Identix Reports Fiscal Third Quarter Results

Identix Incorporated (Nasdaq:IDNX) today reportedfinancial results for its fiscal 2006 third quarter and nine monthsended March 31, 2006. Fiscal 2006 third quarter revenues were $20.8million, compared to year-earlier third quarter revenues of $20.3million. Overall fiscal 2006 third quarter gross margin improved to37% of revenues, compared to the year earlier gross margin of 34%. Thenet loss for the fiscal 2006 third quarter was $3.8 million, or $0.04per share, compared to a net loss for the fiscal 2005 third quarter of$1.9 million, or $0.02 per share. The fiscal 2006 third quarter netloss includes $1.1 million, or $0.01 per share, in expenses related tothe Company's pending merger with Viisage Technology, Inc.(Nasdaq:VISG), severance expense of $0.2 million associated with thepreviously announced reduction in field services staff, andstock-based compensation expense of $0.2 million due to the Company'sJuly 1, 2005 adoption of Statement No. 123R related to the expensingof employee stock options.

Fiscal 2006 third quarter product revenue grew 13%, to $13.7million, compared to year earlier third quarter product revenues of$12.1 million. Higher software revenue contribution and expandinghardware margins led to fiscal 2006 third quarter product gross marginincreasing to 46% of product revenues, compared to year-earlierproduct gross margin of 40%. As expected, services revenues for the2006 third quarter declined to $7.1 million, with gross margin of 18%of services revenue, compared to year-earlier services revenues of$8.1 million and services gross margin of 25%. The Company continuesto replace the older legacy Identix Live Scan systems that currentlyrequire extensive field service costs. The majority of these systemsare expected to be replaced in calendar 2006.

The Company's balance sheet remains solid with no debt and $35.1million in cash, restricted cash and marketable securities as of March31, 2006, up $2.2 million from December 31, 2005.

Identix President & CEO Dr. Joseph J. Atick commented, "During ourfiscal 2006 third quarter, we significantly increased the breadth anddepth of our product offerings. The National Institute of Standards &Technology (NIST) testing report identified Identix' newestfingerprint matching technology offering, BioEngine(R) 6, as a topperforming, AFIS-Grade algorithm. NIST tested a total of 21 algorithmsfrom 10 vendors on large scale, existing, real-world databases,including U.S. VISIT airport captures, Mexico/U.S. land crossings, andworldwide U.S. Visa applications. We submitted one algorithm, whichwas shown by NIST to be in the top three in performance in all of thetests. We expect to incorporate our AFIS-Grade algorithm into acomplete suite of applications and work flow engines that will enableus to begin to deliver end-to-end criminal and civil AFIS capabilitiesduring the third calendar quarter of 2006. With the addition of a fullsuite of AFIS offerings, Identix will be even better positioned tocompete head to head with the established AFIS companies for some ofthe largest opportunities in the biometrics space both in terms ofrevenue dollars and profitability.

"Our confidence in the near- and long-term outlook for thebiometrics industry and for Identix remains high as we continue to seethe value of RFPs and awards increase. We believe Identix and theindustry are at an important inflection point as programs begin tomove forward," Atick continued. "Identix is winning meaningfulcontracts, as evidenced by our third consecutive quarter withbiometrics-related revenues exceeding $20 million. While our base ofbusiness is growing, contract timing can create quarterly deviationsin revenues and profitability. Specifically," he said, "we experiencedcustomer delays on several contracts that we have already won in theMiddle East. We continue to see this as a very active region where weare doing significant business, but the potential for delays exists.

"The dynamics of the marketplace in terms of the size of thecontracts we are bidding on has changed dramatically. In calendar 2006alone," Atick said, "we have submitted, or are preparing to submit,responses to RFPs for large-scale biometric programs representingpotential 2006 contract value for Identix of approximately $200million. This figure does not take into account some of the highestprofile programs being discussed such as TWIC, Registered Traveler andinternational e-passport programs, each of which represents potentialupside for calendar 2006. The $200 million in near-term programsconsist primarily of National ID and border crossing programs, as wellas other international civil ID programs and some U.S. Federaltravel-related programs such as US Visit. Many of these programs,individually, are expected to have a potential value of between $5-10million for biometric solutions alone; a few are expected to be in the$25-50 million range. We believe the robust size and number ofidentified, near term, large scale biometric programs reflects amarket that is growing at an accelerated rate." Atick added,"Importantly, the near-term awards we have identified do not includeworldwide AFIS opportunities, a market in which we intend to competevigorously and one that we believe represents revenue upside forIdentix."

