Viisage (NASDAQ:VISG)
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Viisage (NASDAQ: VISG), a leading provider of advanced
technology identity solutions, today reported results for its fourth
quarter and full-year ended December 31, 2005. The Company's fourth
quarter and 2005 full year results are subject to the completion of
the year end independent audit. The Company anticipates filing its
Form 10-K with the Securities and Exchange Commission in a timely
manner.
Revenue for the 2005 fourth quarter was $15.0 million compared to
$14.3 million for the 2005 third quarter. Gross margin in the fourth
quarter was 24 percent compared to 30 percent in the third quarter,
reflecting slightly higher royalty costs and other adjustments. The
Company reported a fourth quarter net loss of $3.0 million, or $0.14
per share compared to a net loss of $2.1 million, or $0.11 per share
in the third quarter of 2005. The fourth quarter figures include
revenue of approximately $0.6 million from the Integrated Biometric
Technology (IBT) acquisition that closed on December 16, 2005.
Revenue for the full year 2005 aggregated $66.2 million compared
to $67.5 million in 2004, and net loss for 2005 was $7.4 million
compared to $7.0 million in 2004.
Recent milestones for Viisage include an agreement to merge with
Identix Incorporated; and the addition of iris recognition with the
acquisition of privately-held SecuriMetrics. This merger, upon
completion, and acquisition will position the Company as a market
leader in the biometric identity solutions sector and will create a
combined company with projected pro-forma 2006 revenue of $235 million
and EBITDA of $43 million.
"I could not be more pleased to see our vision coming into clearer
focus and our value proposition so positively embraced by all of our
key constituents," said Mr. Robert V. LaPenta, chairman of the board
of Viisage. "Our efforts to consolidate the fragmented biometric
industry continue with this merger and acquisition and serve as
important elements in our strategy, enhancing our secure credentialing
capabilities and adding additional modalities to our technology
platform."
LaPenta added, "Additionally, the Identix merger is moving ahead
and we are on schedule to close in the second quarter. This is an
exciting time for the industry, and I look forward to continued
success in the coming year."
Strategic Highlights for the Fourth Quarter
-- L-1 Investment Partners accelerated the Viisage growth
strategy with a $100 million cash investment in the Company.
This strengthened the Viisage capital position and furthered
the Company's ability to become a leading identity solutions
company.
-- Directorship of Viisage was bolstered with two important
appointments. Bob LaPenta joined as chairman of the board, and
former director of the Central Intelligence Agency, George
Tenet took a board seat.
-- Viisage acquired Integrated Biometric Technology (IBT). The
IBT proprietary fingerprint technology and background
screening solutions add an important multi-modal recognition
capability to the Viisage portfolio.
Customer Adoption Remains Steady
Adoption of Viisage solutions remained steady at all levels of
local, state, federal and international government, with the following
customer milestones announced:
-- The US Department of State (DoS) increased its existing sole
source IDIQ contract ceiling with the Company (via the Viisage
wholly owned subsidiary Trans Digital Technologies) by $56
million. This brings the total potential value of the contract
to $121 million.
-- The state of North Dakota awarded Viisage a five year contract
for secure driver's license credentialing.
-- The U.S. Department of Defense's Technical Support Working
Group (TSWG) awarded Viisage a research and development
contract to continue developing face recognition technology
for use in terrorist watch list applications.
-- Viisage expanded its customer base in Europe through the
Driver and Vehicle Licensing Agency in the United Kingdom, one
of Europe's largest governmental repositories of facial image
data. The agency awarded Viisage a contract to test its facial
recognition tools against the Agency's database.
Bernard Bailey, president and CEO of Viisage, commented, "We are
pleased to report that the company has made significant progress in
positioning itself as the leader in the field through strategic
acquisitions and organic growth. The momentum and success among the
federal government in using biometric-enabled identity programs to
support visa and passport issuance, border control and other access
card requirements should pave the way for greater commercial
enterprise adoption."
Guidance
For the 2006 first quarter, the Company is anticipating that
revenue will be in the range of $20 to $22 million, representing a
sequential increase of 33 percent to 47 percent, based on the
preliminary 2005 fourth quarter results. Gross margin is expected to
be 30 percent. The Company expects gross margin to increase during
2006, as the contributions from SecuriMetrics and IBT, performance
improvements in its existing business, and the impact of the pending
merger and integration of Identix are reflected in the operations. EPS
will range from a loss of (including a stock option expense of $1
million or $0.03 per share, and excluding any merger related
integration costs) $0.10 to a loss of $0.14.
