Exhibit 99.1
L-1
IDENTITY
SOLUTIONS
FOR IMMEDIATE RELEASE
- ---------------------
Contact:
Doni Fordyce
L-1 Identity Solutions
203-504-1109
dfordyce@L1id.com
L-1 IDENTITY SOLUTIONS REPORTS THIRD QUARTER 2006 FINANCIAL RESULTS
STAMFORD, CT. - November 2, 2006 - L-1 Identity Solutions, Inc., (NYSE: ID), a
leading supplier of identity solutions and services, today reported results for
the third quarter ended September 30, 2006. L-1 Identity Solutions consists of,
among other things, the historic operations of Viisage Technology, Inc. and
Identix, Incorporated which merged on August 29, 2006.
Revenue for the third quarter of 2006 was $39.8 million compared to $14.3
million in the third quarter of 2005, an increase of $25.5 million. Of the
increase, $20.8 million relates to acquired businesses including Integrated
Biometrics Technology (IBT), SecuriMetrics, Inc., Iridian Technologies, Inc. and
Identix, while $4.7 million (or approximately 33 percent) represents organic
growth primarily from increased volume of U.S. passports and document
authentication products.
Gross margin in the third quarter of 2006 was 24 percent, compared to 27 percent
in the third quarter of 2005. Gross margin was 5 percent lower as a result of
non-recurring inventory and other charges. Acquisitions resulted in a reduction
of an additional 2 percent reflecting lower margins in the IBT/IIS enrollment
activities.
Adjusted EBITDA before merger-related severance costs and other non-recurring
charges was $4.8 million compared to $1.4 million in the same period in the
prior year. Including the aforementioned charges, Adjusted EBITDA was negative
$1.0 million in the third quarter.
The Company reported a third quarter net loss of $29.3 million, or $0.60 per
diluted share, compared to a net loss of $2.1 million, or $0.11 per diluted
share in the third quarter of 2005. The results of the third quarter of 2006
include non-recurring charges related to asset impairment, the Viisage/Identix
merger, as well as other non-recurring charges aggregating to $26.4 million. In
addition, there were charges of $1.5 million for stock-based compensation and
other one time charges.
Commenting on the third quarter, Robert V. LaPenta, Chairman, President and CEO
of L-1 Identity Solutions, said, "We continue to balance our efforts in creating
the industry's identity solutions powerhouse with a steadfast focus on
increasing shareholder value. L-1 realized $20 million in synergies from the
merger of Viisage and Identix. We also significantly enhanced the marketing and
finance management teams and completed a detailed bottoms-up analysis of
revenues and assets, including intangibles. This enabled us to financially align
the Company's new strategic direction and reflect all of the charges in the
quarter."
YEAR TO DATE RESULTS
Revenue for the first nine months of 2006 was $88.1 million compared to $51.3
million for the same period in the prior year, an increase of $36.8 million.
$34.1 million of the increase relates to acquisitions of IBT, SecuriMetrics,
Iridian and Identix. $2.7 million represents organic growth primarily from
increased volume of U.S. passports and document authentication products.
Gross margin for the first nine months of 2006 was 26 percent compared to 30
percent for the same period in the prior year. Gross margin was 2 percent lower
as a result of non-recurring inventory and other charges. Acquisitions resulted
in a reduction of an additional 2 percent reflecting lower margin in IBT/IIS
enrollment activities.
Adjusted EBITDA for the nine months before merger-related severance costs and
other one time related charges was $11.2 million compared to $5.9 million for
the same period in the prior year. Including the aforementioned charges,
Adjusted EBITDA was $5.4 million.
The Company reported a nine month net loss of $33.0 million, or $0.92 per
diluted share compared to a net loss of $4.3 million, or $0.22 per diluted share
for the corresponding period in the prior year. The 2006 results include
non-recurring asset impairment charges, merger related charges and other
non-recurring charges aggregating $26.4 million.
