                  
Weighted average
shares
outstanding:
Basic and diluted          35,882           35,696                35,849            35,617
                                                                                  
                                                                                  

                                                    
Smith Micro Software, Inc.
Consolidated Balance Sheets
(in thousands)

                                 December 31,                     December 31,
                                 2012                             2011
                                 (unaudited)                      (audited)
ASSETS
Current Assets:
Cash & cash equivalents          $ 18,873                         $ 7,475
Short term investments             13,328                           38,497
Accounts receivable, net           8,953                            8,525
Income tax receivable              681                              8,293
Inventory, net                     176                              309
Prepaid and other assets           903                              1,138
Deferred tax asset                89                            8        
Total current assets               43,003                           64,245
Equipment & improvements,          11,211                           15,482
net
Other assets                      181                            214      
TOTAL ASSETS                     $ 54,395                        $ 79,941   
                                                                  
LIABILITIES &
STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable                 $ 1,978                          $ 3,181
Accrued liabilities                4,829                            7,641
Deferred revenue                  1,436                          703      
Total current liabilities          8,243                            11,525
                                                                  
Long-term liabilities              3,399                            3,546
Deferred tax liability            91                             10       
Total non-current                  3,490                            3,556
liabilities
                                                                  
Stockholders' Equity:
Common stock                       36                               36
Additional paid in capital         211,165                          207,927
Accumulated comprehensive         (168,539 )                      (143,103 )
deficit
Total stockholders' equity        42,662                         64,860   
TOTAL LIABILITIES &              $ 54,395                        $ 79,941   
STOCKHOLDERS' EQUITY

Contact:

At the Company:
Suzanne Runald
Public Relations
949-362-5800
pr@smithmicro.com
or
IR Inquiries:
MKR Group
Charles Messman, Todd Kehrli
323-468-2300
ir@mkr-group.com
 
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