Identix Rounds out Product and Service Offerings to Growing Commercial and Civil Markets with 100% Ownership Acquisition of Fingerprinting Services Joint Venture
MINNETONKA, Minn.--(BUSINESS WIRE)--Feb. 23, 2004--
Newly Named Identix Identification Services Subsidiary Expected to Add at Least $6 Million in Annual Biometrics Revenues; Expected to be Accretive and Cash Flow Positive in Calendar 2004
Identix Incorporated (Nasdaq:IDNX), the world's leading multi-biometrics technology company, announced today that it has acquired 100 percent ownership of Sylvan Identix Fingerprint Centers, LLC. Sylvan Identix, now renamed Identix Identification Services (IIS), is a leader in electronic fingerprinting services. The Company's services allow corporations and government agencies to outsource to IIS the 10-print biometric data capture and transmission to the FBI for applicant background checks. Fingerprint background checks have, in recent times, become a frequent requirement by employers and licensing agencies in the United States, and are in fact mandated by state and federal laws for more than a dozen job categories. IIS maintains a network of Identix live scan systems at processing centers across the Nation, where certified technicians process applicants quickly and easily. Up until this point in time, the Company was an equally owned joint venture founded in 1997 by Identix and Baltimore, MD-based Sylvan Learning Systems, Inc. (Nasdaq:SLVN).
Identix President & CEO Dr. Joseph J. Atick commented, "This acquisition grants us more access to the growing commercial and civil markets that we believe are increasingly turning to fingerprinting as an integral element in establishing identity and granting employee credentials. We believe bringing this well-established identification services business completely under the auspices of Identix is an excellent complement to our broad range of core biometric offerings. We believe it strengthens our position with large corporations, government agencies, and other regulated entities, and allows us to be more responsive to the needs and preferences of the customer by having a complete portfolio of live scan products and fingerprinting services. This acquisition also provides the benefit of an additional established channel for our other complementary biometrics products and solutions offerings.
Consideration for Sylvan's portion of the business is a one-time payment of $875,000 by Identix to Sylvan. Identix expects the current base business of IIS to generate at least $6 million in additional annual revenue for Identix. The acquisition is expected to be both accretive from an operating income perspective and cash flow positive to Identix in the calendar 2004 year (the current accounting calendar of IIS).
Identix said that under applicable accounting rules, it has not recognized any revenue from this business in the past since it was a 50/50 joint venture. It is expected that IIS will contribute revenue to Identix' consolidated financial results beginning in the Company's current third quarter ending March 31, 2004 (prorated to account for fraction of time in quarter entity was still jointly owned), with no material effect to operating income in that quarter.
"Similar to the sale of our non-biometric project management business a little over a week ago," Atick concluded, "today's announcement is another step forward in our strategic plan to ensure that Identix is focused on biometric products and product related services where we see the opportunity to accelerate our growth, deepen our competitive offering and speed our progress to profitability."
With more states passing legislation mandating fingerprint background checks for additional job categories, the demand for identification systems and services from the commercial and civil markets is expected to grow. Identix believes that certain employers, such as federal or state government agencies, child care agencies, banks, securities companies and transportation agencies, may choose to outsource the background check function as opposed to developing this capability in-house. Using state-of-the-art live scan systems from Identix, IIS helps to ensure accurate background check results the first time prints are submitted, significantly reducing the processing time, and at the same time, eliminating the risks to employers that an employee, who has begun work, may have a criminal record.
About Identix Incorporated
Identix Incorporated (Nasdaq:IDNX) is the world's leading multi-biometric technology company. The Company's broad range of fingerprint and facial recognition technology and service offerings are used by system integrators and end users to conduct background checks, secure identification documents, prevent identity fraud and control access to secure areas and networks. With a global network of partners, Identix serves a broad range of markets such as government, law enforcement, gaming, finance, travel, transportation, corporate enterprise and healthcare.
Statements in this release that relate to future plans, events or performance are forward-looking statements reflecting management's current expectations, assumptions and estimates of future performance and economic conditions. All forward-looking statements are made in reliance on the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Identix cautions investors that forward looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed or implied in such statements. Risks and uncertainties include, without limitation, those related to: the ability of the Company to prevail in the DHS BPA protest, maintain the DHS BPA award, and achieve or exceed targeted proceed levels from the DHS BPA; the availability of funding from government and commercial customers; the development of the marketplace for biometrics solutions; the ability of the Company to successfully compete for and be awarded certain major domestic and/or international government contracts that are or will be the subject of targeted RFP's and RFQ's; demand for Identix' products and services; the ability of Identix to complete product development on a successful and timely basis; increasing levels of competition; and other risks identified in the Company's SEC filings. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
CONTACT: Identix Incorporated, Minnetonka