MINNETONKA, Minn. -- Identix Incorporated, the world's leading multi-biometrics security technology company, said that it has entered into an agreement with Vasona Business Park (VBP) to terminate Identix' current lease obligations related to the Company's dormant office and manufacturing facilities in Los Gatos, California. Identix will pay VBP, the lessor of the facilities, a one time sum of $5.25 million in return for the early termination and release of Identix' obligations under the lease. The Los Gatos facilities, which have been vacant since the Company relocated its corporate headquarters and manufacturing operations to Minnetonka, MN following its merger with Visionics Corporation in June 2002, consist of approximately 33,000 square feet. Identix would have been obligated to make payments in excess of $6.8 million over the remaining term of the lease, which would have ended in December 2007.
Identix CFO Elissa Lindsoe commented, "We believe this is a smart deal for both Identix and VBP. Although we have been actively and aggressively marketing this property, the market for commercial office space in the Silicon Valley area has been extremely slow since we vacated in mid-2002, and remains extraordinarily weak today. With one of our most important objectives being the continuing prudent management of our cash balances, we believe this is an opportune time to enter into this transaction, which will result in an approximate annual return on our investment of 18%. Importantly, this buyout enables us to conserve approximately $1.6 million in cash over the next three years. This early termination arrangement also relieves the Company of potential additional costs, expenses and resource allocation associated with ongoing building maintenance, repairs and utilities.
"Based on this transaction," Lindsoe continued, "Identix will record a one-time payment of $5.25 million in our fiscal third quarter ending March 31, 2005. Beginning January 1, 2005, we will immediately begin reducing our quarterly cash usage by approximately $600,000 per quarter. Additionally, we expect to improve by $0.01 the previously provided range of bottom line expectations for the quarter ending December 31, 2004, as the result of the recouping of $1.1 million of previously reserved funds related to our ongoing lease obligations."