EXHIBIT 99.2
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FOR IMMEDIATE RELEASE
CONTACT:
Doni Fordyce
L-1 Identity Solutions, Inc.
203-504-1109
dfordyce@L1ID.com
L-1 IDENTITY SOLUTIONS ACHIEVES SOLID FOURTH QUARTER AND FULL YEAR
FINANCIAL RESULTS FOR 2006
STAMFORD, CT. -- FEBRUARY 9, 2007 -- L-1 Identity Solutions, Inc., (NYSE:ID), a
leading supplier of identity solutions and services, today reported solid
financial results for the fourth quarter and full year ended December 31, 2006
financial results. Revenue for the fourth quarter of 2006 was $76.3 million
compared to $15.0 million in the fourth quarter of 2005, an increase of $61.3
million. Of the increase, $57.1 million relates to acquired businesses including
Integrated Biometrics Technology LLC (IBT), SecuriMetrics, Inc., Iridian
Technologies, Inc., Identix Incorporated, and SpecTal LLC; and $4.2 million, or
approximately 28 percent, represents organic growth at the historical operations
of the Viisage Technology, Inc. business unit primarily from increased volume of
U.S. passports and facial recognition solutions.
Gross margin in the fourth quarter of 2006 was 36 percent, compared to 21
percent in the fourth quarter of 2005. Excluding the impact of acquisitions,
gross margin grew from 24 percent to 39 percent, primarily due to a favorable
business mix. Gross margin related to acquisitions in the fourth quarter was 34
percent, including the impact of the lower margin IBT business unit.
Adjusted EBITDA for the fourth quarter was $15.2 million compared to $0.5
million in the same period in the prior year, reflecting the impact of
acquisitions, organic sales growth and synergies realized during the year.
Net income in the fourth quarter amounted to $2.0 million, or $0.03 per diluted
share, compared to a net loss of $3.0 million, or $0.15 per diluted share in the
fourth quarter of 2005. Net income increased for the reasons noted above,
partially offset by an increase in amortization of intangible assets and the
impact of FAS 123R in 2006.
On a pro forma basis, assuming results from all acquisitions were included from
the beginning of each of the respective quarters, fourth quarter 2006 revenue
would have approximated $80.0 million with Adjusted EBITDA of $16.3 million,
compared to pro forma fourth quarter 2005 revenue of $68.0 million and Adjusted
EBITDA of $6.1 million.
"The solid financial results achieved by the Company during the fourth quarter
of 2006 reflect the successful strategy that we implemented a little over one
year ago," said Robert V. LaPenta, Chairman, President and CEO of L-1 Identity
Solutions. "Over the course of the year, we identified and successfully acquired
key businesses, technologies, assets and services and built the new industry
standard for identity solutions."
FULL YEAR FINANCIAL RESULTS
Revenue for the year ended December 31, 2006 was $164.4 million compared to
$66.2 million for the prior year, an increase of $98.2 million. $91.0 million of
the increase relates to acquisitions and $7.2 million, or approximately 11
percent, represents organic growth primarily from increased volume production of
U.S. passports, facial recognition solutions and document authentication
products.
Gross margin for 2006 was 31 percent, compared to 27 percent for the prior year.
Excluding non-recurring inventory adjustments and other charges related to the
August 29, 2006 merger between Viisage and Identix, gross margin in 2006 would
have been 33 percent for the full year 2006.
After excluding $3.6 million of other non-recurring charges for calendar 2006,
Adjusted EBITDA for 2006 was $23.7 million, as compared to $6.5 million for the
prior year, reflecting the impact of acquisitions, organic sales growth and
synergies realized during the year.
For the full year ended December 31, 2006, the Company reported a net loss of
$31.0 million, or $0.71 per diluted share compared to a net loss of $7.4
million, or $0.37 per diluted share in the year ended December 31, 2005. The
2006 results included non-recurring asset impairment charges, merger related
charges and other non-recurring charges aggregating $26.3 million.
