Exhibit 99.1
Maureen Todaro
Vice President, Corporate Communications
Viisage
978.932.2438
mtodaro@viisage.com
VIISAGE REPORTS THIRD QUARTER 2005 RESULTS; REAFFIRMS REVENUE OUTLOOK
FOR FY2005 AND FY2006
Gross Margin Increases Year-over-year; Company Continues to Generate Positive Cash Flow
Strategic Alliance with L-1 Investment Partners Expected to Close In December 2005
BILLERICA, Mass.—November 1, 2005—Viisage (NASDAQ: VISG), a leading provider of advanced technology identity solutions, today reported results for its third quarter ended October 2, 2005.
Revenue was $14.3 million for the third quarter of 2005 compared to $19.9 million for the same period of 2004, which included approximately $5.4 million of one-time sales to the U.S. Department of Defense. The Company reported a net loss of $2.1 million, or $0.04 per fully diluted share for the third quarter compared to net income of $198,000, or $0.00 per fully diluted share, in the third quarter of 2004. Gross margins increased to 29.6% for the third quarter of 2005, compared to 27.7% in the same quarter of the prior year, reflecting the increased contribution of high value product sales to our overall revenue mix. The Company generated positive cash flow, increasing its quarter end cash balance by $2.0 million, to $12.7 million, including $3.2 million of cash generated from operations.
“As reflected by the Motorola and Government of Pakistan announcements, we continued to see strong interest and demand for our advanced technology identity solutions across our key constituents during the third quarter,” commented Bernard Bailey, president and CEO of Viisage. “We remain committed to becoming the global leader in identity solutions, although the delays in customer deployment and budgetary constraints have made short-term visibility more challenging.”
As previously announced on October 6, 2005, L-1 Investment Partners signed a definitive agreement to purchase $100 million in Viisage common stock from the Company at a price of $5.25 per share (approximately 19 million newly-issued shares). The terms further include warrants to purchase 4,000,000 shares of common stock at an exercise price of $5.50 per share, which will vest pursuant to Viisage achieving a defined acquisition program and certain revenue milestones. On October 20, 2005, the Company filed a preliminary Proxy Statement and Notice of Special Meeting, which is currently expected to occur in December.
“We will continue to focus on those opportunities that showcase Viisage’s ability to manage an identity lifecycle, versus a point solutions offering,” continued Mr. Bailey. “And as we have successfully proved with the state of Connecticut relationship, we are well positioned to be the identity solutions partner at the federal, state and enterprise level. Furthermore, we expect the recently signed definitive agreement with L-1 Investment Partners and the anticipated addition of Robert
LaPenta as Chairman of Viisage to enable us to accelerate our growth, fund our expansion within the marketplace and increase shareholder value.”
Business highlights for the third quarter of 2005 include:
| | • | | Launched contactless smartchip capabilities for the Company’s iA-thenticate® product line, incorporating RFID (radio frequency identification) capability to authenticate travel credentials across Viisage’s widely deployed product set |
| | • | | Announced joint win with Motorola to provide an advanced identity solution for criminal identification to the Harris County, Texas Sheriff’s Department |
| | • | | Named Bradley T. Miller senior vice president and Chief Financial Officer |
| | • | | Announced that the Government of Pakistan is successfully using Viisage’s face recognition technology and a leading fingerprint technology to fight identity theft and fraud in the country’s national ID and passport programs |
| | • | | Selected as strategic partner by Cross Match Technologies to integrate proofing capabilities into fingerprint solutions |
Following the end of the quarter, the Company announced the following developments:
| | • | | Signed the definitive strategic alliance agreement with L-1 described above |
| | • | | Granted patents in the United States and Europe for Live Check™, a method for verifying that a person is live when their facial image is captured rather than an impostor using a fraudulent image, and launched two new multi-biometric products, IdentityTOOLS™ and IdentityEXPLORER™, as Software Development Kits (SDKs) |
Financial Outlook
For the full year 2005, Viisage is anticipating total revenue in the range of $62 million to $65 million. The Company expects it will be operating cash flow positive for 2005. The Company anticipates organic revenue growth of about 20% for the full year 2006 over revenue expectations for the full year 2005.
EBITDA
Viisage reports EBITDA as a non-GAAP financial performance measurement. The Company calculates EBITDA by adding back to its net results 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. Viisage’s EBITDA should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. During 2004, Viisage completed the acquisitions of ZN Vision Technologies, Trans Digital Technologies and Imaging Automation. EBITDA was $1.3 million for the third quarter of 2005, and $5.7 million on a year to date basis.
