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8-K - L-1 IDENTITY SOLUTIONS 8-K 6-8-2010 - L-1 IDENTITY SOLUTIONS, INC.mm06-0810_8k.htm
EXHIBIT 99.1

Morgan Joseph 2010 Best Ideas
Conference

June 9, 2010
 
 

 
Strategic Objectives
 L-1 is the premier identity management Company delivering customized and interoperable
 solutions and services that meet any ID program requirement
  L-1 remains at the forefront of the latest advances in multi-modal biometric recognition capabilities as a
 means to uniquely identify individuals
  L-1 advanced technologies are used to produce the most secure identification documents possible that
 serve as proof of identity
  Today government consulting services address the most important areas of security and intelligence
 and L-1 will expand capabilities into new areas such as language analysis
 Practice strong operational, program and financial discipline
  Exceptional program performance in support of customer’s vision
  Achieve organic growth in the 10-15% range annually
  Profitable, with solid margins and strong cash flow
 Strategic alternatives update
  As L-1 has disclosed, L-1 and its financial advisors are continuing their discussions with a number of
 interested parties as part of the previously announced strategic alternative process
  L-1 is satisfied with the progress of the process to date
2
 
 

 
3
L-1 Market Position Today
 Providing industry- leading
     solutions and services to solve ID
     management challenges for
     customers in 40 countries
  Multi-biometric recognition (finger, face, iris,
 full hand, vein)
  Biometric solutions utilized for managing
 world’s largest and most complex identity
 databases
  Government services design, develop and
 implement and run sophisticated global
 networks and IT systems
  More than 2B identity documents produced
 to date with L-1 solutions
  Largest civilian enrollment network in the
 U.S. and Canada
 
 

 
Evolution of Identity Management
Identity Related
Issues
Emerge
Markets
Converge to
Meet the
Challenge
L-1 Emerges
as the First
Pure-Play
Provider
4
Security
Defense
Intelligence
Technology
 
 

 
Market Fundamentals
5
 Attractive identity market fundamentals
  $5B global market, significant domestic / international growth
 opportunities
  Industry analysts expect market growth of 15 - 20% annually
 through 2017
  Global market expected to be >$9B by 2014 with significant
 growth in law enforcement, military, National ID, State and Local
 and transportation markets
 Government consulting services address the
 highly fragmented $45B U.S. Intelligence
 services market
 
 

 
Customers and Markets
Markets Served
  U.S. and foreign
 military services
  Law enforcement and
 public safety
  Border management
  Civilian programs
  Critical infrastructure
Diverse Customer Base
% of FY09 Rev by Customer
S&L
33%
Intel
30%
DoD
10%
Int’l
7%
DHS
6%
Other
7%
DoS
7%
6
 
 

 
Market-Leading Technology
 400 leading patents and applications in six areas
 related to identity
  Fundamental biometric algorithms in face, finger, iris, skin,
 3D modalities
  System architecture for scalability of matching and fusion
  Imaging technology for biometric capture
  Mobile biometric technology
  Securing and producing credentials
  Methodology and process patents for a wide range of ID solutions and
 applications
7
 
 

 
U.S. and Foreign Military Services
8
 Solutions and services trusted by American and foreign
 military services, defense and intelligence agencies to
 determine ally from enemy and establish identity
 dominance in areas of conflict
 Solution components
  Protecting military personnel and
 civilian populations
  Denying anonymity to adversaries
  Assuring information superiority
 Programs of note
  U.S. Department of Defense (DoD)
 Next Generation ABIS
  U.S. Armed Forces rely on HIIDE and
 PIER; more than 13,000 units are in
 the theater of operation today
  European Ministries of Defense
 incorporate the L-1 ABIS for multi-biometric enrollment, watchlist
 management and forensics / latent analysis capabilities
 
 

 
9
Law Enforcement and Public Safety
 L-1 technology and services are trusted solutions for law enforcement
 efforts and address public safety concerns of government agencies
 Solution components
  Identity data management for inter- and intra-agency information sharing for criminal
 processing, crime solving and crime prevention
  Criminal processing from an officer’s initial encounter of a potential suspect on the street through
 incarceration and eventual parole
  Crime solving forensic analysis and investigative tools
  Crime prevention through identifying known criminals in real-time before they can do harm
  Enrollment services remove the burden of civilian fingerprinting from police stations
  Advanced Concepts improves public safety information technology systems and networks
9
 
 

 
Border Management
 Solutions and services that facilitate faster and more
 secure border crossings
 Solution components
  Enrolling, issuing and authenticating travel documents
  Facilitating faster and safer frequent travel
  Traveler screening
  Securing restricted areas
 Programs of note
  DHS contracts: transportation / Homeland Security
  Exclusive provider - U.S. Border Crossing Card,
 Passport Card
; sole source production - U.S. Passport
  Face recognition platform supports U.S. Visa applicant
 processing and U.S. Passport services
  Solutions used at more than 50 UAE border locations
  Many international customs and immigration border
                 checkpoints
  Automated Border Control for ePassport Holders
10
 
 