On a pro forma basis, assuming results from all acquisitions were included from
the beginning of each respective period, annual revenue would have been $271.0
million for 2006 with adjusted EBITDA of $20.6 million (after excluding
non-recurring charges of $3.6 million), compared to pro forma 2005 revenue of
$240.0 million and adjusted EBITDA of $12.1 million.
The annual revenue growth of 13 percent reflects growth in the U.S. passport
business; facial recognition solutions; enrollment services for state, local and
federal customers; multi-modal mobile biometric devices (HIIDE); and
counter-terrorism services of approximately 25 percent. This growth was
partially offset by delays in live scan awards, along with certain software
opportunities which were booked in the 2006 fourth quarter, but will not be
reflected in revenue until 2007.
The significant increase in EBITDA growth reflects cost reductions and
efficiencies in connection with the Identix merger, improved results from higher
margin products and software solutions.
Backlog, including acquired businesses, climbed to approximately $500 million at
December 31, 2006 compared to previously reported backlog at December 31, 2005
of approximately $141 million.
CUSTOMER WINS AND NEW BIOMETRIC RECOGNITION CONTRACTS CONTINUES
The quarter and
full year included several important customer wins and achievements.
o L-1 teamed with Northrop Grumman on several important biometric recognition
programs. These programs include creating a complete multi-modal ABIS
(Automated Biometric Identification System) for the US Department of
Defense (DoD) that incorporates search engines for finger, face, iris, palm
and complete forensic functionality. The system is expected to become the
DoD biometric repository for all identification types, linking to the
intelligence community and civilian agencies. L-1 also is implementing a
biometric identification system for MEPCOM (U.S. Military Entrance
Processing Command) to uniquely identify and track military applicants
throughout the enlistment process. Over time, the program is expected to
build a watch-list of known professional test takers and "ringers" to help
eliminate military enlistment fraud.
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o The Texas Department of Public Safety (TxDPS) purchased more than 100
criminal booking systems totaling in excess of $2.5 million. The system
includes the TouchPrint(TM) Enhanced Definition 3800 live scan system for
finger recognition from Identix, and integrated video mug shot capabilities
powered by FaceIt(R) software.
o L-1, acting though its SecuriMetrics subsidiary, successfully manufactured,
tested, and delivered the majority of the DoD $10.0 million order announced
in the third quarter for SecuriMetrics' HIIDE (Handheld Interagency
Identity Detection Equipment) device. The device offers multi-modal
identity enrollment and recognition technology to critical theaters abroad
including Iraq and Afghanistan. In addition, SecuriMetrics expects to
receive approximately $4.0 million in customer funding to develop the next
generation HIIDE device. This device dubbed "Super HIIDE" represents a
meaningful opportunity for L-1 in calendar 2007.
o L-1 recently received several large purchase orders for the Identix
TouchPrint Enhanced Definition 4100 Slap & Roll Live Scan device,
manufactured by its Identix subsidiary, with an aggregate value of over
$4.0 million for various international customers and federal agencies of
the United States Government. The international orders will be deployed for
government applications. The federal agency purchase will be used to
facilitate background checks on government and contract employees as
mandated under Homeland Security Presidential Directive 12 (HSPD-12).
o IBT won a contract from the Florida Department of Financial Services
(FLDFS) that calls for a fully Automated Fingerprint-Based Applicant
Processing System (AFAPS) that is expected to process the fingerprints of
more than 70,000 resident and non-resident insurance agents annually with a
contract value estimated at approximately $22 million over five years. IBT
plans to use this as a foundation to establish a statewide fingerprinting
network to be able to process over 900,000 applicants in the state of
Florida.
o L-1 received a $1.8 million contract award from the Department of Homeland
Security (DHS) Science and Technology (S&T) Division to develop advanced
facial recognition technology for the TSA Federal Air Marshal Service
(FAMS) Tactical Information Sharing System (TISS).
o The Portland (OR) Police Department, Hennepin County (MN) Sheriff Office,
Los Angeles County and San Bernardino-Riverside (CA) Sheriffs' Offices are
set to deploy L-1's new version of the Integrated Biometric Identification
System (IBIS) hand-held mobile biometric identification device.
o After the close of the year, L-1's Viisage division was selected by an
unnamed customer to provide iA-thenticate systems to verify identity
documents at airports and border crossings in an award of approximately
$2.8 million.