Additional fiscal 2006 third quarter highlights included:

-- More than $7 million in new live scan awards from new and existing customers, including law enforcement agencies in California and Maryland, the US Army, and several agencies under the Department of Homeland security.

-- Several new international contract wins including voter ID programs, National ID programs using facial recognition, e-passport enrollment, law enforcement transit screening and enforcement and commercial applications aimed at the consumer markets.

-- Continued penetration into the commercial healthcare market for fingerprint-based single sign-on logical access security solutions, including more than 5,000 fingerprint readers and 7,000 seat licenses.

Revenues for the first nine months of the fiscal 2006 year grew19% to $65.7 million compared to $55.4 million for fiscal 2005. Thenet loss for the fiscal 2006 nine months decreased to $6.1 million, or$0.07 per fully diluted share, compared to a net loss of $9.5 million,or $0.11 per fully diluted share in 2005 for the first nine months offiscal 2005; marking a 36% year-over-year improvement in the Company'sbottom line results. The loss for the first nine months of fiscal 2006includes $1.1 million, or $0.01, in expenses related to the Company'spending merger with Viisage, severance expense of $0.2 millionassociated with a previously announced reduction in field servicesstaff, and stock-based compensation expense of $0.7 million due to theCompany's adoption of Statement No. 123R on July 1, 2005.

Fiscal 2006 first nine months product revenues grew 45%, to $44.4million, compared to year earlier first nine months product revenuesof $30.7 million. Increasing hardware margins and largersoftware-based revenue contribution led to fiscal 2006 first ninemonths product gross margin increasing by 17 percentage points to 46%of product revenues, when compared to year-earlier product grossmargin of 29%. As expected, services revenues for the 2006 first ninemonths declined to $21.2 million with gross margin of 18% of servicesrevenue, compared to year-earlier services revenues of $24.8 millionand services gross margin of 26%.

"We currently remain on track to close the pending merger withViisage during the June 2006 quarter," Atick said. "As announced atthe end of March, the U.S. Department of Justice granted earlytermination of the Hart-Scott-Rodino antitrust review process,removing a closing condition of the proposed merger. Teams comprisedof employees from both companies are diligently planning for aseamless integration to ensure that upon consummation of the mergerthe combined company will be positioned to hit the ground running andimmediately capitalize on the numerous synergies and efficiencies thathave been identified. We are confident that the combined company willbe well positioned to fully benefit from the increasing marketopportunities before us as the industry's most comprehensive singleplatform for multi-modal finger, face, skin and imaging identitysolutions."

Since the merger remains on track to close prior to June 30, 2006,the end of the Company's 2006 fiscal year, the Company does notcurrently expect to report, as a standalone company, operating resultsfor its fiscal 2006 fourth quarter. Accordingly, the Company is notproviding any forward looking expectations.

EBITDA

EBITDA for the first nine months of fiscal 2006 improvedsignificantly to negative EBITDA of $2.6, when compared to yearearlier EBITDA of negative $5.2 million. The improvements are based onexpanding gross margins due to higher software contribution torevenues and growing hardware margins. Identix has also been focusedon reducing costs across all business and operating areas. Identixexpects these positive trends to continue.

Identix is reporting EBITDA as a non-GAAP financial performancemeasurement. The Company calculates EBITDA by adding back to its lossfrom continuing operations interest, taxes, depreciation andamortization. EBITDA is provided as a complement to results providedin accordance with GAAP, as management believes the measures helpillustrate underlying operating trends in the Company's business.Identix' EBITDA should not be considered in isolation or as asubstitute for comparable measures calculated and presented inaccordance with GAAP.

Three Months Ended Nine Months Ended
March 31, March 31,
$ in Thousands 2006 2005 2006 2005
--------- --------- --------- ---------

Loss from continuing
operations $(3,830) $(1,925) $(6,300) $(9,523)

Add:
Depreciation and amortization 1,514 1,560 4,488 4,836
Interest (income) expense, net (290) (201) (783) (562)
Provision (benefit) for income
taxes (6) 11 (44) 33
--------- --------- --------- ---------

EBITDA $(2,612) $(555) $(2,639) $(5,216)
========= ========= ========= =========

Stock option expense included
above $231 - $742 $14
Net restructuring and other
included above $1,335 - $1,335 $(620)

Conference Call Information

The Company will host a webcast tomorrow at 9:00 am EST. Thewebcast will be broadcast live and may be accessed at the Company'swebsite at http://www.shareholder.com/identix/medialist.cfm. To listento the live webcast, please visit the Identix Investor Relations website and click on the conference call button at least fifteen minutesprior to the start of the call to register, download and install anynecessary audio software. For those who cannot listen to the livewebcast, a replay will be available at the same location shortly afterthe call. For those without Internet access, a telephonic replay willbe available approximately 2 hours following the call until 11:59 p.m.Eastern time, Tuesday, May 2, 2006, and may be accessed at (800)642-1687 by entering conference ID # 7870067.