L-1 MOMENTUM WITHIN THE INDUSTRY CONTINUES
"This was a significant quarter for us, both in our contributions to advancing
the state of the industry and in positioning the Company at the forefront of
global identity solution opportunities," said Mr. LaPenta. "The Company's most
meaningful achievement was creating the industry's premier company for identity
solutions and services by completing the merger between Viisage and Identix that
formed L-1 Identity Solutions. We added greater value to the market by
successfully integrating the L-1 Identity Solution companies' offerings into a
set of unique customer-focused solutions and acquiring new technologies and
services. Iridian Technologies, when combined with SecuriMetrics, now gives us
powerful capabilities in the iris recognition market. The acquisition of SpecTal
LLC adds valuable intelligence services and a larger set of potential customers
for our solutions within the U.S. intelligence community and other government
agencies."
The Company also made significant progress in positioning itself for the future
as the central player in shaping the global business landscape for identity
solutions. The Company listed on the NYSE as "ID" to gain access to worldwide
investors, a wider base within the financial community, and global business
leaders. Additionally, individuals with hands-on experience in solving the
world's toughest security challenges joined the Company's Board of Directors.
This includes former FBI Director Louis Freeh, former Deputy Secretary of DHS
Admiral Loy, former Director of Central Intelligence for the United States
George Tenet, former Ambassador Robert Gelbard, and other distinguished
Directors.
Products and services offered by L-1 Solutions companies continued to permeate
the industry. The National Institute of Standards & Technology (NIST) and GSA
certified the biometric technology and services of Identix, an L-1 Identity
Solutions Company. This certification paved the way for Identix to pursue
significant U.S. government personal identity verification (PIV) program
business associated with the implementation of Homeland Security Presidential
Directive 12 (HSPD12).
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Additionally, several new customer wins were announced in the third quarter that
included:
o Common Access Card (CAC) program award for a five-year $25 million
contract. The award made to Viisage, an L-1 Identity Solutions company,
will enable the company to continue to support the production of secure
smart credentials as part of the Common Access Card (CAC) program for the
United States Department of Defense (DoD). The award demonstrates added
momentum for the products within a program that today has more than three
million users across the DoD and is widely regarded as the largest and most
advanced use of smart cards.
o Department of Defense (DoD) $10 million order for SecuriMetrics' HIIDE
(Handheld Interagency Identity Detection Equipment) device using
multi-modal identity enrollment and recognition technology. This new order
for the L-1 Identity Solutions company from the DoD represented a major
step forward in the adoption of multi-modal biometric recognition
technologies that include iris, face, and finger.
o The Illinois Department of Motor Vehicles selected IBT, an L-1 Identity
Solutions company, as the state's sole source provider for the HazMat
program. The program calls for the collection and management of fingerprint
and demographic data of commercial drivers license (CDL) holders who wish
to transport hazardous materials.
o IBT, an L-1 Identity Solutions company, was selected by TSA as one of the
final competitors in pursuit of the TWIC (Transportation Worker
Identification Credential) program to be awarded later this year. The
program is an important initial step for the government to secure the
nation's ports.
EXPECTATIONS
The Company expects revenue for the fourth quarter, ended December 31, 2006, to
be $75 - $80 million with Adjusted EBITDA of $14 - $16 million. Further, the
Company expects gross margins to be approximately 30-35 percent and $0.02 -
$0.04 GAAP EPS, expecting to turn GAAP profitable by the end of 2006.
The Company expects revenue for 2007 to be $330 - $340 million with Adjusted
EBITDA of $58 - $62 million. The Company expects gross margin to be
approximately 35 percent for 2007 with $0.08-$0.12 GAAP EPS.
"L-1 is in the enviable position of being the pre-eminent identity solutions
company with end-to-end solution capabilities, financial resources, and over
$500 million in backlog. We continue to build the management team and resources
to fully capitalize on the untapped potential in the market today," concluded
Mr. LaPenta.
CONFERENCE CALL INFORMATION
The Company will host a conference call with the investment community to discuss
its operating results beginning at 10:00 a.m. EST today. The dial-in number for
the call is 877-692-2595, participant passcode 7935836. Internationally, please
dial 973-582-2846, using the same confirmation code. The conference call will be
available live over the Internet at the investor relations section of L-1
Identity Solutions' website at www.L1ID.com. A recording of the conference call
will be available starting one hour after the completion of the call until 11:59
p.m. (EST) on November 9, 2006. To access the replay, please dial 877-519-4471
and use passcode 7935836. To access the replay from outside the U.S., dial
973-341-3080 and use passcode 7935836
The Company will host a meeting for financial analysts beginning at 12:00 p.m.