A reconciliation of GAAP Net Income (Loss) to EBITDA follows:
| | | | | | | |
| | | For the Quarter Ended
|
| | | October 2, | | | September 26, |
| | | 2005
| | | 2004
|
Net Income (loss) | | $ | (2,108 | ) | | $ | 198 |
| | |
Add: | | | | | | | |
Depreciation and Amortization | | | 3,182 | | | | 2,742 |
Interest Income (Expense), net | | | (44 | ) | | | 411 |
Provisions for Income Taxes | | | 309 | | | | 25 |
| | |
|
|
| |
|
|
EBITDA | | $ | 1,339 | | | $ | 3,376 |
| | |
|
|
| |
|
|
Conference Call information
The Company will host a conference call with the investment community to discuss its operating results beginning at 5:00 p.m. ET on Tuesday, November 1, 2005. The dial-in number for the call is 800-706-7745 and the participant conference code is 87694680. Internationally, please dial 617-614-3472, using the same participant conference code. The call also will be available via live audio webcast under the Conference Calls page of the Investors section of the Company’s website (www.viisage.com). To access the webcast, please go to the Company’s website 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 website beginning an hour after completion of the call. In addition, immediately following this call, the Company will host a financial call beginning at 6:00 pm ET. The dial-in number for this call is 800-260-8140 and the participant conference code is 51960864. Internationally, please dial 617-614-3672 using the same participant conference code. This call will also be available via live audio webcast under the conference calls page of the investors section of the Company’s website (www.viisage.com), and a replay will be available at the site beginning an hour after completion of the call.
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® SDK, Viisage PROOF™, FaceEXPLORER®, Viisage iA-thenticate®, BorderGuard®, IdentityTOOLS™, IdentityEXPLORER™, FacePASS™ and FaceFINDER®.
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, as amended. 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”, “bode”, “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, the possible inability of the Company or L-1 to satisfy conditions to closing the investment, including but not limited to the requirement that the Company’s shareholders approve the investment, the size and timing of contract awards, performance on contracts, 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 Viisage is 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, the unpredictable nature of working with government agencies and other risks, uncertainties and factors including those described from time to time in Viisage’s filings with the Securities and Exchange Commission, including without limitation, Viisage’s Form 10-K for the year ended December 31, 2004 and its quarterly reports on Form 10-Q. Viisage expressly disclaims any obligation to update any forward-looking statements.
Viisage has filed a preliminary proxy statement with the Securities and Exchange Commission in connection with the proposed L-1 investment. Investors are urged to read such proxy statement which contains important information. The proxy statement and other documents filed by Viisage with the SEC are available free of charge at the SEC’s website (www.sec.gov) or from Viisage by directing a request to investor@viisage.com, or from Viisage’s website atwww.viisage.com.
Viisage and its directors, executive officers, and other employees may be deemed to be participating in the solicitation of proxies from Viisage stockholders in connection with the approval of the proposed transaction. Information about Viisage’s directors and executive officers is available in Viisage’s proxy statement, dated September 7, 2005, for its 2005 Special Meeting in Lieu of Annual Meeting. Additional information about the interests of potential participants is included in the preliminary proxy statement which Viisage has filed with the SEC.
- Tables Follow -
VIISAGE TECHNOLOGY, INC.
Consolidated Balance Sheets
(in thousands)
(Unaudited)
| | | | | | |
| | | October 2,
2005
| | December 31,
2004
|
Assets | | | | | | |
Current assets: | | | | | | |
Cash | | $ | 12,675 | | $ | 11,309 |
Accounts receivable | | | 12,366 | | | 17,075 |
Inventories and other costs and estimated earnings in excess of billings | | | 5,532 | | | 3,382 |
Other current assets | | | 762 | | | 1,213 |
| | |
|
| |
|
|
Total current assets | | | 31,335 | | | 32,979 |
Property and equipment, net | | | 18,384 | | | 19,917 |
Goodwill | | | 92,621 | | | 93,507 |
Intangible assets, net | | | 21,248 | | | 26,046 |
Other assets | | | 3,151 | | | 3,180 |
| | |
|
| |
|
|
| | | $ | 166,739 | | $ | 175,629 |
| | |
|
| |
|
|
Liabilities & Shareholders Equity | | | | | | |
Current liabilities: | | | | | | |
Accounts payable and accrued expenses | | $ | 10,273 | | $ | 15,279 |
Current portion of project financing | | | 141 | | | 281 |
Current deferred revenue | | | 3,063 | | | 1,992 |
Other current liabilities | | | 304 | | | 194 |
| | |
|
| |
|
|
Total current liabilities | | | 13,781 | | | 17,746 |
Project financing | | | 219 | | | 149 |
Deferred tax liability | | | 1,637 | | | 859 |
Deferred revenue | | | 1,234 | | | 1,717 |
Other liabilities | | | 200 | | | 368 |
| | |
|
| |
|
|
Total Liabilities | | | 17,071 | | | 20,839 |
| | |
Shareholders’ equity | | | 149,668 | | | 154,790 |
| | |
|
| |
|
|
| | | $ | 166,739 | | $ | 175,629 |
| | |
|
| |
|
|
VIISAGE TECHNOLOGY, INC.