About Identix Incorporated

Identix Incorporated (Nasdaq:IDNX) is the world's leadingmulti-biometric technology company. Identix provides fingerprint,facial and skin biometric technologies, as well as systems, andcritical system components that empower the identification ofindividuals in large-scale ID and ID management programs. TheCompany's offerings include live scan systems and services forbiometric data capture, mobile systems for on-the-spot ID, and backendstandards-based modules and software components for biometric matchingand data mining. Identix products are used to conduct backgroundchecks, speed travel and commerce via secure identification documents,prevent identity fraud in large-scale government and civil IDprograms, and control access to secure areas and networks. With aglobal network of partners, such as leading system integrators,defense prime contractors and OEMs, Identix serves a broad range ofmarkets including government, law enforcement, gaming, finance,travel, transportation, corporate enterprise and healthcare.

More information on Identix can be accessed via the Company website at http://www.identix.com.

Forward-Looking Statements

The statements contained in this release, which are not historicalfacts, are forward-looking statements within the meaning of Section27A of the Securities Act of 1933 and Section 21E of the SecuritiesExchange Act of 1934. These statements are based on the Company'scurrent expectations and beliefs and are subject to a number of risksand assumptions that could cause actual results to differ materiallyfrom those described in the forward-looking statements. All statementsother than statements of historical fact are statements that could bedeemed forward-looking statements. These statements are subject touncertainties that could cause actual results to differ materiallyfrom those set forth in or implied by forward-looking statements.Risks and uncertainties include, without limitation, those related to:the availability of funding from government and other customers; thereadiness of customers to accept delivery of products on a timelybasis; the ability of the Company to achieve targeted levels ofhardware, software and related component mix; the ability of theCompany to timely complete a full suite of end to end AFIScapabilities and successfully compete in that marketplace; the abilityof the Company to win and successfully implement on a growing numberof large scale biometrics programs domestically and internationally;and increasing levels of competition. In addition, such risks anduncertainties include, among others, the following risks: that themerger with Viisage Technology will not close, that the regulatory orshareholders approval will not be obtained, that the closing will bedelayed, that customers and partners will not react favorably to themerger, integration risks, the risk that the combined companies may beunable to achieve cost-cutting synergies, and other risks described inIdentix' and Viisage's Securities and Exchange Commission filings,including the Registration Statement on Form S-4 to be filed with theSEC in connection with the transaction, Identix' Annual Report on Form10-K for the year ended June 30, 2005 and its Quarterly Report on Form10-Q for the quarter ended September 30, 2005 under the captions "RiskFactors" and "Management's Discussion and Analysis of FinancialCondition and Results of Operations," and Viisage's Annual Report onForm 10-K for the year ended December 31, 2004 and its QuarterlyReports on Form 10-Q for the quarters ended April 3, 2005, July 3,2005 and October 2, 2005 under the captions "Risk Factors" and"Management's Discussion and Analysis of Financial Condition andResults of Operations." Neither Identix nor Viisage undertake anyobligation to update these forward-looking statements to reflectevents or circumstances after the date of this press release.

Additional Information and Where to Find It

Investors and security holders of both Identix and Viisage areadvised to read the joint proxy statement/prospectus regarding thebusiness combination transaction referred to in the material below,when it becomes available, because it will contain importantinformation. Identix and Viisage expect to mail a joint proxystatement/prospectus about the transaction to their respectivestockholders. This joint proxy statement/prospectus will be filed withthe Securities and Exchange Commission by both companies. Investorsand security holders may obtain a free copy of the joint proxystatement/prospectus and other documents filed by the companies at theSecurities and Exchange Commission's web site at http://www.sec.gov.The joint proxy statement/prospectus and such other documents may alsobe obtained from Identix or Viisage by directing such requests to thecompanies.

