EXHIBIT 99.1
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FOR IMMEDIATE RELEASE
CONTACT:
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Doni Fordyce
L-1 Identity Solutions
203-504-1109
dfordyce@L1ID.com
L-1 IDENTITY SOLUTIONS TO ACQUIRE ID SYSTEMS BUSINESS FROM DIGIMARC
CORPORATION FOR APPROXIMATELY $250 MILLION IN STOCK AND CASH
Complementary Expertise will Provide More Secure and Cost Effective
Credentialing Solutions for Customers Worldwide
STAMFORD, CT. -- MARCH 24, 2008 -- L-1 Identity Solutions, Inc. (NYSE: ID), a
leading provider of identity solutions and services, today announced it has
entered into a definitive agreement to acquire the ID Systems business of
Digimarc Corporation (Nasdaq: DMRC) in a stock and cash transaction valued at
approximately $250 million. The acquisition has been approved by the respective
Board of Directors of each company.
Under the terms of the definitive agreement, Digimarc stockholders will receive
approximately 50 percent of the purchase consideration in shares of L-1 stock
and 50 percent in cash. Digimarc stockholders will also receive shares in a new
company bearing the Digimarc name and holding Digimarc's digital watermarking
business. The cash consideration is approximately $120 million. The number of
L-1 shares to be issued will be based on the average price of the stock over the
20 consecutive trading days ending five days prior to closing of the
transaction, and will be fixed at approximately 10.3 million shares if the
average trading price of L-1's stock is between $11 and $14. If the price of L-1
shares exceeds $14 per share, the number of shares to be issued will be reduced.
Under the definitive agreement, the maximum number of L-1 shares that can be
issued is 11.3 million. L-1 has agreed to invest $5 million in new Digimarc. For
a more detailed description of the terms and conditions of the transaction,
please review the public filing of the agreement.
"The synergies between our secure credentialing businesses make this a natural
combination and one that will deliver great benefit to our customers and the
industry," said Robert V. LaPenta, Chairman and CEO of L-1 Identity Solutions.
"Digimarc's expertise in centralized production of credentials, together with
L-1's biometric recognition and document authentication capabilities, will
enable us to provide a secure end-to-end solution for issuance of government
credentials like driver's licenses. Additionally, we believe that together we
will offer the best in class technology to meet the needs of U.S. and
international credentialing programs."
Following the closing of the transaction, on a pro forma calendar 2008 basis,
L-1 is expected to have revenues of approximately $670 million, Adjusted EBITDA
of $110 million including operational efficiencies, unlevered free cash flow of
$75 million and a backlog of approximately $1 billion. In addition, L-1 expects
to recognize synergies and additional operating efficiencies once the businesses
are combined. The transaction is expected to be accretive to L-1 earnings.
"L-1 has state-of-the-art biometric recognition and authentication capabilities
that are integral to making our credential production process for national and
international customers more secure and complete," said Bruce Davis, CEO and
Chairman of the Board of Digimarc. "Furthermore, our combined knowledge in
international markets will enable us to reach more potential customers with an
expanded portfolio of innovative credentialing solutions, including national ID
cards. The combination of the two will also help speed adoption globally by
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introducing a more streamlined and cost effective process into the international
marketplace."
L-1 believes that the combination of L-1 and Digimarc's Secure ID business will
bring significant synergies and benefits to the identity management industry.
The company's customers will have a choice of secure credentialing production
systems, including central issuance, over-the-counter or a hybrid approach that
utilizes both methods. The combined security features will deliver best-in-class
protection to produce the most secure credentials possible and the industry
knowledge of the combined teams will foster the development of superior
next-generation security functionality for future applications. The increased
industry knowledge and cross-border relationships will help secure identities
across the globe in emerging markets such as Russia and Asia-Pacific, as well as
with Canadian and Mexican biometric credentialing programs. Leveraged synergies
between the businesses will reduce the cost structures of both organizations to
drive greater operational efficiency and shareholder value. These benefits also
will be passed directly to the customer for improved customer service from the
combined call center and field service teams, bolstered competency of the entire
organization from acquired back office systems and processes, and valuable
savings with more competitive pricing from economies of scale.
