Identix Reports Fiscal Third Quarter Results

Biometrics identity company reports net loss for fiscal 2006 third quarter


MINNETONKA, Minn.--(BUSINESS WIRE)--April 26, 2006--Identix Incorporated (Nasdaq:IDNX) today reported financial results for its fiscal 2006 third quarter and nine months ended March 31, 2006. Fiscal 2006 third quarter revenues were $20.8 million, compared to year-earlier third quarter revenues of $20.3 million. Overall fiscal 2006 third quarter gross margin improved to 37% of revenues, compared to the year earlier gross margin of 34%. The net loss for the fiscal 2006 third quarter was $3.8 million, or $0.04 per share, compared to a net loss for the fiscal 2005 third quarter of $1.9 million, or $0.02 per share. The fiscal 2006 third quarter net loss includes $1.1 million, or $0.01 per share, in expenses related to the Company's pending merger with Viisage Technology, Inc. (Nasdaq:VISG), severance expense of $0.2 million associated with the previously announced reduction in field services staff, and stock-based compensation expense of $0.2 million due to the Company's July 1, 2005 adoption of Statement No. 123R related to the expensing of employee stock options.

Fiscal 2006 third quarter product revenue grew 13%, to $13.7 million, compared to year earlier third quarter product revenues of $12.1 million. Higher software revenue contribution and expanding hardware margins led to fiscal 2006 third quarter product gross margin increasing to 46% of product revenues, compared to year-earlier product gross margin of 40%. As expected, services revenues for the 2006 third quarter declined to $7.1 million, with gross margin of 18% of services revenue, compared to year-earlier services revenues of $8.1 million and services gross margin of 25%. The Company continues to replace the older legacy Identix Live Scan systems that currently require extensive field service costs. The majority of these systems are expected to be replaced in calendar 2006.

The Company's balance sheet remains solid with no debt and $35.1 million in cash, restricted cash and marketable securities as of March 31, 2006, up $2.2 million from December 31, 2005.

Identix President & CEO Dr. Joseph J. Atick commented, "During our fiscal 2006 third quarter, we significantly increased the breadth and depth of our product offerings. The National Institute of Standards & Technology (NIST) testing report identified Identix' newest fingerprint matching technology offering, BioEngine(R) 6, as a top performing, AFIS-Grade algorithm. NIST tested a total of 21 algorithms from 10 vendors on large scale, existing, real-world databases, including U.S. VISIT airport captures, Mexico/U.S. land crossings, and worldwide U.S. Visa applications. We submitted one algorithm, which was shown by NIST to be in the top three in performance in all of the tests. We expect to incorporate our AFIS-Grade algorithm into a complete suite of applications and work flow engines that will enable us to begin to deliver end-to-end criminal and civil AFIS capabilities during the third calendar quarter of 2006. With the addition of a full suite of AFIS offerings, Identix will be even better positioned to compete head to head with the established AFIS companies for some of the largest opportunities in the biometrics space both in terms of revenue dollars and profitability.

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