Participants In Solicitation

Viisage, Identix and their respective directors and executiveofficers and other members of management and employees may be deemedto be participants in the solicitation of proxies in respect of themerger. Information concerning Viisage's participants is set forth inthe proxy statement dated, November 21, 2005, for Viisage's specialmeeting of shareholders held on December 16, 2005 as filed with theSEC on Schedule 14A. Information concerning Identix' participants isset forth in the proxy statement, dated October 6, 2005, for Identix'2005 annual meeting of shareholders as filed with the SEC on Schedule14A. Additional information regarding the interests of participants ofViisage and Identix in the solicitation of proxies in respect of themerger will be included in the registration statement and joint proxystatement/prospectus to be filed with the SEC.

IDENTIX INCORPORATED
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Unaudited, In Thousands, Except Per Share Amounts)

Three Months Ended Nine Months Ended
March 31, March 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues:
Product revenue $13,698 $12,119 $44,445 $30,683
Services revenue 7,099 8,133 21,247 24,750
--------- --------- --------- ---------
Total revenue 20,797 20,252 65,692 55,433
Cost of revenues:
Cost of product revenue:
Excluding the
amortization of acquired
intangible assets 6,333 6,285 20,741 18,563
Amortization of acquired
intangible assets 1,063 1,033 3,140 3,098
Cost of service revenue 5,803 6,140 17,390 18,249
--------- --------- --------- ---------
Total cost of revenue 13,199 13,458 41,271 39,910
Gross profit:
Product gross profit 6,302 4,801 20,564 9,022
Service gross profit 1,296 1,993 3,857 6,501
--------- --------- --------- ---------
Total gross profit 7,598 6,794 24,421 15,523
Operating expenses:
Selling and marketing 3,445 3,179 9,737 8,744
Research and development 3,650 3,029 9,867 8,345
General and administrative 3,121 3,013 10,033 9,215
Amortization of acquired
intangible assets 202 250 622 754
Restructuring and other,
net 1,335 --- 1,335 (620)
--------- --------- --------- ---------
Total operating
expenses 11,753 9,471 31,594 26,438
--------- --------- --------- ---------
Loss from operations (4,155) (2,677) (7,173) (10,915)
Interest and other income, net 319 763 829 1,425
--------- --------- --------- ---------
Loss from continuing
operations before income
taxes (3,836) (1,914) (6,344) (9,490)
(Provision) benefit for income
taxes 6 (11) 44 (33)
--------- --------- --------- ---------
Loss from continuing
operations (3,830) (1,925) (6,300) (9,523)
Discontinued operations:
Gain on sale of IPS, net of
provision for income taxes --- --- 213 ---
--------- --------- --------- ---------
Income from discontinued
operations --- --- 213 ---
--------- --------- --------- ---------
Net loss $(3,830) $(1,925) $(6,087) $(9,523)
========= ========= ========= =========
Basic and diluted loss per
share:
Continuing operations $(0.04) $(0.02) $(0.07) $(0.11)
Discontinued operations --- --- 0.00 ---
--------- --------- --------- ---------
Basic and diluted loss per
share $(0.04) $(0.02) $(0.07) $(0.11)
========= ========= ========= =========
Weighted average shares
outstanding:
basic and diluted 89,406 88,834 89,158 88,620
========= ========= ========= =========


IDENTIX INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Unaudited, In Thousands)

Mar. 31, Jun. 30,
2006 2005
---------- ----------

Assets
Cash and cash equivalents $24,093 $22,445
Marketable securities 9,827 9,753
Restricted cash 549 2,649
Accounts receivable, net 17,801 15,376
Inventories, net 5,502 6,340
Prepaid expenses and other assets 936 928
---------- ----------
Total current assets 58,708 57,491

Restricted cash 633 933
Property and equipment, net 3,086 1,738
Goodwill 141,213 141,213
Acquired intangible assets, net 10,852 13,363
Other assets 314 317
---------- ----------
Total assets $214,806 $215,055
========== ==========

Liabilities and stockholders' equity
Accounts payable $6,899 $6,597
Accrued compensation 3,601 3,894
Other accrued liabilities 3,775 3,634
Deferred revenue 7,245 6,738
---------- ----------
Total current liabilities 21,520 20,863

Deferred revenue, net of current portion 3,040 1,947
Other liabilities 495 159
---------- ----------
Total liabilities 25,055 22,969

Stockholders' equity
Common stock 896 889
Additional paid-in capital 556,252 552,507
Accumulated deficit (367,246) (361,159)
Accumulated other comprehensive loss (151) (151)
---------- ----------
Total stockholders' equity 189,751 192,086
---------- ----------
Total liabilities and stockholders' equity $214,806 $215,055
========== ==========