Cogent Systems Announces Fourth Quarter and Full Year 2008 Financial Results
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Recent Wins Include BOSS-U and U.K. Post Office Limited PASADENA, Calif.--(Business Wire)-- Cogent Systems (Nasdaq:COGT) today announced financial results for the fourth quarter and full fiscal year ended December 31, 2008. Fourth quarter 2008 revenues were $40.0 million, compared to revenue of $21.9 million in the same year ago period. Net income on a GAAP basis for the fourth quarter of 2008 was $11.5 million, or $0.13 per diluted share. This compares to GAAP net income of $7.7 million, or $0.08 per diluted share in the same year ago period. Cogent's fourth quarter of 2008 GAAP results included $1.0 million of non-cash share based compensation charges. Excluding the effects of share-based compensation and the net tax effect, non-GAAP net income for the fourth quarter of 2008 was $12.2 million, or $0.14 per diluted share. This compares to non-GAAP net income of $8.0 million, or $0.08 per diluted share, in the same year ago period, excluding the effects of similar items in both periods. For the full-year ended December 31, 2008, revenues increased to $125.7 million from $105.8 million in 2007. Net income in 2008 on a GAAP basis was $45.2 million, or $0.50 per diluted share, which compares to GAAP net income of $28.6 million, or $0.30 per diluted share, for the year ended December 31, 2007. Excluding the effects of share-based compensation and related tax effects, non-GAAP net income in 2008 was $47.2 million, or $0.52 per diluted share, compared to non-GAAP net income of $30.4 million, or $0.32 per diluted share in 2007. "Fourth quarter revenue increased 83% year-over-year, and we entered 2009 with a solid backlog of orders, including deferred revenues of almost $75 million," commented Ming Hsieh, Chief Executive Officer of Cogent. "During the year, we saw increased demand from a number of core customers, while also expanding our customer base with key wins at the U.S. Census Bureau and the Department of Defense. At the end of 2008, Cogent was one of 12 companies selected for the Biometrics Operations and Support Services Unrestricted (BOSS-U) contract by the U.S. Army. We believe that the Department of Defense will be a leading driver of biometrics in the years to come and expect BOSS-U to be an important purchasing vehicle for future orders. Last week and following the completion of tenders evaluation, the UK Post Office, Post Office Limited, notified Cogent Systems of its decision to appoint Cogent as its preferred bidder for the contract to provide integrated biometric data collection services to Post Office Limited. This is one of the final main steps leading to the award and signing of the contract marking the completion of Post Office Limited's competitive tendering process. Post Office Limited provides a variety of products and services through 12,500 branches in the UK. The size of the initial award is potentially larger than any other single international win in the Company`s history. We believe these recent wins will help us continue to grow and diversify our business, and we also expect several significant contracts to be awarded over the next several months by large government agencies both domestically and internationally. Dependent on timing and revenue recognition, the award of these contracts to Cogent may have an incrementally positive impact on our outlook for 2009." "While gross margins were impacted by product mix, we expect them to improve in the first quarter," commented Paul Kim, Chief Financial Officer of Cogent. "We also generated $24 million in cash this quarter, ending the quarter with our cash and investments position at approximately $480 million, or $5.32 per share." The Company will host a conference call at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) on Wednesday, February 25 to discuss these results. For parties in the United States and Canada, call 800-240-6709 to access the conference call. International parties can access the call at 303-262-2191. Cogent will offer a live webcast of the conference call, accessible from the "Investor Relations" section of the Company's website (www.cogentsystems.com). The webcast will be archived for a period of 15 days. A telephonic replay of the conference call will also be available 2 hours after the call and will run for 2 days. To hear the replay, parties in the United States and Canada should call 800-405-2236 and enter pass code 11124769. International parties should call 303-590-3000 and enter pass code 11124769. Note Regarding Use of Non-GAAP Financial Measures Certain of the information set forth herein, including non-GAAP net income and earnings per share, may be considered non-GAAP financial measures. Cogent believes this information is useful to investors because it provides a basis for measuring Cogent's available capital resources, the operating performance of Cogent's business and Cogent's cash flow, excluding share-based compensation that would normally be included in the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles. Cogent's management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating Cogent's operating performance, capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-financial measures as reported by Cogent may not be comparable to similarly titled amounts reported by other companies. About Cogent Systems Cogent is a global biometric identification solutions provider to governments, law enforcement agencies, and commercial enterprises. Cogent provides the highest quality identification systems, products and services with leading technology, accuracy and speed. Cogent`s Automated Fingerprint/Palmprint Identification Systems, or AFIS, enable customers to capture fingerprint and palm print images electronically, encode prints into searchable files, and accurately compare a set of fingerprints/palm prints to a database containing potentially millions of prints in seconds. For more information, please visit www.cogentsystems.com Forward-Looking Statements This press release contains, in addition to historical information, forward-looking statements. Such statements are based on management`s current estimates and expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Cogent is providing this