EST today. The meeting will be webcast live over the Internet and accessible
through the investor relations section of the L-1 Identity Solutions website at
www.L1ID.com. The webcast also will have accompanying slides. To listen to the
meeting, please dial 866-425-6192 or 973-935-8749 and use pass code 8007582. A
recording will be available starting one hour after the completion of the call
until 11:59 p.m. (EST) on November 9, 2006. To access the replay, please dial
877-519-4471 or 973-341-3080, using the same pass code as above.
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ADJUSTED EBITDA
L-1 Identity Solutions uses Adjusted EBITDA as a non-GAAP financial performance
measurement. Adjusted EBITDA is calculated by adding back to net income (loss)
interest, taxes, depreciation, amortization, and stock-based compensation
expense. Adjusted EBITDA is provided to investors to supplement the results of
operations reported in accordance with GAAP. Management believes Adjusted EBITDA
is useful to help investors analyze the operating trends of the business before
and after the adoption of FAS 123(R) and to assess the relative underlying
performance of businesses with different capital and tax structures. Management
believes that Adjusted EBITDA provides an additional tool for investors to use
in comparing L-1 Identity Solutions financial results with other companies in
the industry, many of which also use Adjusted EBITDA in their communications to
investors. By excluding non-cash charges such as amortization, depreciation and
stock-based compensation, as well as non-operating charges for interest and
income taxes, L-1 Identity Solutions can evaluate its operations and can compare
its results on a more consistent basis to the results of other companies in the
industry. Management also uses Adjusted EBITDA to evaluate potential
acquisitions, establish internal budgets and goals, and evaluate performance.
L-1 Identity Solutions considers Adjusted EBITDA to be an important indicator of
the Company's operational strength and performance of its business and a useful
measure of the Company's historical operating trend. However, there are
significant limitations to the use of Adjusted EBITDA since it excludes interest
income and expense and income taxes, all of which impact the Company's
profitability, as well as depreciation and amortization related to the use of
long term assets which benefit multiple periods. L-1 Identity Solutions believes
that these limitations are compensated by providing Adjusted EBITDA only with
GAAP net income (loss) and clearly identifying the difference between the two
measures. Consequently, Adjusted EBITDA should not be considered in isolation or
as a substitute for net income (loss) presented in accordance with GAAP.
Adjusted EBITDA as defined by the Company may not be comparable with similarly
named measures provided by other entities.
We have not provided a reconciliation of expected Adjusted EBITDA because a
single point projection of net income is not available without unreasonable
efforts. However, the principal differences between projected Adjusted EBITDA
and projected net income consist of the projected provision for income taxes,
interest expense, interest income, depreciation and amortization and stock based
compensation. A reconciliation of GAAP net loss to Adjusted EBITDA for
historical periods follows
(IN MILLIONS)
For the Quarter Ended For the Nine Months Ended
Sept. 30, 2006 Oct. 2, 2005 Sept. 30, 2006 Oct. 2, 2005
------------------------------- -------------------------------
Net Loss $ (29.3) $ (2.1) $ (33.0) $ (4.3)
Add/Deduct:
Depreciation and Amortization 5.9 3.1 14.4 9.0
Interest (Income)/Expense, Net (0.3) - - - (1.4) - - -
Provision for Income Taxes 0.7 0.3 2.0 1.0
Stock Based Compensation and
Other Charges 1.5 0.1 2.9 0.2
Asset Impairments and
Merger Related Costs 20.5 - - - 20.5 - - -
-------- -------- -------- --------
Adjusted EBITDA $ (1.0) $ 1.4 $ 5.4 $ 5.9
======== ======== ======== ========
Adjusted EBITDA includes merger-related severance costs of $2.2 million that
were paid in cash, as well as non-recurring charges of $3.6 million included in
the 2006 third quarter and nine months results.
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Non-cash asset impairments and merger related costs consist primarily of
impairments of intangible and fixed assets of $14.6 million, in process research
and development costs of $2.7 million, and stock compensation charges of $3.2
million.
ABOUT L-1 IDENTITY SOLUTIONS, INC.
