EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

For more information, contact:  
Cogent Systems, Inc.   The Blueshirt Group, Investor Relations
Paul Kim   Chris Danne, Jill Isenstadt
Chief Financial Officer   (415) 217-7722
626-325-9600   chris@blueshirtgroup.com
www.cogentsystems.com   jill@blueshirtgroup.com

Cogent Systems Announces Second Quarter 2010 Financial Results

Pasadena, CA – August 5, 2010 - Cogent Systems (Nasdaq: COGT) today announced financial results for the second quarter ended June 30, 2010.

Second quarter 2010 revenues were $25.4 million which compares to revenue of $31.8 million reported in the same year ago period. Net income on a GAAP basis for the second quarter of 2010 was $2.7 million, or $0.03 per diluted share. This compares to GAAP net income of $8.5 million, or $0.09 per diluted share in the same year ago period.

Cogent’s second quarter of 2010 GAAP results included $1.1 million of non-cash share-based compensation charges. Excluding the effects of share-based compensation, non-GAAP net income for the second quarter of 2010 was $3.4 million, or $0.04 per diluted share. This compares to non-GAAP net income of $9.1 million, or $0.10 per diluted share, in the same year ago period.

“Our order flow in the first half of the year has been very strong to date, and we expect to start seeing the benefit of these orders in the second half of the year and 2011,” commented Ming Hsieh, President and Chief Executive Officer of Cogent. “These orders, combined with our year-end backlog of over $200.0 million, give us good visibility and confidence that we are well positioned to achieve our financial targets for 2010 with a strong second half of the year. While gross margins were impacted by product mix in our initial roll-out for the U.K. Post Office, we expect them to rebound and accelerate starting in the third quarter. During our second quarter we repurchased approximately $6.7 million of our stock, as we remain confident in our business and our ability to capitalize on both the near and longer term opportunities in biometrics.”

The Company will host a conference call and live webcast at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) on Thursday, August 5 to discuss these results. For parties in the United States and Canada, call 888-549-7704 to access the conference call. International parties can access the call at 480-629-9857.

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 800-406-7325 and enter pass code 4331131. International parties should call 303-590-3030 and enter pass code 4331131.

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

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-GAAP financial measures as reported by Cogent may not be comparable to similarly titled amounts reported by other companies.

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 financial results, contract awards, stock repurchases 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 Annual Report on Form 10-K for the year ended December 31, 2009 and Cogent’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 filed with the Securities and Exchange Commission which identify 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

June 30, 2010 and December 31, 2009

(in thousands)

 

ASSETS:    Balance at
6/30/2010
   Balance at
12/31/2009

Cash and investments

   $ 514,016    $ 525,871

Accounts receivable, net

     30,889      19,984

Unbilled accounts receivable

     328      2,152

Inventories and deferred contract costs

     28,597      17,659

Property and equipment, net

     38,388      37,552

Deferred income taxes

     22,677      21,221

Other assets

     24,332      16,124
             

Total assets

   $ 659,227    $ 640,563
             

LIABILITIES & EQUITY:

     

Accounts payable, accrued liabilities and income taxes payable

   $ 21,137    $ 26,503

Deferred revenue

     83,818      61,973

Total stockholders’ equity

     554,272      552,087
             

Total liabilities & equity

   $ 659,227    $ 640,563
             


COGENT, INC.

CONDENSED STATEMENT OF INCOME

Three and Six Months Ended June 30, 2010 and 2009

(in thousands, except per share data)

 

     Three months ended
June 30,
   Six months ended
June 30,
     2010     2009    2010     2009

Revenues:

         

Product revenues

   $ 13,566      $ 21,472    $ 25,293      $ 42,138

Maintenance and services revenues

     11,828        10,299      24,499        20,667
                             

Total revenues

     25,394        31,771      49,792        62,805
                             

Cost of revenues:

         

Cost of product revenues (1)

     9,626        7,727      14,244        13,280

Cost of maintenance and services revenues (1)

     4,403        3,732      9,288        7,993
                             

Total cost of revenues

     14,029        11,459      23,532        21,273
                             

Gross profit

     11,365        20,312      26,260        41,532
                             

Operating expenses:

         

Research and development (1)

     3,876        3,453      7,691        7,180

Selling and marketing (1)

     2,812        3,360      6,119        6,515

General and administrative (1)

     2,282        2,753      4,804        5,773

Income from settlement of lawsuit

     (12     —        (165     —  
                             

Total operating expenses

     8,958        9,566      18,449        19,468
                             

Operating income

     2,407        10,746      7,811        22,064

Interest income

     1,980        2,736      3,996        5,992

Other, net

     55        155      326        200
                             

Income before income taxes

     4,442        13,637      12,133        28,256

Income tax provision

     1,693        5,150      4,365        10,819
                             

Net income

   $ 2,749      $ 8,487    $ 7,768      $ 17,437
                             

Net income per share:

         

Basic

   $ 0.03      $ 0.09    $ 0.09      $ 0.19

Diluted

   $ 0.03      $ 0.09    $ 0.09      $ 0.19

Number of shares used in per share computations:

         

Basic

     89,348        89,631      89,452        89,605

Diluted

     89,902        90,554      90,000        90,545

(1) Share-based compensation expense was allocated as follows:

         

Cost of product revenues

   $ 183      $ 133    $ 361      $ 271

Cost of maintenance and services revenues

     309        166      667        331

Research and development

     270        249      526        499

Selling and marketing

     217        236      440        466

General and administrative

     115        189      235        382
                             

Total share-based compensation expense

   $ 1,094      $ 973    $ 2,229      $ 1,949
                             


COGENT, INC.

Non-GAAP Earnings per Share Reconciliation

Three Months Ended June 30, 2010 and 2009

(in thousands, except per share data)

 

     Three months ended
June 30,
2010
    Three months ended
June 30,

2009
 

Earnings for per share calculations

    

GAAP Net Income

   $ 2,749      $ 8,487   

GAAP Income tax provision

     1,693        5,150   

Share-based compensation expense

     1,094        973   

Tax effect (1)

     (2,104     (5,552
                

Non-GAAP Net income

   $ 3,432      $ 9,058   
                

Earnings per share

    

GAAP Diluted EPS

   $ 0.03      $ 0.09   

GAAP Income tax provision

   $ 0.02        0.06   

Share-based compensation expense

   $ 0.01        0.01   

Tax effect (1)

   $ (0.02     (0.06
                

Non-GAAP Diluted EPS

   $ 0.04      $ 0.10   
                

(1) Tax rates as follows:

- 38% for three months ended June 30, 2010

- 38% for three months ended June 30, 2009