The list of companies in the biometric space will soon be one smaller as Viisage, once again, has an announced an acquisition in the space. This time the company is buying Iris recognition pioneer Iridian for US$35 million. This follows the two other recent high-profile biometric buys of SecuriMetrics and Identix.
Viisage To Acquire Iridian Technologies
BILLERICA, Mass. – July 17, 2006 – Viisage Technology, Inc. (Nasdaq: VISG) today announced that it has entered into a definitive agreement to acquire privately-held Iridian Technologies, Inc., the company responsible for the initial development and commercialization of iris recognition technology. Iridian’s extensive intellectual property portfolio and industry-standard iris recognition algorithm will be combined with Viisage’s wholly-owned subsidiary SecuriMetrics, Inc. to advance the development and implementation of SecuriMetrics’ advanced hardware, software and database capabilities. Upon completion of the Iridian transaction and the pending merger with Identix Incorporated (Nasdaq: IDNX), Viisage is expected to become the only U.S.-based manufacturer of a full range of handheld and multi-modal biometric recognition solutions encompassing iris, finger and face.
Under the terms of its definitive agreement with Iridian, Viisage will pay Iridian shareholders $35 million in cash. In parallel with the negotiation of the Iridian transaction, Viisage also secured a $6.5 million reduction in potential contingency payments to SecuriMetrics under the terms of Viisage’s February 2006 acquisition of SecuriMetrics, resulting in an effective “net” purchase price for Iridian of $28.5 million. The acquisition of Iridian will be funded primarily by proceeds from the initial $100 million investment into Viisage by L-1 Investment Partners in December 2005.
Iridian is expected to have positive net working capital and be debt free at the time of the close of the transaction. The company is estimated to generate positive pro forma EBITDA of approximately $3 million in 2006. Closing of the Iridian transaction, which is anticipated to occur in August 2006, is subject to the satisfaction of a number of customary precedent conditions, including obtaining requisite Iridian shareholder approval.
Current Iridian licensees (including Panasonic and Oki Electric Industry Co.) will continue to have non-exclusive rights to deploy Iridian’s software and related intellectual property in integrated products manufactured by the licensees.
“With direct access to the IP that underpins the iris recognition market, our business will realize improved margins and cost synergies, as well as significant revenue opportunities,” said Robert V. LaPenta, Chairman of the Board of Viisage. “Most importantly, we believe the market will now be primed for accelerated growth as the development of critical services and products required for widespread adoption of iris recognition technologies can proceed ahead unencumbered.”
Iris recognition technology identifies people by the unique patterns of the iris – the colored ring around the pupil of the eye – and is designed to meet the authentication needs of large-scale, country-wide applications. Iridian filed the first industry patent (Flom) for this technology in 1987, and with it controlled greater than 90 percent of the iris recognition market until the expiration of the patent beginning in 2005. Today the company maintains an extensive intellectual portfolio in this area, including holding the key iris algorithm patent that is the industry standard for iris recognition.
Iridian licenses iris recognition software and related intellectual property to hardware and software developers for applications in the government, military and commercial markets, both domestically and internationally. One of Iridian’s more significant deployments includes the United Arab Emirates (UAE) Border Control Program. This program uses Iridian software in combination with third-party hardware at all land, air, and sea ports for enrolling visa applicants and visitors. The purpose of the program is to identify high risk or expelled individuals and ensure that they are prevented from re-entering the country. To date, the program is believed to have prevented more than 70,000 expellees from re-entering the country.
“This acquisition brings together the premiere iris device and database management provider with the recognized leader in iris algorithm development and will provide tremendous benefits to our customers and the overall market,” said Greg Peterson, Founder & CEO of SecuriMetrics. “This combination removes the market perception and technology development challenges that have prevented widespread market adoption and will support the development of the truly multi-biometric search capability that is in such high demand by large federal projects and civil agencies.”
Iridian’s business operation, currently located in Moorestown, N.J., is expected to be integrated into Identix’ Jersey City, N.J. research facility once the pending Identix merger is consummated.
Viisage uses EBITDA as a non-GAAP financial performance measurement. EBITDA is calculated by adding back to net income (loss) interest, taxes, depreciation and amortization. EBITDA is provided to investors to complement results provided in accordance with GAAP, as management believes the measures help illustrate underlying operating trends in the Company’s business and uses the measures to establish internal budgets and goals, manage the business, and evaluate performance. Management also believes that EBITDA provides an additional tool for investors to use in comparing Viisage’s financial results with other companies in the industry, many of which also use EBITDA in their communications to investors. By excluding non-cash charges such as amortization and depreciation as well as non-operating charges for interest and income taxes, Viisage can evaluate its operations and can compare its results on a more consistent basis to the results of other companies in the industry and to its operations in prior quarters. As noted above, EBITDA excludes the effect of interest, taxes, depreciation and amortization. Because EBITDA eliminates these items, Viisage considers this financial measure to be an important indicator of the Company’s operational strength and performance of its business and a good measure of the Company’s historical operating trend. EBITDA should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. Estimated pro forma EBITDA for 2006 has been calculated by adding estimated pro forma depreciation and amortization of $1.2 million to pro forma estimated net income of $1.8 million.
About Viisage Technology, Inc.
Viisage delivers advanced technology identity solutions for governments, law enforcement agencies and businesses concerned with enhancing security, reducing identity theft, and protecting personal privacy. Viisage solutions include secure credentials such as passports and drivers’ licenses, biometric technologies for uniquely linking individuals to those credentials, and credential authentication technologies to ensure the documents are valid before individuals are allowed to cross borders, gain access to finances, or be granted other privileges. With more than 3,000 installations worldwide, Viisage’s identity solutions stand out as a result of the company’s industry-leading technology and unique understanding of customer needs. Viisage’s product suite includes IdentityTOOLS(TM) SDK, Viisage PROOF(TM), FaceEXPLORER(R), iA-thenticate(R), ID-GUARD(R), BorderGuard(R), PIER(TM), HIIDE(TM), AutoTest(TM), FacePASS(TM) and FaceFINDER(R).
About Iridian Technologies
Iridian Technologies, Inc., of Moorestown, NJ is the world leader in development and commercialization of iris recognition technology – renowned as one of the most accurate biometric identifiers. The holder of US and international patents behind iris recognition technologies, Iridian offers unparalleled security for public-use applications such as simplified passenger travel, border control, national IDs, and election verification as well as restricted access and information access. For more information, visit www.iridiantech.com.