 
Civilian Programs
 Solutions and services help safeguard a wide range of civil programs
 from identity-related fraud
 Solution components
  Performing background checks for government licenses and permits
  Enrolling and verifying participants in government
 entitlement programs
  Issuing secure identity documents
 Programs of note
  HAZPrint, TWIC
  Andhra Pradesh Ration Cards, India
  UN World Food Program
  Produce more than 80 percent of U.S.
 State driver’s licenses
  National IDs and Voter Registration Cards
  Passports / ePassports
11
 
 

 
Critical Infrastructure
 Solution components
  Performing pre-employment background checks
 § Financial services firms, healthcare organizations,
 educational institutions, casinos and gaming
  Using biometrics to control access to buildings
  Protecting information systems from cyber attack
 Programs of note
  Major banks / enrollment services for FINRA submissions
  Texas Board of Educator certification / enrollment services
  World’s largest casino in Macao / finger and 3D face
 access control
  A large international retailer / face recognition
  Global transportation companies / government consulting
 services
12
 
 

 
 Solutions combine industry-leading ABIS® software
 with advanced biometric readers, capture and
 authentication devices, access control units
  Mobile identification devices (HIIDEÔ, PIER Ô, IBIS)
  Access control systems
  Iris recognition systems
  Finger / full hand solutions (single, dual and
 tenprint fingers; palm, full hand)
  Face solutions
  Multi-biometric stations
 Playing an integral role in the world’s largest identity-
 related programs
  Search and match capabilities for the DoD ABIS system
  DoS Visa issuance program - 85 million record database
  More than 13,000 mobile devices fielded in areas of conflict
  De-duplication of >80 million records in the world’s largest
 biometric and demographic de-duplication exercise
- India
13
Biometric Solutions
 
 

 
14
14
ABIS® System Solutions Platform
14
 
 

 
15
Secure Credentialing Solutions
 Secure end-to-end processes and advanced technologies used by
 thousands of government customers worldwide to produce the most
 secure identity documents possible
  Driver’s Licenses, Enhanced Driver’s Licenses (EDLs)
  Passports, U.S. Passport Cards, Border Crossing Cards
  Voter Registration, National, Universal/Unique and WHTI Compliant Tribal ID Cards
 Solutions
  Secure front and back office processes
  Remote services
  Self-service kiosks
  Biometric recognition software
  Automated knowledge and road skills testing
  Secure production systems
  Documents authentication
 Produced over two billion secure credentials to-date
  85 million driver’s licenses annually
 Over 80% of U.S. states use L-1 for secure driver’s license
 
 

 
16
Enrollment Services
 Enrollment services capture and submit biometric data and other information
 required for processing civilian applications for government-issued ID cards,
 Visas and Passports, permits and other entitlement benefits
  Approx. 6M people processed to date; 2M annually
  Largest network in the U.S. and Canada
 with more than 1,000 locations
 Complete outsourced solution
  Secure self-service Web portal
  Customized data collection and enrollment
  Convenient locations near applicant populations
  Direct electronic channeling and response
  Integration with employee records
 Wide range of customers
  More than 5,000 educational institutions and charitable / volunteer organizations
  Nurses, doctors, home health care and nursing facility workers
  Commercial drivers / TSA HAZPrint endorsement; Maritime workers / TWIC card
  Regulated industries such as national banks, brokerage firms and financial institutions
  Government humanitarian, health and welfare program enrollment
 
 

 
17
Government Services
Advanced Concepts
Information Technology
§ Cyber security
§ Information assurance
§ Systems engineering
§ Telecommunications R&D
§ Public safety consulting
SpecTal
Intelligence Services
§ Intelligence analysis
§ Operations support
§ Training
§ Information technology
§ Physical security
§ Language analysts
§ Systems engineering and integration
§ GEOINT and MASINT science
§ Intelligence analysis
§ Operations capabilities
 More than 1,000 specialists,
 most holding top security
 clearances, expected to grow
 by 15 percent in 2010
 Intelligence playing larger
 and more important role in
 fighting the War on Terror
McClendon Engineering & Analytical
 
 

 
Financial Review
 
 

 
19
** Reflects the midpoint of the guidance range
*** Organic growth represents the increase in revenues in the latest period, expressed as a percentage; it excludes revenues from businesses acquired both in the
latest period and the prior period
**** Actual results may differ from estimated results, which are subject to the risks and uncertainties disclosed in the Company's filings with the Securities and
Exchange Commission
Strong Revenue and Organic Growth
Five Year Revenue CAGR - 63%
$ in Millions
Organic
Growth***
Revenue
**
****
6%
15%
 
 

 
Solid Adjusted EBITDA and Strong Cash Generation
($ in millions)
*Actual results may differ from estimated results, which are subject to the risks and uncertainties
disclosed in the Company's filings with the Securities and Exchange Commission
20
 
 

 
DMV Franchise
L-1’s commitment to investing in its DMV franchise yields strong organic growth, visibility, cash flows
 and access to valuable adjacent markets
DMV Revenues
Base Card Issuance
DMV Cash Flows*
* Cash Gross Margins Less Capex
Web Portal Kiosk
Real ID Per Card
5 Year
Cum
48%
50%
54%
56%
57%
58%
$200M
$150M
$100M
$50M
$600M
21
 
