Viisage (Nasdaq: VISG), a leading provider of advanced technology
identity solutions, today reported results for the quarter ended
June 30, 2006. Revenue for the second quarter of 2006 was $24.9
million compared to $20.1 million in the second quarter of 2005.
Revenue from Integrated Biometrics Technology (IBT) and
SecuriMetrics, acquired December 16, 2005 and February 17, 2006,
respectively, was $6.9 million and is included in the results for
the full second quarter of 2006. Prior year revenue for the quarter
ended June 30, 2005 included $4 million of one time and accelerated
orders from ABN AMRO, the Department of Defense (DOD) and the U.S.
Department of State (DOS). The Company reported a second quarter
net loss of $1.6 million, or $0.06 per diluted share, compared to a
net loss of $0.5 million, or $0.03 per diluted share in the second
quarter of 2005. The results of the second quarter of 2006 include
a non-cash charge of $0.8 million for stock-based compensation in
connection with the adoption of FAS 123(R) on January 1, 2006.
Gross margin in the second quarter of 2006 was 29 percent, compared
to 31 percent in the second quarter of 2005, reflecting the impact
of IBT and an unusually large sale of products in the second
quarter of 2005. Gross margin, excluding the impact of the
acquisitions of IBT and SecuriMetrics was 32 percent. Earnings
before interest, taxes, depreciation and amortization and non-cash
stock compensation expense, or Adjusted EBITDA, was $3.8 million in
the second quarter, compared to $3.0 million in the same period in
the prior year. Year to Date Results Revenue for the first half of
2006 was $48.3 million compared to $37.0 million for the same
period in the prior year. Revenue from IBT and SecuriMetrics of
$13.3 million has been included in the six month results since
their respective dates of acquisition. Prior year revenue for the
same period included $4.5 million of one time and accelerated
revenues from ABN AMRO, the DOS and the DOD. The Company reported a
net loss of $3.8 million, or $0.13 per diluted share compared to a
net loss of $2.1 million, or $0.11 per diluted share for the
corresponding period in the prior year. The 2006 results include a
non-cash charge for stock-based compensation of $1.4 million as a
result of adopting FAS 123(R) on January 1, 2006. Gross margin for
the first half of 2006 was 28 percent compared to 32 percent for
the same period in the prior year and reflects the impact of the
acquisitions of IBT and SecuriMetrics. Gross margin for the first
half of the year excluding the impact of the acquisitions was 32
percent. Adjusted EBITDA was $6.3 million compared to $4.6 million
for the same period in the prior year. "We are pleased with our
second quarter results especially with respect to our bookings,
which totaled $50 million during the quarter. Our healthy bookings
rate reflects robust growth in our sole source US passport program
and increases in our drivers' license business," said Robert V.
LaPenta, Chairman of the Board of Viisage. "Furthermore, we
continue to see a number of identity and credentialing programs,
such as the Western Hemisphere Travel Initiative and the Real ID
Act favorably impacting our current business and future prospects.
We also are gaining traction with a significant number of
opportunities worldwide for our facial recognition and document
authentication equipment as countries strive to meet critical
deadlines and comply with a myriad of legislative requirements
including the US Visit and e-Passport initiatives." Mr. LaPenta
also noted, "Our backlog is in excess of $210 million at June 30,
2006, compared to approximately $180 million at June 30, 2005. Our
broad product and program base and significant backlog provides us
with a unique position in the industry and confidence in our
ability to achieve increased quarterly revenue performance." Second
Quarter Highlights -- Viisage continued to help state motor vehicle
departments address security requirements of the REAL ID Act, with
four deals announced in the quarter that collectively represented
$48 million in contract revenue. These deals were with the
Pennsylvania Department of Transportation, the Wisconsin Department
of Transportation, the Arkansas Department of Finance and
Administration, and the Maryland Department of Motor Vehicles. --
Viisage saw added momentum in the automation of driver knowledge
testing by state Department of Motor Vehicle (DMV) agencies as they
seek to improve the accuracy and security of identity proofing, ID
issuance and customer service. Six DMV agencies awarded Viisage
contracts with a total value of $2.3 million in this area including
Alabama, Mississippi, Nebraska, Kentucky, Colorado and Arkansas. --
Internationally, the Australian Department of Immigration and
Multicultural Affairs selected Viisage's iA-thenticate(R) Smart
Chip/RFID Electronic Document Reader for the authentication of
passports, as well as e-passports at 26 embassies worldwide. This
marks the second consecutive contract win for the Company from an
Australian agency. -- Organic growth continued, with follow-on
orders in the quarter from ABN AMRO Bank, Kuwait Immigration
Services, and the Province of Alberta, Canada. LaPenta concluded,
"We are nearing the completion of our merger with Identix with a
strong bench of technological and industry expertise in hand that
will be a major differentiator for the company and offer
competitive advantage for our customers. We recently welcomed
former Deputy Secretary of the U.S. Department of Homeland Security
James Loy and former Director of the U.S. Federal Bureau of
Investigation (FBI) Louis Freeh to the Viisage Board of Directors.
