Cogent Systems Announces Fourth Quarter and Year End Results.SOUTH PASADENA South Pasadena (păs'ədē`nə), city (1990 pop. 23,936), Los Angeles co., S Calif., a residential suburb of Los Angeles; inc. 1888. Medical supplies, clothing, and transportation and electronic equipment are manufactured. , Calif. -- Cogent COGENT - COmpiler and GENeralized Translator Systems (Nasdaq:COGT) today announced financial results for the fourth quarter and year ended December December: see month. 31, 2005. Fourth quarter 2005 revenues were $46.2 million, which is a 20% sequential increase over revenues of $38.4 million in the immediately preceding third quarter and a 46% increase over revenue of $31.8 million in the same year ago period. Net income on a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis for the fourth quarter of 2005 was $20.7 million, or $0.22 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. This compares to GAAP net income of $20.1 million, or $0.21 per diluted share, in the immediately preceding third quarter and compares to GAAP net income of $9.9 million, or $0.11 per diluted share in the same year ago period. Cogent's fourth quarter of 2005 GAAP results included $1.3 million of non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. related to the amortization of stock-based compensation. Excluding the effects of stock-based compensation and the net tax effect, non-GAAP net income was $21.8 million, or $0.23 per diluted share. This compares to $21.2 million, or $0.22 per diluted share, in the immediately preceding third quarter and $10.0 million, or $0.11 per diluted share, in the same year ago period, excluding the effects of similar items in both periods. "We are pleased with our performance in 2005 as we increased revenues by 82% from the prior year and non-GAAP net income by 142%," commented Ming Hsieh Ming Hsieh (simplified Chinese: 谢明; traditional Chinese: 謝明; b. 1955) is a billionaire Chinese American entrepreneur and philanthropist and the founder of AMAZ technology in 1987 and Cogent Systems in 1990. , President and Chief Executive Officer of Cogent. "Results in the fourth quarter were bolstered bol·ster n. A long narrow pillow or cushion. tr.v. bol·stered, bol·ster·ing, bol·sters 1. To support or prop up with or as if with a long narrow pillow or cushion. 2. by revenues from our core customers including the DHS DHS Department of Homeland Security (USA) DHS Department of Human Services DHS Department of Health Services DHS Demographic and Health Surveys DHS Dirhams (Morocco national currency) , Venezuela Venezuela (vĕnəzwā`lə, Span. vānāswā`lä), officially the Bolivarian Republic of Venezuela, republic (2005 est. pop. 25,375,000), 352,143 sq mi (912,050 sq km), N South America. , LA County and State of Connecticut Connecticut, state, United States Connecticut (kənĕt`ĭkət), southernmost of the New England states of the NE United States. It is bordered by Massachusetts (N), Rhode Island (E), Long Island Sound (S), and New York (W). . Over the past three years, we have won market share and built an impressive customer list. In the fourth quarter, we won contracts for new AFIS AFIS Automated Fingerprint Identification System AFIS Aerodrome Flight Information Service AFIS Armed Forces Radio and Television Service AFIS Airborne Flight Information System AFIS Automated Fingerprinting Identification System (Pakistan) systems abroad and in multiple counties in California The U.S. state of California is divided into fifty-eight counties. Counties are responsible for all elections, property-tax collection, maintenance of public records such as deeds, and local-level courts within their borders, as well as providing law enforcement (through the county and received follow-on fol·low-on adj. Following as a related or consequent aspect or development: "Such contracts involve follow-on sales of maintenance services" Christian Science Monitor. orders from customers in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Asia and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . We believe that our AFIS solution is the most technologically advanced in the world, with clear advantages in terms of overall performance, scalability How much a system can be expanded. See scalable. scalability - How well a solution to some problem will work when the size of the problem increases. For example, a central server of some kind with ten clients may perform adequately but with a thousand clients it , integration and cost of ownership." For the year ended December 31, 2005, revenues increased 82% to $159.9 million from $87.7 million in 2004. Net income in 2005 on a GAAP basis was $65.3 million, or $0.69 per diluted share, which compares to GAAP net income of $42.6 million, or $0.56 per diluted share, for the year ended December 31, 2004. Excluding the effects of stock-based compensation and related