Cogent Systems Announces Record Third Quarter Results; Revenues Increase 37% Sequentially to $23.4 Million GAAP Net Income Reaches $0.28 per share.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 third quarter ended September 30, 2004. Third quarter 2004 net revenues were $23.4 million, which is a 37% sequential increase over net revenues of $17.1 million for the immediately preceding second quarter of 2004. Net income on a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis for the third quarter of 2004 was $19.8 million, or $0.28 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, which compares to net income of $7.2 million, or $0.10 per diluted share, for the second quarter of 2004. Cogent's third quarter of 2004 GAAP results included $3.0 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 and a net tax benefit of $11.7 million, resulting primarily from the September 22, 2004 one-time termination of the Company's S election. Excluding the effects of stock-based compensation and the net tax benefit and using a 38% tax rate, non-GAAP net income was $6.9 million, or $0.10 per diluted share, compared to $6.3 million, or $0.09 per diluted share, for the immediately preceding period after excluding the effects of similar items. "We are pleased to report record results in our first quarter as a public company," 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. "We believe that our IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. marks a significant milestone for Cogent, allowing us to build on our past success and better positioning us to provide total integrated solutions on larger contracts in the future. Our strong top-line performance in the third quarter was 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 our penetration into the civil sector, evidenced by our successful implementation of a complete 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) solution for the Venezuelan National Elections in August. On the Federal front, the US-VISIT US-VISIT United States Visitor and Immigrant Status Indicator Technology program is just entering its second phase, expanding to include 27 visa-waiver countries and rolling out to 50 land crossing points by the end of the year." Mr. Hsieh continued, "Last week, we announced a $20 million follow-on order from the National Electoral Council and believe this is a strong testament to the success of our program in Venezuela which helped ensure 'one voter VOTER. One entitled to a vote; an elector. - one vote.' Installed in only six weeks, we believe it is one of the largest and fastest AFIS systems ever deployed and we were pleased that our performance significantly surpassed the technical milestones in the contract. We see additional opportunities in the civil market and throughout the emerging world, as we continue to expand internationally." Recent Highlights: --In late September, the Company completed its initial public offering of 20.7 million shares of its common stock, including the exercise of the over-allotment option. The total offering raised $229 million for the Company in proceeds after transaction fees and offering expenses. The managing underwriters Managing underwriter The leading firm in an underwriting group, which originates the deal and acts as an agent for the group. managing underwriter See lead underwriter. of the offering were Morgan Stanley  To comply with Wikipedia's , the introduction of this article needs a complete rewrite. & Co. Incorporated, J.P. Morgan Securities Inc., Bear, Stearns &
Co. Inc., SG Cowen & Co., LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control and Needham & Company, Inc. Cogent believes its strong balance sheet with $208 million in cash will help the Company fund its future growth and allow it to win more contracts as the prime contractor. --On October 28th, the Company announced that it had been awarded a $20 million, follow-on contract from the National Electoral Council (CNE (Certified NetWare Engineer) See Novell certification. ) in Venezuela. This one year contract expanded its implementation in Venezuela to include mayoral and regional elections. In the third quarter, the Company was awarded a contract from the CNE valued at $54 million to Cogent to provide its AFIS solution for the Venezuelan national elections, which took place in August of 2004. For this deployment, the Company provided a comprehensive solution that included procuring Procuring, in general, is the act of acquiring goods or services, usually by contract. It may refer to:
tr.v. con·fig·ured, con·fig·ur·ing, con·fig·ures To design, arrange, set up, or shape with a view to specific applications or uses: hardware, transmitting data to a centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. AFIS system through vSAT satellite links and training operators. --In late September, Fujitsu Microelectronics microelectronics, branch of electronic technology devoted to the design and development of extremely small electronic devices that consume very little electric power. America announced that Cogent's algorithms The following is a list of the algorithms described in Wikipedia. See also the list of data structures, list of algorithm general topics and list of terms relating to algorithms and data structures. and software have been integrated into the JumpDrive TouchGuard, the newest USB USB in full Universal Serial Bus Type of serial bus that allows peripheral devices (disks, modems, printers, digitizers, data gloves, etc.) to be