Their insight into the issues and concerns at local, state and
federal agencies as they relate to protecting and securing personal
identities will be invaluable. We also announced plans to acquire
Iridian Technologies, which will further enhance our multi-modal
biometric product portfolio and open up a new era for the market in
the development of applications based on iris recognition
technologies." Guidance The Company expects to complete the merger
with Identix on or about August 29, 2006. Assuming the transaction
is concluded, the combined entity expects pro forma revenue for the
second half of the year in the range of $120 to $125 million with
pro forma Adjusted EBITDA of between $25 and $27 million. The
Company expects gross margin to be approximately 40 percent for the
second half of 2006. (See Adjusted EBITDA discussion below.)
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. EDT today. The dial-in number for the call
is 800-299-0148, participant passcode 21054761. Internationally,
please dial 617-801-9711, 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. Adjusted EBITDA Viisage 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 Viisage's 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, Viisage 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. Viisage 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. Viisage
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 pro forma net income
(loss) to expected pro forma Adjusted EBITDA for the second half of
2006 because such data is based on the assumed merger with Identix
as of July 1, 2006. Because the actual timing of the merger and
related actions to improve profitability are not known, related
costs could not be quantified, accordingly, a reliable projection
of net income for the second half of the year is not available
without unreasonable efforts. A reconciliation of GAAP Net Income
(Loss) to Adjusted EBITDA for the historical periods follows: -0-
*T (in millions) For the Quarter Ended For the Six Months Ended
June 30, July 3, June 30, July 3, 2006 2005 2006 2005
---------------------- ------------------------ Net Loss $( 1.6 )
$( 0.5 ) $( 3.8 ) $( 2.1 ) Add/Deduct: Depreciation and
Amortization $ 4.4 $ 3.2 $ 8.5 $ 6.1 Interest (Income) /Expense,
Net $ (0.5 ) $ --- $( 1.1 ) $ --- Provision for Income Taxes $ 0.7
$ 0.3 $ 1.3 $ 0.6 Stock Based Compensation $ 0.8 $ --- $ 1.4 $ ---
-------- -------- --------- -------- Adjusted EBITDA $ 3.8 $ 3.0 $
6.3 $ 4.6 ======== ======== ========= ======== *T About Viisage
Technology, Inc. Viisage 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 be granted other privileges. With more than
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 IdentityTOOLS(TM) SDK, Viisage PROOF(TM), FaceEXPLORER(R),
iA-thenticate(R), ID-GUARD(R), BorderGuard(R), PIER(TM), HIIDE(TM),
AutoTest(TM), FacePASS(TM) and FaceFINDER(R). 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 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, 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 requisite Iridian shareholder approval will
not be obtained, or that the pending Iridian acquisition will not
close or otherwise be delayed, 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 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 under the captions "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and Identix' Annual Report on
Form 10-K for the year ended June 30, 2005 and its Quarterly
Reports on Form 10-Q for the quarters ended September 30, 2005,
December 31, 2005 and March 31, 2006 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 proposed business combination
transaction between the two companies because it contains important