FORWARD LOOKING FINANCIAL EXPECTATIONS
The Company reaffirms its forward looking financial expectations guidance for
the year ending December 31, 2007. The Company expects revenue for 2007 to be
$330.0 - $340.0 million with Adjusted EBITDA of $58.0 - $62.0 million and
unlevered free cash flow of approximately $52 million. The Company expects gross
margin to be approximately 35 percent for 2007 with earnings per share in the
range of $0.08-$0.12.
For the first quarter ending March 31, 2007, L-1 expects revenue to be $73.0 -
$75.0 million with Adjusted EBITDA of $9.0 - $11.0 million with loss per share
in the range of $0.04 - $0.06.
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Mr. LaPenta concluded. "With the foundation firmly in place, we are optimistic
about what 2007 holds for the Company. We expect to continue to add to our
technology portfolio through acquisition, as well as to see major awards
continue across all of our divisions. Our unique multi-modal biometric
recognition capabilities will continue to provide momentum for the Company and
the identity solutions marketplace."
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 866-406-5408, participant passcode 8352536. Internationally, please
dial 973-582-2770, 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 February 23, 2007. To access the replay, please dial 877-519-4471
and use passcode 8352536. To access the replay from outside the U.S., dial
973-341-3080 and use passcode 8352536.
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.
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A reconciliation of GAAP net income (loss) to Adjusted EBITDA for historical
periods follows
(in millions)
AS REPORTED
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FOR THE QUARTER ENDED FOR THE YEAR ENDED
DEC 31 2006 DEC 31 2005 DEC 31 2006 DEC 31 2005
----------- ----------- ----------- -----------
Net Income / (loss) $ 2.0 $ (3.0) $ (31.0) $ (7.4)
========== ========== ========== ==========
Add / Deduct:
Depreciation and Amortization 9.1 3.2 23.4 12.7
Interest (Income) / Expense, Net 1.3 (0.1) (0.2) (0.2)
Provision for Income Taxes 1.1 0.4 2.8 1.4
Stock Based Compensation and Other Charges 1.7 - 4.6 -
Asset Impairments and Merger Related Costs - - 20.5 -
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ADJUSTED EBITDA $ 15.2 $ 0.5 $ 20.1 $ 6.5
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PRO FORMA
PRO FORMA PRO FORMA
FOR THE QUARTER ENDED FOR THE YEAR ENDED
DEC 31 2006 DEC 31 2005 DEC 31 2006 DEC 31 2005
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Net Income / (loss) $ 2.6 $ (6.9) $ (58.5) $ (38.6)
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Add / Deduct:
Depreciation and Amortization 9.1 10.2 39.5 40.3
Interest (Income) / Expense, Net 1.6 1.4 5.9 6.3
Provision for Income Taxes 1.2 1.1 4.8 3.6
Stock Based Compensation and Other Charges 1.8 0.3 4.8 0.5
Asset Impairments and Merger Related Costs - - 20.5 -
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ADJUSTED EBITDA $ 16.3 $ 6.1 $ 17.0 $ 12.1
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Adjusted EBITDA for the full year includes merger-related severance costs of
$2.2 million that were paid in cash, as well as non-recurring charges of $3.6
million. 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.
A reconciliation of adjusted EBITDA estimated for the quarter ending March 31,
2007 and the year ending December 31, 2007 follows:
(in millions)
Quarter Ending Year Ending
March 31, 2007 December 31, 2007
Net income (loss) $ (4.5) to $(2.5) $ 3.0 to $7.0
Depreciation and amortization 9.1 36.6
Interest expense, Net 1.1 5.9
Provision for deferred income taxes 1.2 4.0
Stock based compensation 2.1 8.5
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Adjusted EBITDA $9.0 to $ 11.0 $ 58.0 to $ 62.0
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UNLEVERED FREE CASH FLOW
Unlevered Free Cash Flow for 2007 represents cash flow from operating activities
of $58 million, plus interest expense of $4 million less capital expenditures of
$10 million. L-1 believes unlevered free cash flow is a useful measure for
assessing the company's liquidity, meet its debt service requirements and make
acquisitions. Unlevered free cash flow is not necessarily comparable to similar
measures used by other entities and is not a substitute for GAAP measures of
liquidity such as cash flows from operating activities.
