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Bernard C. Bailey President and CEO 07 September 2005. Safe Harbor Statement.
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Bernard C. Bailey President and CEO 07 September 2005
Safe Harbor Statement Statements that representatives of Viisage make today that are not historical facts are accurate as of today and may be considered forward-looking statements that involve risks and uncertainties, including reliance on public sector markets, the possibility of customer delays, need for capital and competition. You should refer to our Form 10-Q for the quarter ended April 3, 2005 filed with the Securities and Exchange Commission, under the heading “Certain Factors That May Affect Future Results” and subsequent SEC filings for more information on the risk factors that could cause actual results to differ, perhaps materially, from our statements today. Viisage undertakes no obligation to publicly release any revision to any forward-looking statement made today.
VIISAGE - TODAY • Secure credential provisioning systems • Authentication software and solutions • Biometric software and systems • Systems design, development, integration and support • Leading provider of end-to-end, advanced technology identity solutions • Market Capitalization of $211M Who We Are Core Strengths • Produce more than 30 million secure credentials annually • Produce about one in every four of U.S. drivers’ licenses • Sole provider of passport production capability • Production platform for U.S. DOD Common Access Card • Worldwide leader in document authentication and verification • Recognized leader in face recognition biometric technology Leadership Financial Highlights • 2004 Revenues of $67.5M up 81% YTY • 2004 EBITDA of $8.5M • Beginning year multi-year signed backlog of $131M • Strong Balance Sheet - $11M Cash, No Debt
Where We Have Been 1996 1997 2002 2004 2005+ • Recognized the emergence of face-recognition biometrics ahead of competitors • Acquired ZN Vision Technologies to solidify leadership in face recognition capabilities and provide European foothold • Acquired Trans Digital Technologies to enhance presence in secure credentials and Federal Gov’t • Acquired Imaging Automation, the industry and market leader in automated identity document authentication technologies • Significant recent contract wins include: • DOS 5 yr Sole Source for US Passports ($65mm, 4Q03) • DOD Smart Card program (initial order: $10mm, 1Q04) • Key State Drivers’ License contracts – NC, IL, WV • Florida document authentication implementation Viisage is uniquely positioned as an end-to-end advanced identity solutions provider • IPO • Focus on next-generation ID credentials • Acquired three small strategic companies • Added six states in DL market through competitive wins • Re-focused company around identity solutions • Executive changes
The Identity Problem PERSON CREDENTIALS PRIVILEGES Driving Financial Health Care Border Crossing Use of Resources Biometrics allow us to connect individuals to the credentials. Licenses Passports ID Cards Tokens Smartcards What privileges are connected to these credentials? Are the credentials authentic? How do we know that this is the person who is uniquely connected to these credentials and privileges?
The Viisage Solution The Viisage Identity Life Cycle Proofing Identity Life Cycle Usage Enrollment Issuance Viisage Scope Computer Network Security External Databases Real-time Identity Database Identity Solutions Business Processes Secure Credentials Biometrics Verification
Our Customers Driver’s licenses Social services National voter IDs Other • Over 2,000 locations • DoD CAC program • 30% US DLs Civil Identification • Key federal agencies • Multiple State and Local customers • Multiple FR Applications Criminal Identification • U.S. passport production • Worldwide placement for document authentication • International passport and visa applications Border Management • Casino surveillance • Access control • Airport security • Financial Services Emerging Markets
Case Study: Civil Identification Possible Fraud John Doe Jim Smith STATE OF ILLINOIS Each day over 15,000 new images are captured at 135 drivers license facilities throughout the State Each night new images are sent to headquarters to be compared against the database of over 16 million images for possible fraud Each morning State officials review possible matches from the day before and flag possible fraudulent activity
Case Study: Border Management • Canada Customs and Revenue Agency (CCRA) Problem: CCRA needed to authenticate identity documents to ensure: Solution: CCRA deployed 400 iA-thenticate units in 40 of the most heavily used points of entry, resulting in: • The more than 200,000 identity documents presented daily, including driver’s licenses, visas, passports and Canadian permanent residency cards, are authentic, therefore entitling the person to cross the border • The person trying to cross the border was not on a watch list • Scans of over 200,000 driver’s licenses, visas, passports and Canadian permanent residency cards daily for authentication and comparison to watch lists • A safer, more secure border • A system that ensured safer, but did not slow the border crossing process down
Viisage Solutions for the Law Enforcement Community Viisage offers solutions that… • Help protect officers in the field • Increase homeland security • Are tools for public safety • Link law enforcement organizations together • Solutions • Facial recognition systems for booking processes • Mobile (in vehicle) systems for checking identities • Investigation tools for facial matching
Secure ID Market Opportunity • Market drivers: • Legislative directives for biometrically enabled passports and visas • Legislative initiatives around DL enhancements: REAL ID • Presidential directives around federal secure IDs: HSPD-12 • Development of industry standards and requirements • Enhanced accuracy of biometric technologies • Convergence of physical and logical security Biometric Enabled Secure ID Market Biometric Revenues CAGR 50% CAGR 49% Source: International Biometrics Group 2004 ($ millions) Source: Frost and Sullivan 2003 ($ millions)
FINANCIAL OVERVIEW
Financial Highlights • Long-term contracts with high revenue visibility • Backlog of $119 million • Strengthened balance sheet with follow-on offering in August 2004 • Positive operating cash with $11M on balance sheet, no debt • Transitioning financial model to higher margin product portfolio
Revenue and Gross Profit 29% 26% 22% Note: $ millions
EBITDA and EPS Note: $ millions
1Q05 Results EBITDA: Up $.5M to $1.6M OPEX: Up $2.6M to $7.2M 34.4% 27.4% Note: $ millions
2Q05 Results EBITDA: Down $.3M to $2.8M OPEX: Up $2.1M to $6.8M 32.8% 30.53% Note: $ millions
YTD 2005 EBITDA: Up $.2M to $4.4M OPEX: Up $4.7M to $14.0M 33.2% 29.4% Note: $ millions
2005 Full Year Outlook YTY Revenue Growth of 8% to 19% Gross Profit Improvement to 30%+ Continued EBITDA Improvement REVENUE Note: $ millions
Investment Highlights Rapidly growing market opportunity Strong customer base Strong technology portfolio and market knowledge Long-term contracts with high revenue and earnings visibility Experienced and committed management team