Sarbanes-Oxley Compliance
In connection with the Company's Sarbanes-Oxley Section 404
compliance review, management expects to conclude that it will likely
continue to have from last year an unremediated material weakness with
respect to its year end financial closing, and as a result, management
will conclude that the Company's internal controls over financial
reporting are not effective as of December 31, 2005.
Conference Call information
The Company will host a conference call with the investment
community to discuss its operating results beginning at 11:00 a.m. EST
on Thursday, March 2, 2006. The dial-in number for the call is
888-396-2369, confirmation code 77467844. Internationally, please dial
617-847-8710, using the same confirmation code. The call also will be
available via live audio webcast, found under the Conference Calls
page of the Investors section of the company's Web site
www.viisage.com. To access the webcast, please go to the company's Web
site at least 10 minutes prior to the start of the call and follow the
directions. A replay of the webcast will be available at Viisage's Web
site beginning an hour after completion of the call.
EBITDA
Viisage uses EBITDA as a non-GAAP financial performance
measurement. EBITDA is calculated by adding back to net income (loss)
interest, taxes, depreciation and amortization. EBITDA is provided to
investors to complement results provided in accordance with GAAP, as
management believes the measures help illustrate underlying operating
trends in the Company's business and uses the measures to establish
internal budgets and goals, manage the business, and evaluate
performance. EBITDA should not be considered in isolation or as a
substitute for comparable measures calculated and presented in
accordance with GAAP. Viisage has not provided a quantitative
reconciliation of EBITDA with projected net income (loss) because such
reconciliation cannot be provided without unreasonable efforts.
About Viisage
Viisage (NASDAQ: VISG) delivers advanced technology identity
solutions for governments, law enforcement agencies and businesses
concerned with enhancing security, reducing identity theft, and
protecting personal privacy. Viisage solutions include secure
credentials such as passports and drivers' licenses, biometric
technologies for uniquely linking individuals to those credentials,
and credential authentication technologies to ensure the documents are
valid before individuals are allowed to cross borders, gain access to
finances, or granted other privileges. With over 3,000 installations
worldwide, Viisage's identity solutions stand out as a result of the
Company's industry-leading technology and unique understanding of
customer needs. Viisage's product suite includes FaceTOOLS(R) SDK,
Viisage PROOF(TM), FaceEXPLORER(R), Viisage iA-thenticate(R),
BorderGuard(R), PIER(TM), HIIDE(TM), AutoTest(TM), FacePASS(TM) and
FaceFINDER(R).
This news release contains forward-looking statements that involve
risks and uncertainties. Forward-looking statements in this document
and those made from time to time by Viisage through its senior
management are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect the Company's current views with
respect to the future events or financial performance discussed in
this release, based on management's beliefs and assumptions and
information currently available. When used, the words "believe",
"anticipate", "estimate", "project", "should", "expect", "plan",
"assume" and similar expressions that do not relate solely to
historical matters identify forward-looking statements.
Forward-looking statements concerning future plans or results are
necessarily only estimates and actual results could differ materially
from expectations. Certain factors that could cause or contribute to
such differences include, among other things, in particular, the size
and timing of contract awards, performance on contracts, performance
of acquired companies, availability and cost of key components,
unanticipated results from audits of the financial results of the
Company and acquired companies, changing interpretations of generally
accepted accounting principles, outcomes of government reviews,
developments with respect to litigation to which we are a party,
potential fluctuations in quarterly results, dependence on large
contracts and a limited number of customers, lengthy sales and
implementation cycles, market acceptance of new or enhanced products
and services, proprietary technology and changing competitive
conditions, system performance, management of growth, dependence on
key personnel, ability to obtain project financing, general economic
and political conditions and other factors affecting spending by
customers, and the unpredictable nature of working with government
agencies. In addition, such risks and uncertainties include, among
others, the following risks: that the merger with Identix will not
close, that the regulatory or shareholder approval will not be
obtained, that the closing will be delayed, that customers and
partners will not react favorably to the merger, integration risks,
the risk that the combined companies may be unable to achieve
cost-cutting synergies, and other risks described in Viisage's and
Identix' Securities and Exchange Commission filings, including the
Registration Statement on Form S-4 filed (of February 14, 2006) with
the SEC in connection with the transaction, Viisage's Annual Report on
Form 10-K for the year ended December 31, 2004 and its Quarterly
Reports on Form 10-Q for the quarters ended April 3, 2005, July 3,
2005 and October 2, 2005 under the captions "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations." Viisage expressly disclaims any obligation to
update any forward-looking statements.
