L-1 Identity Solutions reports Q4 and 2008 results

Company records Q4 2008 non-cash goodwill and intangible asset impairment charges


STAMFORD, Conn.--(BUSINESS WIRE)--L-1 Identity Solutions, Inc. (NYSE: ID), a leading supplier of identity solutions and services, today announced financial results for the Company's fourth quarter and full-year ended December 31, 2008.

Revenue for the fourth quarter of 2008 increased to $147.5 million compared to $113.9 million in the fourth quarter of 2007, an increase of $33.6 million of which $29.3 million is the result of acquisitions closed in 2008. Organic growth in revenues in the quarter, excluding acquisitions closed in 2008, represents an increase of 4 percent compared to the fourth quarter of 2007. Revenue for the quarter was driven by a 23 percent increase in enrollment and government consulting services, offset by lower organic growth in the Biometrics division primarily due to unusually large shipments of HIIDE and LiveScan devices in Q4 2007 that created incomparable year-over-year results.

Gross margin in the fourth quarter of 2008 decreased to 28 percent compared to 33 percent for the fourth quarter of 2007. The decrease was due to changes in the revenue mix as previously described.

Adjusted EBITDA for the fourth quarter of 2008 was $23.0 million (excluding the impact of one-time charges related to the Digimarc acquisition) compared to $21.2 million for the same period in the prior year. The increase in Adjusted EBITDA was driven by 23 percent organic growth in the Services business, acquisitions, and offset by previously disclosed decreases from the Biometrics division.

Fourth quarter 2008 operating expenses as a percentage of revenue were 28 percent compared to 27 percent in the fourth quarter of 2007 due to strategic investments made in sales and marketing.

The Company recorded a non-cash charge of $528.6 million in the quarter as a result of its annual impairment review in accordance with the Statement of Financial Accounting Standard (SFAS) No. 142 “Goodwill and Other Intangibles” and SFAS No. 144 “Accounting for the Impairment or Disposal of Long-lived Assets”. The impairment charge is primarily driven by a difficult economic environment and a decrease in the market price of the Company’s stock in the fourth quarter of 2008. The charge is attributable to impairment of goodwill, intangibles and other long-lived assets recorded in connection with an acquisition in the Biometrics division. The non-cash impairment charge does not impact the Company’s ongoing business operations and will not have any impact on its compliance with debt covenants, cash flow or liquidity.

After giving effect to the $528.6 million non-cash non-recurring impairment charge, the Company’s loss for the fourth quarter was $548.8 million, or ($6.55) per diluted share based on 83.8 million diluted shares outstanding. This compared to income of $26.2 million in the fourth quarter of 2007, or $0.35 per diluted share based on 77.7 million shares outstanding. Excluding non-cash non-recurring items in Q4 of 2007 and 2008 resulting from impairment charges and non-recurring tax charge and credit, the net loss would have been $0.12 per diluted share in 2008 and the net income would have been $0.02 per diluted share in 2007.

2008 Full Year Results

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