tax effects, non-GAAP net income in 2005 was $69.8 million, or $0.74 per diluted share, compared to non-GAAP net income of $28.9 million, or $0.38 per diluted share in 2004, which excludes the effects of stock-based compensation, related tax effects and a tax benefit of $6.4 million. "Looking forward, we are seeing major RFPs for large border control programs in Europe and multiple opportunities from the civil and commercial sectors," commented Paul Kim, Chief Financial Officer of Cogent. "At the same time, our visibility has decreased on the timing and potential revenue recognition of some large follow-on orders to existing customers and possible new orders." The Company will host a conference call and live webcast at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) today to discuss these results and anticipated results for fiscal year 2006. Cogent will offer a live webcast of the conference call, accessible from the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " 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 two hours after the call and will run for two days. To hear the replay, parties in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Canada should call 800-405-2236 and enter pass code 11050805. International parties should call 303-590-3000 and enter pass code 11050805. 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 stock-based compensation that would normally be included in the most directly comparable measures calculated and presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . 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 leading provider of Automated Fingerprint Identification Systems Automated Fingerprint Identification System (or AFIS) is a system to automatically match one or many unknown fingerprints against a database of known prints. This is done for various reasons, not the least of which is because the person has committed a crime. , or AFIS, and other fingerprint fingerprint, an impression of the underside of the end of a finger or thumb, used for identification because the arrangement of ridges in any fingerprint is thought to be unique and permanent with each person (no two persons having the same prints have ever been biometric bi·o·met·rics n. (used with a sing. verb) The statistical study of biological phenomena. bi solutions to governments, law enforcement agencies A law enforcement agency (LEA) is a term used to describe any agency which enforces the law. This may be a local or state police, federal agencies such as the Federal Bureau of Investigation (FBI) or the Drug Enforcement Administration (DEA). and other organizations worldwide. Cogent's AFIS solutions enable customers to capture fingerprint images electronically, encode (1) To assign a code to represent data, such as a parts code. Contrast with decode. (2) To convert from one format or signal to another. See codec and D/A converter. (3) The term is sometimes erroneously used for "encrypt. fingerprints Impressions or reproductions of the distinctive pattern of lines and grooves on the skin of human fingertips. Fingerprints are reproduced by pressing a person's fingertips into ink and then onto a piece of paper. into searchable files and accurately compare a set of fingerprints to a database containing potentially millions of fingerprints in seconds. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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-Q Form 10-Q See 10-Q. for the quarter ended September 30, 2005 filed 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 The biological identification of a person. Examples are face, iris and retinal patterns, hand geometry and voice. Increasingly built into laptop computers, fingerprint readers have become popular as a secure method for identification. 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 Noun 1. confidential information - an indication of potential opportunity; "he got a tip on the stock market"; "a good lead for a job" steer, tip, wind, hint, lead ; 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 Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" 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
December 31, 2005 and 2004
(in thousands)
Balance at Balance at
ASSETS: 12/31/2005 12/31/2004
------------ ------------
Cash and investments $351,087 $223,284
Accounts receivable, net 42,804 14,761
Unbilled accounts receivable 3,257 1,308
Inventories 20,222 37,980
Property and equipment, net 33,136 8,478
Deferred income taxes 55,246 14,312
Other assets 7,513 771
----------- -----------
Total assets $513,265 $300,894
=========== ===========
LIABILITIES & EQUITY:
Accounts payable and accrued liabilities $ 9,495 $ 10,401
Deferred revenue 45,158 68,429
Total stockholders' equity 458,612 222,064
----------- -----------
Total liabilities & equity $513,265 $300,894
=========== ===========
COGENT, INC.