L-1 Identity Solutions, Inc. (NYSE: ID), formed in 2006 from the merger of
Viisage Technology, Inc., and Identix Incorporated, offers a comprehensive set
of products and solutions for protecting and securing personal identities and
assets. Leveraging the industry's most advanced multi-modal biometric platform
for finger, face and iris recognition, our solutions provide a circle of trust
around all aspects of an identity and the credentials assigned to it --
including proofing, enrollment, issuance and usage. With the trust and
confidence in individual identities provided by L-1 Identity Solutions,
government entities, law enforcement and border management agencies, and
commercial enterprises can better guard the public against global terrorism,
crime and identity theft fostered by fraudulent identity. L-1 Identity Solutions
is headquartered in Stamford, CT. For more information, visit www.L1id.com.
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FORWARD LOOKING STATEMENTS
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 L-1 Identity Solutions 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, 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 those described in the
Securities and Exchange Commission filings of the Identix Incorporated and
Viisage Technology, Inc., including Viisage's Registration Statement on Form S-4
filed with the SEC in connection with the transaction, Viisage's Annual Report
on Form 10-K for the year ended December 31, 2005 and its Quarterly Report on
Form 10-Q for the quarter ended March 31, 2006 and June 30, 2006 under the
captions "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." L-1 Identity Solutions expressly disclaims
any obligation to update any forward-looking statements.
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L-1 IDENTITY SOLUTIONS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPT 30, 2006 OCT 3, 2005 SEPT 30, 2006 OCT 3, 2005
------------- ----------- ------------- -----------
Revenue $ 39.8 $ 14.3 $ 88.1 $ 51.3
Cost of Revenues:
Cost of Revenue 26.7 9.3 57.5 32.3
Amortization of Purchased Intangible Assets 3.4 1.1 7.3 3.6
------ ------ ------ ------
Total Cost of Revenue 30.1 10.4 64.8 35.9
------ ------ ------ ------
Gross Profit 9.7 3.9 23.3 15.4
------ ------ ------ ------
Gross Margin 24% 27% 26% 30%
Operating Expenses:
Sales and Marketing 3.4 1.6 8.7 5.6
Research and Development 3.3 1.3 6.9 3.9
General and Administrative 9.0 2.9 17.0 9.2
Asset Impairments and Merger Related Expenses 22.8 - - - 22.8 - - -
Amortization of Purchase Intangible Assets 0.1 0.1 0.4 0.3
------ ------ ------ ------
Total Operating Expenses 38.6 5.9 55.8 19.0
------ ------ ------ ------
Loss from Operations: (28.9) (2.0) (32.5) (3.6)
Interest Income, net 0.3 - - - 1.5 - - -
Other Income Expenses, net - - - 0.2 - - - 0.3
------ ------ ------ ------
Loss Before Income Taxes (28.6) (1.8) (31.0) (3.3)
Provision for Income Taxes 0.7 0.3 2.0 1.0
------ ------ ------ ------
Net Loss $(29.3) $ (2.1) $(33.0) $ (4.3)
====== ====== ====== ======
Net loss per Basic and Diluted Share $ 0.60 $ 0.11 $ 0.92 $ 0.22
====== ====== ====== ======
Weighted Average Basic and Diluted Shares 49.1 19.2 35.8 19.2
====== ====== ====== ======
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L-1 IDENTITY SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (IN MILLIONS)
(unaudited)
September 30, 2006 December 31, 2005
------------------ -----------------
ASSETS
Current Assets:
Cash $ 30.3 $ 72.4
Accounts Receivable 39.4 14.5
Other Current Assets 15.1 6.0
----------- ---------
Total Current Assets 84.8 92.9
Property and Equipment, net 19.9 19.5
Goodwill and Net Intangible Assets 1,027.7 179.4
Other Assets 5.3 2.3
----------- ---------
Total Assets $ 1,137.7 $ 294.1
=========== =========
LIABILITIES & SHAREHOLDERS EQUITY
Current Liabilities:
Accounts Payable, Accrued Expense 57.0 11.4
Current Deferred Revenue 9.7 2.6
Other Current Liabilities 1.6 1.4
----------- ---------
Total Current Liabilities 68.3 15.4
Deferred Tax Liability 3.6 2.0
Deferred Revenue 4.6 1.7
Other Liabilities 1.7 0.3
----------- ---------
Total Liabilities 78.2 19.4
Shareholders' Equity 1,059.5 274.7
----------- ---------
Total Liabilities and Shareholders' Equity $ 1,137.7 $ 294.1
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