easily connected to a computer. portable storage product from Lexar Media. The JumpDrive TouchGuard replaces awkward passwords with the convenience of a finger swipe, to control access to data stored on the device. "During the third quarter we posted record earnings, generated over $26 million in cash from operations and bolstered our balance sheet with the addition of $229 million from the successful completion of our IPO," commented Paul Kim, Chief Financial Officer of Cogent. "Additionally, the Company posted strong GAAP gross margins of 62.3% and grew deferred revenues to approximately $62 million from $22 million in the previous quarter. Gross margins and deferred revenues reflect our success in providing a total integrated solution to the government of Venezuela. These total integrated solutions contribute more to the bottom line but also include the re-sale of some third party equipment at lower margins." 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 2004. 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 45 days. A telephonic replay of the conference call will also be available 2 hours after the call and will run until Wednesday, November 3rd, 2004 at 7:00 p.m. ET. 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 11013525. International parties should call 303-590-3000 and enter pass code 11013525. 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 and a non-recurring tax benefit 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 success in winning more contracts as the prime contractor, Cogent's continued involvement in the US-VISIT program, Cogent's future domestic and international growth, and opportunities in the civil market. 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 Form S-1 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; 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; ineffectiveness of Cogent's remedies to previously identified material weaknesses in its internal controls; 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 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
September 30, 2004 and December 31, 2003
(in thousands)
(unaudited)
Balance at Balance at
ASSETS: 9/30/2004 12/31/2003
----------- ------------
Cash and investments $207,954 $17,457
Accounts receivable, net 13,930 6,271
Unbilled accounts receivable 1,556 306
Inventories 34,594 6,319
Property and equipment, net 9,819 5,696
Other assets 15,217 1,606
----------- ------------
Total assets $283,070 $37,655
=========== ============
LIABILITIES & EQUITY:
Accounts payable and accrued liabilities $ 10,853 $ 2,675
Deferred revenue 61,717 15,264
Total stockholders' equity 210,500 19,716
----------- ------------
Total liabilities & equity $283,070 $37,655
=========== ============
COGENT, INC.
CONDENSED STATEMENT OF OPERATIONS
Three Months and Nine Months Ended September 30, 2004 and 2003
(in thousands, except per share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
2004 2003 2004 2003
-------- -------- -------- --------
Revenues:
Product revenues $19,933 $1,271 $46,248 $7,227
Maintenance and services
revenues 3,515 1,705 9,660 4,902
-------- -------- -------- --------
Total revenues 23,448 2,976 55,908 12,129
-------- -------- -------- --------
Cost of revenues:
Cost of product revenues 7,577 651 13,094 2,859
Cost of maintenance and
services revenues 1,012 444 2,538 1,268
Amortization of deferred
stock-based compensation 244 89 602 167
-------- -------- -------- --------
Total cost of revenues 8,833 1,184 16,234 4,294
-------- -------- -------- --------
-------- -------- -------- --------
Gross profit 14,615 1,792 39,674 7,835
-------- -------- -------- --------
Operating expenses:
Research and development 1,998 1,365 5,157 4,128
Selling and marketing 840 674 2,444 1,904
General and administrative 986 449 2,730 1,366
Amortization of deferred
stock-based compensation 2,746 295 8,575 707
-------- -------- -------- --------
Total operating expenses 6,570 2,783 18,906 8,105
-------- -------- -------- --------
Operating income (loss) 8,045 (991) 20,768 (270)
Interest income 106 27 196 59
Other, net -- (71) 362 (213)
-------- -------- -------- --------
Income (loss) before income
taxes 8,151 (1,035) 21,326 (424)
Income tax provision (benefit) (11,651) (62) (10,971) (26)
-------- -------- -------- --------
Net income (loss) $19,802 $ (973) $32,297 $ (398)
======== ======== ======== ========
Net income (loss) per share:
Basic $ 0.32 $(0.02) $ 0.53 $(0.01)
Diluted $ 0.28 $(0.02) $ 0.46 $(0.01)
Number of shares used in per
share computations:
Basic 61,493 60,000 60,501 60,000
Diluted 70,987 60,000 69,545 60,000
COGENT, INC.
Non-GAAP Earnings per Share Reconciliation
Three Months Ended September 30, 2004 and June 30, 2004
(in thousands, except per share data)
(unaudited)
Three months Three months
ended ended
September 30, June 30,
2004 2004
-------------- ------------
Earnings for per share calculations
GAAP Net Income $19,802 $7,168
GAAP Income tax provision (benefit) (11,651) 313
Amortization of deferred stock-based
compensation 2,990 2,716
Tax effect (1) (4,234) (3,875)
-------------- ------------
Non-GAAP Net income $ 6,907 $6,322
============== ============
Earnings per share
GAAP Diluted EPS $ 0.28 $ 0.10
GAAP Income tax provision (benefit) (0.16) 0.01
Amortization of deferred stock-based
compensation 0.04 0.04
Tax effect (1) (0.06) (0.06)
-------------- ------------
Non-GAAP Diluted EPS $ 0.10 $ 0.09
============== ============
(1) Tax rate at 38%
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