Additional Information and Where to Find It
Investors and security holders of both Viisage and Identix are
advised to read the joint proxy statement/prospectus regarding the
business combination transaction referred to in the material below
because it contains important information. Viisage and Identix expect
to mail a joint proxy statement/prospectus about the transaction to
their respective stockholders. This joint proxy statement/prospectus
will be filed with the Securities and Exchange Commission by both
companies. Investors and security holders may obtain a free copy of
the joint proxy statement/prospectus and other documents filed by the
companies at the Securities and Exchange Commission's web site at
http://www.sec.gov. The joint proxy statement/prospectus and such
other documents may also be obtained from Viisage or Identix by
directing such requests to the companies.
Participants In Solicitation
Viisage, Identix and their respective directors and executive
officers and other members of management and employees may be deemed
to be participants in the solicitation of proxies in respect of the
merger. Information concerning Viisage's participants is set forth in
the proxy statement dated, November 21, 2005, for Viisage's special
meeting of shareholders held on December 16, 2005 as filed with the
SEC on Schedule 14A. Information concerning Identix' participants is
set forth in the proxy statement, dated October 6, 2005, for Identix'
2005 annual meeting of shareholders as filed with the SEC on Schedule
14A. Additional information regarding the interests of participants of
Viisage and Identix in the solicitation of proxies in respect of the
merger will be included in the registration statement and joint proxy
statement/prospectus filed with the SEC.
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VIISAGE TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(in millions)
(Unaudited)
December 31, December 31,
2005 2004
-------------- --------------
Current assets:
Cash $ 72.4 $ 11.3
Other current assets 20.5 21.7
-------------- --------------
Total current assets 92.9 33.0
Property and equipment, net 19.5 19.9
Goodwill and net intangible assets 179.5 119.5
Other assets 3.2 3.2
--------------- ---------------
$ 295.1 $ 175.6
============== ==============
Liabilities & Shareholders Equity
Current liabilities:
Accounts payable, accrued expenses
and other current liabilities 12.6 15.7
Current deferred revenue 4.0 2.0
-------------- --------------
Total current liabilities 16.6 17.7
Deferred tax liability 2.0 0.9
Deferred revenue 1.4 1.6
Other liabilities 0.5 0.6
-------------- --------------
Total Liabilities 20.5 20.8
Shareholders' equity 274.6 154.8
-------------- --------------
$ 295.1 $ 175.6
============== ==============
VIISAGE TECHNOLOGY, INC.
Condensed Consolidated Statements of Operation
(in millions, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
------------------- -------------------
December December December December
31, 31, 31, 31,
2005 2004 2005 2004
-------- -------- -------- --------
Revenues:
Services revenue $ 10.0 $ 11.8 $ 40.8 $ 45.9
Product revenue 5.0 7.3 25.4 21.6
-------- -------- -------- --------
Total revenue 15.0 19.1 66.2 67.5
-------- -------- -------- --------
Cost of revenues:
Services cost of revenue 7.7 7.1 29.0 29.4
Product cost of revenue 2.9 5.7 13.9 16.1
Amortization of purchased
intangible assets 0.8 0.8 3.2 2.7
-------- -------- -------- --------
Total cost of revenue 11.4 13.6 46.1 48.2
-------- -------- -------- --------
Gross Profit: 3.6 5.4 20.1 19.3
-------- -------- -------- --------
Operating expenses:
Sales and marketing 1.9 2.3 7.8 6.9
Research and development 1.1 1.3 4.7 3.8
General and administrative 2.9 3.0 12.2 9.8
Impairment of long-lived
assets - 2.0 - 2.0
Amortization of purchased
intangible assets 0.5 0.5 2.1 0.8
-------- -------- -------- --------
Total operating expenses 6.4 9.1 26.8 23.3
-------- -------- -------- --------
Loss from operations (2.8) (3.7) (6.7) (4.0)
Interest income (expense),
net 0.1 (0.4) 0.2 (1.7)
Other income (expense) 0.1 (0.3) 0.5 (0.2)
-------- -------- -------- --------
Income (loss) before
income taxes (2.6) (4.4) (6.0) (5.9)
Provision for income taxes 0.4 0.9 1.4 (1.0)
-------- -------- -------- --------
Net loss $ (3.0) $ (5.3) $ (7.4) $ (6.9)
======== ======== ======== ========
Net loss per share:
Net income (loss) per basic
share $ (0.14) $ (0.28) $ (0.38) $ (0.45)
======== ======== ======== ========
Net income (loss) per diluted
share $ (0.14) $ (0.28) $ (0.38) $ (0.45)
======== ======== ======== ========
Weighted average basic shares 20.9 18.9 19.6 15.5
======== ======== ======== ========
Weighted average diluted
shares 20.9 18.9 19.6 15.5
======== ======== ======== ========
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