information as of the date of this press release, and expressly disclaims any duty to update information contained in this press release. Forward-looking statements in this press release include, without limitation, express and implied statements regarding anticipated contract awards and market developments. These forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from those expressed or implied here. Readers are referred to Cogent`s Report on Form 10-K for the year ended December 31, 2007 filed by Cogent with the Securities and Exchange Commission which identifies important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including but not limited to: changes in government policies; uncertain political conditions in international markets; deriving a significant portion of revenues from a limited number of customers; deriving a significant portion of revenues from the sale of solutions pursuant to government contracts; failure of the biometrics market to experience significant growth; failure of Cogent`s products to achieve broad acceptance; potential fluctuations in quarterly and annual results; changes in Cogent`s effective tax rate; failure to successfully compete; failure to comply with government regulations; failure to accurately predict financial results due to long sales cycles; negative publicity and/or loss of clients due to security breaches resulting in the disclosure of confidential information; loss of export licenses or changes in export laws; failure to manage projects; rapid technology change in the biometrics market; loss of a key member of management team; termination of backlog orders; loss of limited source suppliers; negative audits by government agencies; failure to protect intellectual property; exposure to intellectual property and product liability claims; difficulty in integrating acquisitions; and failure to achieve the expected benefits of acquisitions. The information contained in this press release is a statement of Cogent`s present intention, belief or expectation and is based upon, among other things, existing industry conditions, market conditions, the economy in general and Cogent`s assumptions. Cogent may change its intention, belief or expectation, at any time and without notice, based upon any changes in such factors, in its assumptions or otherwise. Cogent undertakes no obligation to review or confirm analysts` expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. By including any information in this press release, Cogent does not necessarily acknowledge that disclosure of such information is required by applicable law or that the information is material. COGENT, INC. CONDENSED BALANCE SHEET December 31, 2008 and December 31, 2007 (in thousands) Balance at Balance at ASSETS: 12/31/2008 12/31/2007 Cash and investments $ 479,896 $ 444,307 Accounts receivable, net 30,767 31,845 Unbilled accounts receivable 1,110 1,201 Inventories 18,528 11,359 Property and equipment, net 37,192 33,644 Deferred income taxes 41,068 26,143 Other assets 11,570 2,689 Total assets $ 620,131 $ 551,188 LIABILITIES & EQUITY: Accounts payable, accrued liabilities and income taxes payable $ 25,681 $ 13,324 Deferred revenue 74,978 27,648 Total stockholders' equity 519,472 510,216 Total liabilities & equity $ 620,131 $ 551,188 COGENT, INC. CONDENSED STATEMENT OF INCOME Three Months and Year Ended December 31, 2008 and 2007 (in thousands, except per share data) Three months ended Twelve months ended December 31, December 31, 2008 2007 2008 2007 Revenues: Product revenues $ 31,307 $ 14,858 $ 90,761 $ 80,572 Maintenance and services revenues 8,670 7,017 34,920 25,222 Total revenues 39,977 21,875 125,681 105,794 Cost of revenues: Cost of product revenues (1) 12,730 4,175 29,335 33,081 Cost of maintenance and services revenues (1) 4,362 2,169 15,146 7,615 Total cost of revenues 17,092 6,344 44,481 40,696 Gross profit 22,885 15,531 81,200 65,098 Operating expenses: Research and development (1) 4,203 2,850 14,788 10,625 Selling and marketing (1) 3,879 2,960 13,187 9,382 General and administrative (1) 2,400 2,381 10,157 19,927 Income from settlement of lawsuit - - (10,000 ) - Total operating expenses 10,482 8,191 28,132 39,934 Operating income 12,403 7,340 53,068 25,164 Interest income 3,799 5,602 16,862 22,132 Other, net 15 (302 ) 189 (117 ) Income before income taxes 16,217 12,640 70,119 47,179 Income tax provision 4,709 4,930 24,939 18,537 Net income $ 11,508 $ 7,710 $ 45,180 $ 28,642 Net income per share: Basic $ 0.13 $ 0.08 $ 0.50 $ 0.30 Diluted $ 0.13 $ 0.08 $ 0.50 $ 0.30 Number of shares used in per share computations: Basic 89,424 93,903 89,947 94,223 Diluted 90,290 95,455 90,938 95,837 (1) Share-based compensation expense was allocated as follows: Cost of product revenues $ 139 $ 47 $ 470 $ 332 Cost of maintenance and services revenues 172 58 576 320 Research and development 267 76 937 350 Selling and marketing 223 193 912 919 General and administrative 202 158 801 804 Total share-based compensation expense $ 1,003 $ 532 $ 3,696 $ 2,725 COGENT, INC. Non-GAAP Earnings per Share Reconciliation Three Months and Year Ended December 31, 2008 and 2007 (in thousands, except per share data) Three months Three months Year ended Year ended ended ended December 31, December 31, December 31, December 31, 2008 2007 2008 2007 Earnings for per share calculations GAAP Net Income $ 11,508 $ 7,710 $ 45,180 $ 28,642 GAAP Income tax provision 4,709 4,930 24,939 18,537 Share-based compensation expense 1,003 532 3,696 2,725 Tax effect (1) (4,993 ) (5,137 ) (26,574 ) (19,463 ) Non-GAAP Net income $ 12,227 $ 8,035 $ 47,241 $ 30,441 Earnings per share GAAP Diluted EPS $ 0.13 $ 0.08 $ 0.50 $ 0.30 GAAP Income tax provision 0.05 0.05 0.27 0.19 Share-based compensation expense 0.01 0.01 0.04 0.03 Tax effect (1) (0.05 ) (0.06 ) (0.29 ) (0.20 ) Non-GAAP Diluted EPS $ 0.14 $ 0.08 $ 0.52 $ 0.32 (1) Tax rates as follows: - 29% for three months ended December 31, 2008 - 39% for three months ended December 31, 2007 - 36% for Year ended December 31, 2008 - 39% for Year ended December 31, 2007 Cogent Systems, Inc. Paul Kim, 626-325-9600 Chief Financial Officer www.cogentsystems.com or The Blueshirt Group, Investor Relations Chris Danne, 415-217-7722 email@example.com Jill Isenstadt, 415-217-7722 firstname.lastname@example.org Copyright Business Wire 2009