Cogent Systems Announces Third Quarter Financial Results
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- Cogent Systems Announces Third Quarter Financial Results
Company Announces New $100 Million Stock Buy-Back Program
PASADENA, Calif.--(BUSINESS WIRE)-- Cogent Systems (Nasdaq: COGT) today announced financial results for the third quarter ended September 30, 2009.
Third quarter 2009 revenues were $28.9 million which compares to revenue of $35.0 million reported in the same year ago period. Net income on a GAAP basis for the third quarter of 2009 was $5.7 million, or $0.06 per diluted share. This compares to GAAP net income of $12.0 million, or $0.13 per diluted share in the same year ago period.
Cogent's third quarter of 2009 GAAP results included $992,000 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 third quarter of 2009 was $6.3 million, or $0.07 per diluted share. This compares to non-GAAP net income of $12.6 million, or $0.14 per diluted share, in the same year ago period.
"While some revenue pushed into the fourth quarter, we believe we are on track to achieve our financial goals for 2009," commented Ming Hsieh, President and Chief Executive Officer of Cogent. "Orders and revenues to the Department of Homeland Security continue to be solid as the DHS expands the ten print database for the U.S. Visit program. Additionally, we won a civil program in a large state during the quarter that should generate solid revenues in 2010. Over the next three to six months, a number of international AFIS contracts are coming up for award and we hope to make progress with newer product offerings including handhelds, web-based software solutions and services. So far in 2009, the Company has added over $53 million to cash and investments and ended the quarter with $533.7 million or $5.89 per share."
Cogent also announced today that its Board of Directors has authorized a new stock buy-back program of $100 million, expiring on November 12, 2010. This new program will replace its previous program which expires on November 12, 2009.
"The Board's decision to initiate a new share repurchase program emphasizes their confidence in the future of our company," said Ming Hsieh, Chief Executive Officer and Chairman of Cogent. "We remain firmly committed to improving shareholder value."
Depending on market conditions, shares may be repurchased from time to time at prevailing market prices through open market or negotiated transactions. The Company is not obligated to purchase any shares. Subject to applicable corporate securities laws, repurchases may be made at such times and in such amounts as the Company's management deems appropriate. Purchases under the program can be discontinued at any time management feels additional purchases are not warranted. The repurchases will be made using the Company's cash resources.
The Company will host a conference call at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) on Tuesday, November 3 to discuss these results. For parties in the United States and Canada, call 877-941-4774 to access the conference call. International parties can access the call at 480-629-9760.
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 4169863. International parties should call 303-590-3030 and enter pass code 4169863.
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 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, 2008 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 filed by Cogent 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
September 30, 2009 and December 31, 2008
(in thousands)
Balance at Balance at
ASSETS: 9/30/2009 12/31/2008
Cash and investments $ 533,712 $ 479,896
Accounts receivable, net 18,044 30,767
Unbilled accounts receivable 384 1,110
Inventories 19,802 18,528
Property and equipment, net 37,552 37,192
Deferred income taxes 39,683 41,068
Other assets 10,551 11,570
Total assets $ 659,728 $ 620,131
LIABILITIES & EQUITY:
Accounts payable, accrued liabilities and income $ 36,565 $ 25,681
taxes payable
Deferred revenue 76,220 74,978
Total stockholders' equity 546,943 519,472
Total liabilities & equity $ 659,728 $ 620,131
COGENT, INC.
CONDENSED STATEMENT OF INCOME
Three and Nine Months Ended September 30, 2009 and 2008
(in thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
Revenues:
Product revenues $ 19,042 $ 24,656 $ 61,180 $ 59,454
Maintenance and services revenues 9,826 10,376 30,493 26,250
Total revenues 28,868 35,032 91,673 85,704
Cost of revenues:
Cost of product revenues (1) 9,636 6,006 22,916 16,605
Cost of maintenance and services 3,870 4,490 11,863 10,784
revenues (1)
Total cost of revenues 13,506 10,496 34,779 27,389
Gross profit 15,362 24,536 56,894 58,315
Operating expenses:
Research and development (1) 3,941 4,039 11,121 10,585
Selling and marketing (1) 3,365 3,625 9,880 9,308
General and administrative (1) 2,154 2,144 7,927 7,757
Income from settlement of lawsuit - - - (10,000 )
Total operating expenses 9,460 9,808 28,928 17,650
Operating income 5,902 14,728 27,966 40,665
Interest income 2,437 4,000 8,429 13,063
Other, net 117 376 317 174
Income before income taxes 8,456 19,104 36,712 53,902
Income tax provision 2,796 7,070 13,615 20,230
Net income $ 5,660 $ 12,034 $ 23,097 $ 33,672
Net income per share:
Basic $ 0.06 $ 0.13 $ 0.26 $ 0.37
Diluted $ 0.06 $ 0.13 $ 0.26 $ 0.37
Number of shares used in per share
computations:
Basic 89,676 89,536 89,629 90,122
Diluted 90,632 90,403 90,567 91,169
(1) Share-based compensation expense
was allocated as follows:
Cost of product revenues $ 127 $ 119 $ 398 $ 331
Cost of maintenance and services 175 141 506 404
revenues
Research and development 266 230 765 670
Selling and marketing 230 213 696 689
General and administrative 194 200 576 599
Total share-based compensation $ 992 $ 903 $ 2,941 $ 2,693
expense
COGENT, INC.
Non-GAAP Earnings per Share Reconciliation
Three Months Ended September 30, 2009 and 2008
(in thousands, except per share data)
Three months ended Three months ended
September 30, September 30,
2009 2008
Earnings for per share calculations
GAAP Net Income $ 5,660 $ 12,034
GAAP Income tax provision 2,796 7,070
Share-based compensation expense 992 903
Tax effect (1) (3,117 ) (7,403 )
Non-GAAP Net income $ 6,331 $ 12,604
Earnings per share
GAAP Diluted EPS 0.06 $ 0.13
GAAP Income tax provision 0.03 0.08
Share-based compensation expense 0.01 0.01
Tax effect (1) (0.03 ) (0.08 )
Non-GAAP Diluted EPS 0.07 $ 0.14
(1) Tax rates as follows:
- 33% for three months ended September
30, 2009
- 37% for three months ended September
30, 2008
Source: Cogent Systems, Inc.
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