CONDENSED STATEMENT OF OPERATIONS
Three Months and Year Ended December 31, 2005 and 2004
(in thousands, except per share data)
Three months ended Year ended
December 31, December 31,
------------------- ------------------
2005 2004 2005 2004
-------- -------- --------- --------
Revenues:
Product revenues $41,346 $28,450 $141,649 $74,698
Maintenance and services
revenues 4,903 3,330 18,240 12,990
-------- -------- --------- --------
Total revenues 46,249 31,780 159,889 87,688
-------- -------- --------- --------
Cost of revenues:
Cost of product revenues 16,604 12,457 53,062 25,551
Cost of maintenance and
services revenues 1,153 1,069 4,553 3,607
Amortization of deferred
stock-based compensation 148 169 690 669
-------- -------- --------- --------
Total cost of revenues 17,905 13,695 58,305 29,827
-------- -------- --------- --------
-------- -------- --------- --------
Gross profit 28,344 18,085 101,584 57,861
-------- -------- --------- --------
Operating expenses:
Research and development 1,767 1,733 7,157 6,890
Selling and marketing 1,535 1,382 6,060 3,826
General and administrative 2,572 1,246 7,998 3,976
Amortization of deferred
stock-based compensation 1,133 1,497 5,388 9,759
-------- -------- --------- --------
Total operating expenses 7,007 5,858 26,603 24,451
-------- -------- --------- --------
Operating income 21,337 12,227 74,981 33,410
Interest income 3,518 948 9,050 1,144
Other, net (219) 1,237 518 1,599
-------- -------- --------- --------
Income before income taxes 24,636 14,412 84,549 36,153
Income tax provision (benefit) 3,967 4,502 19,263 (6,428)
-------- -------- --------- --------
Net income $20,669 $ 9,910 $ 65,286 $42,581
======== ======== ========= ========
Net income per share:
Basic $ 0.22 $ 0.12 $ 0.74 $ 0.65
Diluted $ 0.22 $ 0.11 $ 0.69 $ 0.56
Number of shares used in per
share computations:
Basic 92,957 80,792 88,403 65,617
Diluted 96,093 91,716 94,053 75,817
COGENT, INC.
Non-GAAP Earnings per Share Reconciliation
Three Months Ended December 31, 2005 and 2004
(in thousands, except per share data)
Three Three Year Year Three
months months ended ended months
ended ended December December ended
December December 31, 31, September
31, 31, 2005 2004 30,
2005 2004 2005
-------- -------- --------- --------- --------
Earnings for per share
calculations
GAAP Net Income $20,669 $ 9,910 $ 65,286 $ 42,581 $20,104
GAAP Income tax
provision (benefit) 3,967 4,502 19,263 (6,428) 5,771
Amortization of
deferred stock-based
compensation 1,281 1,666 6,078 10,428 1,332
Tax effect (1) (4,147) (6,110) (20,844) (17,701) (5,986)
-------- -------- --------- --------- --------
Non-GAAP Net income $21,770 $ 9,968 $ 69,783 $ 28,880 $21,221
======== ======== ========= ========= ========
Earnings per share
GAAP Diluted EPS $ 0.22 $ 0.11 $ 0.69 $ 0.56 $ 0.21
GAAP Income tax
provision (benefit) 0.04 0.05 0.21 (0.09) 0.06
Amortization of
deferred stock-based
compensation 0.01 0.02 0.06 0.14 0.01
Tax effect (1) (0.04) (0.07) (0.22) (0.23) (0.06)
-------- -------- --------- --------- --------
Non-GAAP Diluted EPS $ 0.23 $ 0.11 $ 0.74 $ 0.38 $ 0.22
======== ======== ========= ========= ========
(1) Tax rates as follows:
-- 16% for three months ended December 31, 2005
-- 38% for three months ended December 31, 2004
-- 23% for year ended December 31, 2005
-- 38% for year ended December 31, 2004
-- 22% for three months ended September 30, 2005
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