information. Viisage and Identix have mailed a joint proxy
statement/prospectus about the transaction to their respective
stockholders. This joint proxy statement/prospectus has been 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 Identix or Viisage 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 joint proxy statement/prospectus
dated July 27, 2006, for Viisage's special meeting of shareholders
to be held on August 29, 2006 as filed with the SEC as part of the
registration statement on Form S-4. Information concerning Identix'
participants is set forth in the joint proxy statement/prospectus
dated July 27, 2006, for Identix' special meeting of shareholders
as filed with the SEC on Schedule 14A. -0- *T VIISAGE TECHNOLOGY,
INC. Condensed Consolidated Statements of Operations (in millions,
except per share amounts) (unaudited) Three Months Ended Six Months
Ended June 30, July 3, June 30, July 3, 2006 2005 2006 2005
-------- -------- -------- -------- Revenue $24.9 $20.1 $48.3 $37.0
-------- -------- -------- -------- Cost of Revenues: Cost of
Revenue (1) 15.7 12.7 30.8 22.9 Amortization of Purchased
Intangible Assets 2.0 1.2 3.9 2.4 -------- -------- --------
-------- Total Cost of Revenue 17.7 13.9 34.7 25.3 --------
-------- -------- -------- Gross Profit 7.2 6.2 13.6 11.7 --------
-------- -------- -------- Operating Expenses: Sales and Marketing
(2) 2.9 2.0 5.3 4.2 Research and Development (3) 1.9 1.2 3.5 2.5
General and Administrative (4) 3.6 3.1 8.1 6.4 Amortization of
Purchase Intangible Assets 0.1 0.1 0.2 0.2 -------- --------
-------- -------- Total Operating Expenses 8.5 6.4 17.2 13.3
-------- -------- -------- -------- Loss from Operations: (1.3)
(0.2) (3.6) (1.6) Interest Income, net 0.4 --- 1.1 --- Other
Expense, net --- --- --- 0.1 -------- -------- -------- --------
Loss Before Income Taxes (0.9) (0.2) (2.5) (1.5) Provision for
Income Taxes 0.7 0.3 1.3 0.6 -------- -------- -------- --------
Net Loss $ (1.6) $ (0.5) $ (3.8) $ (2.1) ======== ======== ========
======== Net loss per Basic and Diluted Share $ (0.06) $ (0.03) $
(0.13) $ (0.11) ======== ======== ======== ======== Weighted
Average Basic and Diluted Shares 29.1 19.2 29.0 19.2 ========
======== ======== ======== (1) Includes $0.1 and $0.2 and
stock-based compensation in three and six months ended June 30,
2006, respectively (2) Includes $0.2 and $0.4 and stock-based
compensation in three and six months ended June 30, 2006,
respectively (3) Includes $0.1 and $0.2 and stock-based
compensation in three and six months ended June 30, 2006,
respectively (4) Includes $0.4 and $0.7 and stock-based
compensation in three and six months ended June 30, 2006,
respectively *T -0- *T VIISAGE TECHNOLOGY, INC. Condensed
Consolidated Balance Sheets (in millions) (unaudited) June 30,
December 31, Assets 2006 2005 --------- ------------ Current
Assets: Cash $ 43.6 $ 72.4 Other Current Assets 23.9 20.5 ---------
------------ Total Current Assets 67.5 92.9 Property and Equipment,
net 19.4 19.5 Goodwill and Net Intangible Assets 206.5 179.4 Other
Assets 5.0 2.3 --------- ------------ Total Assets $ 298.4 $ 294.1
========= ============ Liabilities & Shareholders Equity
Current Liabilities: Accounts Payable, Accrued Expenses and Other
Current Liabilities 14.7 12.8 Current Deferred Revenue 3.3 2.6
--------- ------------ Total Current Liabilities 18.0 15.4 Deferred
Tax Liability 3.0 2.0 Deferred Revenue 2.0 1.7 Other Liabilities
0.2 0.3 --------- ------------ Total Liabilities 23.2 19.4
Shareholders' Equity 275.2 274.7 --------- ------------ Total
Liabilities and Shareholders' Equity $ 298.4 $ 294.1 =========
============ *T
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