The transaction is expected to close in the second half of 2008 and is subject
to customary regulatory approvals and other closing conditions, including
approval by Digimarc stockholders at the stockholder meeting and the spin-off of
the digital watermarking business. The Company may also consider a stock buyback
depending upon market conditions and subject to compliance with applicable law.
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.
ABOUT DIGIMARC CORPORATION
Digimarc Corporation (NASDAQ:DMRC), based in Beaverton, Oregon, is a leading
supplier of secure identity and media management solutions. Digimarc provides
products and services that enable the annual production of more than 60 million
personal identification documents, including two-thirds of U.S. driver licenses
and IDs for more than 25 countries. Digimarc's digital watermarking technology
provides a persistent digital identity for various media content and is used to
enhance the security of financial documents, identity documents and digital
images, and support other media rights management applications.
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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, income taxes, depreciation, amortization, impairments of long term
assets and stock-based compensation expense. Adjusted EBITDA is provided to
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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 SFAS
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, impairments of long term assets as well as non-operating charges
for interest and income taxes, investors can evaluate the Company's 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 of its business units and management.
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 and prospective operating trends. 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 and
impairments related to the use of long term assets which benefit multiple
periods. L-1 Identity Solutions believes that these limitations are compensated
by 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.
UNLEVERED FREE CASH FLOW
Unlevered Free Cash Flow represents cash flow from operating activities, plus
cash interest expense and cash income taxes, less interest income, and capital
expenditures. L-1 believes unlevered free cash flow is a useful measure for
assessing the company's liquidity, meeting its debt service requirements and
making 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.
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. Forward-looking statements reflect the Company's current
expectations based on management's beliefs and assumptions and information
currently available and actual results could differ materially from these
expectations. Certain factors that could cause or contribute to such differences
include, among other things, the ability of the Company and Digimarc to obtain
necessary regulatory approvals, consummate the spin-off of the digital
watermarking business and satisfy other conditions in order to successfully
close the transaction on a timely basis, availability of government funding for
the Company's products and solutions, general economic and political conditions
and the unpredictable nature of working with government agencies. Additional
risks and uncertainties are described in the Securities and Exchange Commission
("SEC") filings of L-1 Identity Solutions, including the Company's Form 10-K for
the year ended December 31, 2007. L-1 Identity Solutions expressly disclaims any
intention or obligation to update any forward-looking statements.
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ADDITIONAL INFORMATION
In connection with the proposed merger, L-1 Identity Solutions will file with
the SEC a Registration Statement on Form S-4 that will include a proxy statement
of Digimarc that also constitutes a prospectus of L-1 Identity Solutions.
Digimarc will mail the proxy statement/prospectus to its stockholders. L-1
Identity Solutions and Digimarc urge investors and security holders to read the
proxy statement/prospectus regarding the proposed merger when it becomes
available because it will contain important information. You may obtain copies
of all documents filed with the SEC regarding this transaction, free of charge,
at the SEC's website (www.sec.gov). You may also obtain these documents, free of
charge, from L-1 Identity Solutions' website (www.L1id.com) under the tab
"Investor Relation" and then under the heading "Financial Information" then
under the item "SEC Filings". You may also obtain these documents, free of
charge, from Digimarc's website (www.digimarc.com) under the heading "Investors"
and then under the tab "SEC Filings."
L-1 Identity Solutions, Digimarc and their respective directors, executive
officers and certain other members of management and employees may be soliciting
proxies from Digimarc stockholders in favor of the merger. Information regarding
the persons who may, under the rules of the SEC, be deemed participants in the
solicitation of the Digimarc stockholders in connection with the proposed merger
will be set forth in the proxy statement/prospectus when it is filed with the
SEC. You can find information about L-1 Identity Solutions' executive officers
and directors in its definitive proxy statement filed with the SEC on March 20,
2008. You can find information about Digimarc's executive officers and directors
in its definitive proxy statement filed with the SEC on March 12, 2008. You can
obtain free copies of these documents from L-1 Identity Solutions and Digimarc
using the contact information above.