SOUTH PASADENA, Calif.----Cogent Systems Nasdaq:COGT today announced financial results for the
first quarter ended March 31, 2007.
First quarter 2007 revenues were $30.1 million, a 32% increase compared
to revenue of $22.7 million in the same year ago period. Net income on a
GAAP basis for the first quarter of 2007 was $6.2 million, or $0.06 per
diluted share. This compares to GAAP net income of $6.7 million, or
$0.07 per diluted share in the same year ago period.
Cogent's first quarter of 2007 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 first quarter of 2007 was $6.8 million, or $0.07 per diluted share.
This compares to non-GAAP net income of $7.6 million, or $0.08 per
diluted share, in the same year ago period, excluding the effects of
similar items in both periods. First quarter 2007 net and operating
income were impacted by $2.7 million in legal expenses related to the
Company’s ongoing intellectual property
lawsuit.
“First quarter revenues increased by 32%
year-over-year driven by a broad set of customers around the world,”
commented Ming Hsieh, President and Chief Executive Officer of Cogent. “Our
success in adding a number of new core customers last year has led us to
expect more consistent results this year, and we believe we are on track
to reach our growth objectives. The need for biometric solutions
continues to grow, and we are pursuing an increasing number of new
projects for border control, law enforcement, the civil market and the
commercial sector. We expect several sizable procurements to be awarded
this year by large government agencies both domestically and
internationally. Based on both our technological performance and our
track record with our customers, we feel confident in our competitive
positioning.”
“Gross margin decreased below our target
levels due to product mix as well as a higher proportion of third party
hardware sales to certain customers,”
commented Paul Kim, Chief Financial Officer of Cogent. “Importantly,
these impacts are timing issues, and we remain comfortable with our 55%
to 60% full year gross margin target. During the quarter, we generated
approximately $18 million in cash and ended the quarter with our cash
and investments position at approximately $433 million or $4.52 per
share.”
The Company will host a conference call and live webcast at 4:30 p.m.
Eastern Time 1:30 p.m. Pacific Time today to discuss these results.
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 11087950.
International parties should call 303-590-3000 and enter pass code
11087950.
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 Cogent's
anticipated revenue growth and growth in sales opportunities in a
variety of markets, including future domestic and international growth.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-Kfor the year ended December 31, 2006filed 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; and exposure to intellectual
property and product liability claims. 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
March 31, 2007 and December 31, 2006
in thousands
Balance at
Balance at
ASSETS:
3/31/2007
12/31/2006
Cash and investments
$
432,932
$
414,802
Accounts receivable, net
16,427
26,798
Unbilled accounts receivable
1,229
530
Inventories
11,711
19,439
Property and equipment, net
33,027
32,874
Deferred income taxes
41,620
43,423
Other assets
3,031
3,075
Total assets
$
539,977
$
540,941
LIABILITIES & EQUITY:
Accounts payable and accrued liabilities
$
20,007
$
12,878
Deferred revenue
24,084
37,504
Total stockholders' equity
495,886
490,559
Total liabilities & equity
$
539,977
$
540,941
COGENT, INC.
CONDENSED STATEMENT OF INCOME
Three Months Ended March 31, 2007 and 2006
in thousands, except per share data
Three months ended March 31,
2007
2006
Revenues:
Product revenues
$
24,480
$
16,868
Maintenance and services revenues
5,627
5,863
Total revenues
30,107
22,731
Cost of revenues:
Cost of product revenues 1
14,164
7,082
Cost of maintenance and services revenues 1
1,598
1,649
Total cost of revenues
15,762
8,731
Gross profit
14,345
14,000
Operating expenses:
Research and development 1
2,529
2,267
Selling and marketing 1
1,976
1,839
General and administrative 1
5,222
2,693
Total operating expenses
9,727
6,799
Operating income
4,618
7,201
Interest income
5,218
3,489
Other, net
292
4
Income before income taxes
10,128
10,694
Income tax provision
3,904
3,947
Net income
$
6,224
$
6,747
Net income per share:
Basic
$
0.07
$
0.07
Diluted
$
0.06
$
0.07
Number of shares used in per share computations:
Basic
94,219
93,685
Diluted
95,867
96,123
1 Share-based compensation expense was allocated as follows:
Cost of product revenues
$
183
$
86
Cost of maintenance and services revenues
139
171
Research and development
118
231
Selling and marketing
248
403
General and administrative
267
494
Total share-based compensation expense
$
955
$
1,385
COGENT, INC.
Non-GAAP Earnings per Share Reconciliation
Three Months Ended March 31, 2007 and 2006
in thousands, except per share data
Three months ended
March 31,
2007
Three months ended
March 31,
2006
Earnings for per share calculations
GAAP Net Income
$
6,224
$
6,747
GAAP Income tax provision
3,904
3,947
Share-based compensation expense
955
1,385
Tax effect 1
4,322
4,469
Non-GAAP Net income
$
6,761
$
7,610
Earnings per share
GAAP Diluted EPS
$
0.06
$
0.07
GAAP Income tax provision
0.04
0.04
Share-based compensation expense
0.01
0.02
Tax effect 1
0.04
0.05
Non-GAAP Diluted EPS
$
0.07
$
0.08
1 Tax rates as follows:
- 39% for three months ended March 31, 2007
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