 

 
22
Diverse Backlog 
Enrollment Services
Secure Credentialing
Biometric Solutions
Government Consulting Services
17%
47%
4%
32%
Approximately $1.3 Billion of Total Backlog
 
 

 
23
Safe Harbor Statement
 This presentation contains forward-looking statements that involve risks and uncertainties. Forward-looking
 statements in this document and those made from time to time by L-1 Identity Solutions, Inc. through its
 senior management are made pursuant to the safe harbor provisions of the Private Securities Litigation
 Reform Act of 1995. These forward-looking statements reflect the Company's current views based on
 management's beliefs and assumptions and information currently available. Forward-looking statements
 concerning future plans or results are necessarily only estimates, and actual results could differ materially
 from expectations. Certain factors that could cause or contribute to such differences include, among other
 things, the availability of government funding for L-1's products and solutions and the unpredictable nature
 of working with government customers, L-1’s federal, state, local and international contract awards and the
 size and timing of such awards, L-1’s performance on existing and future contracts, general economic and
 political conditions and other factors affecting spending by customers, generally. Additional risks and
 uncertainties are described in the Securities and Exchange Commission filings of L-1 Identity Solutions,
 including its Form 10-K for the year ended December 31, 2009. L-1 Identity Solutions expressly disclaims any
 intention or obligation to update any forward-looking statements.
 
 

 
24
Defined Financial Terms
Adjusted EBITDA
 L-1 Identity Solutions uses Adjusted EBITDA as a non-GAAP financial performance measurement. Adjusted
 EBITDA is calculated by adding back to net income (loss) interest, income taxes, impairments of long-lived
 assets and goodwill, depreciation, amortization, stock-based compensation expense, including retirement plan
 contributions settled, or to be settled, in common stock. Adjusted EBITDA is provided to investors to
 supplement the results of operations reported in accordance with GAAP. Management believes Adjusted
 EBITDA is useful to help investors analyze the operating trends of the business and to assess the relative
 underlying performance of businesses with different capital and tax structures. Management believes that
 Adjusted EBITDA provides an additional tool for investors to use in comparing L-1 Identity Solutions financial
 results with other companies that also use Adjusted EBITDA in their communications to investors. By
 excluding non-cash charges such as impairments of long-lived assets and goodwill, amortization, depreciation
 and stock-based compensation, as well as non-operating charges for interest and income taxes, investors can
 evaluate the Company's operations and can compare its results on a more consistent basis to the results of
 other companies. Management also uses Adjusted EBITDA to evaluate potential acquisitions, establish internal
 budgets and goals, and evaluate performance of its business units and management.
 L-1 Identity Solutions considers Adjusted EBITDA to be an important indicator of the Company's operational
 strength and performance of its business and a useful measure of the Company's historical and prospective
 operating trends. However, there are significant limitations to the use of Adjusted EBITDA since it excludes
 interest income and expense, impairments of long lived assets and goodwill, stock based compensation
 expense, including retirement plan contributions settled, or to be settled, in common stock and income taxes,
 all of which impact the Company's profitability, as well as depreciation and amortization related to the use of
 long term assets which benefit multiple periods. L-1 Identity Solutions believes that these limitations are
 compensated by providing Adjusted EBITDA only with GAAP net income (loss) and clearly identifying the
 difference between the two measures. Consequently, Adjusted EBITDA should not be considered in isolation or
 as a substitute for net income (loss) presented in accordance with GAAP. Adjusted EBITDA as defined by the
 Company may not be comparable with similarly named measures provided by other entities.
 
 

 
25
Defined Financial Terms
Backlog
 L-1's backlog represents sales value of firm orders for products and services not yet delivered
 and for long term executed contractual arrangements (contracts, subcontracts, and customer
 commitments), the estimated future sales value of estimated product shipments, transactions
 processed and services to be provided over the term of the contractual arrangements,
 including renewal options expected to be exercised. L-1 may not realize the full amount of
 revenues reflected in backlog because L-1 is subject to the risks that clients may modify or
 terminate projects and contracts and may decide not to exercise contract options or the
 estimate of quantities may not.
Unlevered Free Cash Flow
 Unlevered free cash flow represents cash flow from operating activities, plus cash interest
 expenses and cash income taxes, less capital expenditures. L-1 believes unlevered free cash
 flow is a useful measure for assessing the company's liquidity, its ability to meet debt service
 requirements and making acquisitions. Unlevered free cash flow is not necessarily comparable
 to similar measures used by other entities and is not a substitute for GAAP measures of
 liquidity such as cash flows from operating.
 
 

 
26
Defined Financial Terms
CAGR
 Compound Annual Growth Rate (CAGR) is the year-over-year
 growth rate of an investment over a specified period of time. It is
 calculated by taking the nth root of the total percentage growth
 rate, where n is the number of years in the period being
 considered.
Organic Growth
 Organic growth represents the increase in revenues in the current
 period, expressed as a percentage. It excludes businesses
 acquired in 2008 for both 2008 and 2009.