Consolidated Statements of Operation
(in thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
| | | Nine Months Ended
| |
| | | October 2,
2005
| | | September 26,
2004
| | | October 2,
2005
| | | September 26,
2004
| |
Revenues: | | | | | | | | | | | | | | | | |
Services revenue | | $ | 9,833 | | | $ | 11,818 | | | $ | 30,811 | | | $ | 34,157 | |
Product revenue | | | 4,473 | | | | 8,089 | | | | 20,454 | | | | 14,285 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total revenue | | | 14,306 | | | | 19,907 | | | | 51,265 | | | | 48,442 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Cost of revenues: | | | | | | | | | | | | | | | | |
Services cost of revenue | | | 6,677 | | | | 7,097 | | | | 21,333 | | | | 22,327 | |
Product cost of revenue | | | 2,617 | | | | 6,541 | | | | 10,965 | | | | 10,378 | |
Amortization of purchased intangible assets | | | 784 | | | | 762 | | | | 2,360 | | | | 1,908 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total cost of revenue | | | 10,078 | | | | 14,400 | | | | 34,658 | | | | 34,613 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Gross Profit: | | | 4,228 | | | | 5,507 | | | | 16,607 | | | | 13,829 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Operating expenses: | | | | | | | | | | | | | | | | |
Sales and marketing (1) | | | 1,732 | | | | 1,588 | | | | 5,873 | | | | 4,659 | |
Research and development (1) | | | 1,086 | | | | 781 | | | | 3,439 | | | | 2,510 | |
General and administrative (1) | | | 2,936 | | | | 2,362 | | | | 9,358 | | | | 6,717 | |
Amortization of purchased intangible assets | | | 527 | | | | 115 | | | | 1,581 | | | | 287 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total operating expenses | | | 6,281 | | | | 4,846 | | | | 20,251 | | | | 14,173 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Income (loss) from operations | | | (2,053 | ) | | | 661 | | | | (3,644 | ) | | | (344 | ) |
Interest income | | | 75 | | | | 67 | | | | 143 | | | | 108 | |
Interest expense | | | 31 | | | | 478 | | | | 85 | | | | 1,488 | |
Other income (expense) | | | 210 | | | | (27 | ) | | | 294 | | | | 48 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Income (loss) before income taxes | | | (1,799 | ) | | | 223 | | | | (3,292 | ) | | | (1,676 | ) |
Provision for income taxes | | | 309 | | | | 25 | | | | 963 | | | | 75 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net income (loss) | | $ | (2,108 | ) | | $ | 198 | | | $ | (4,255 | ) | | $ | (1,751 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net loss per share: | | | | | | | | | | | | | | | | |
Net income (loss) per basic share | | | (0.04 | ) | | | 0.00 | | | | (0.09 | ) | | | (0.05 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net income (loss) per diluted share | | | (0.04 | ) | | | 0.00 | | | | (0.09 | ) | | | (0.05 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Weighted average basic shares | | | 48,114 | | | | 40,072 | | | | 48,021 | | | | 35,783 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Weighted average diluted shares | | | 48,114 | | | | 41,090 | | | | 48,021 | | | | 35,783 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| | | | |
(1) Excludes non-cash, amortization of purchased intangible assets as follows: | | | | | | | | | | | | | | | | |
Cost of Revenue | | $ | 784 | | | $ | 762 | | | $ | 2,360 | | | $ | 1,908 | |
Sales and marketing | | | 107 | | | | — | | | | 321 | | | | — | |
Research and development | | | 359 | | | | 115 | | | | 1,077 | | | | 287 | |
General and administrative | | | 61 | | | | — | | | | 183 | | | | — | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| | | $ | 1,311 | | | $ | 877 | | | $ | 3,941 | | | $ | 2,195 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