ABOUT L-1 IDENTITY SOLUTIONS
L-1 Identity Solutions, Inc. (NYSE: ID), together with its portfolio of
companies, 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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ID-L
FORWARD LOOKING STATEMENTS
This news release contains forward-looking statements that involve risks and
uncertainties. Forward-looking statements in this press release 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 based on management's beliefs and assumptions and information
currently available. 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 availability of government
funding for L-1's products and solutions, the size and timing of federal
contract awards, performance on existing and future contracts, general economic
and political conditions and other factors affecting spending by customers, and
the unpredictable nature of working with government agencies. Additional risks
and uncertainties are described in the Securities and Exchange Commission
filings of the L-1 Identity Solutions, including the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 2006. L-1 Identity Solutions
expressly disclaims any intention or 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)
Quarter Ended Year Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2006 2005 2006 2005
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Revenue $76.3 $15.0 $164.4 $66.2
Cost of Revenues:
Cost of Revenue 42.2 10.6 99.7 42.9
Amortization of Purchased
Intangible Assets 6.6 1.2 13.9 4.6
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Total Cost of Revenue 48.8 11.8 113.6 47.5
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Gross Profit 27.5 3.2 50.8 18.7
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Gross Margin 36% 21% 31% 27%
Operating Expenses:
Sales and Marketing 5.8 1.9 14.5 7.8
Research and Development 4.7 1.1 11.6 4.6
General and Administrative 12.4 2.9 29.8 12.1
Asset Impairments and Merger
Related Expenses --- --- 22.8 ---
Amortization of Purchase
Intangible Assets 0.1 0.1 0.4 0.7
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Total Operating Expenses 23.0 6.0 79.1 25.2
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Income (Loss) from Operations: 4.5 (2.8) (28.3) (6.5)
Interest (Income) Expense, net 1.3 0.1 (0.2) (0.2)
Other Income (Expenses), net (0.1) 0.1 (0.1) 0.3
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Income (Loss) Before Income Taxes 3.1 (2.6) (28.2) (6.0)
Provision for Income Taxes 1.1 0.4 2.8 1.4
------- ------- ------- -------
Net Income (Loss) $2.0 $(3.0) $(31.0) $(7.4)
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Net Income (Loss) per Share:
Basic $0.03 $(0.15) $(0.71) $(0.37)
Diluted $0.03 $(0.15) $(0.71) $(0.37)
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Weighted Average Shares:
Basic 72.3 20.9 43.8 19.6
Diluted 72.8 20.9 43.8 19.6
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L-1 IDENTITY SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (IN MILLIONS)
(UNAUDITED)
December 31, 2006 December 31, 2005
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Assets
Current Assets:
Cash $ 5.0 $ 72.4
Accounts Receivable 61.5 14.5
Other Current Assets 15.5 6.0
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Total Current Assets 82.0 92.9
Property and Equipment, net 19.9 19.5
Goodwill and Net Intangible
Assets 1,121.5 179.4
Other Assets 3.8 2.3
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Total Assets $ 1,227.2 $ 294.1
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Liabilities & Shareholders
Equity
Current Liabilities:
Accounts Payable and
Accrued Expenses 54.8 11.4
Current Deferred Revenue 10.3 2.6
Other Current Liabilities 5.2 1.4
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Total Current Liabilities 70.3 15.4
Borrowings Under Revolving
Credit Facility 80.0
Deferred Income taxes 4.4 2.0
Deferred Revenue 3.7 1.7
Other Liabilities 1.7 0.3
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Total Liabilities 160.1 19.4
Shareholders' Equity 1,067.1 274.7
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Total Liabilities and
Shareholders' Equity $ 1,227.2 $ 294.1
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