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ICx Technologies Debuts on Stock Market

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By Zachary A. Goldfarb
Washington Post Staff Writer
Friday, November 9, 2007

ICx Technologies, an Arlington homeland security company with a slate of former government officials serving as board members and top executives, went public yesterday, raising $80 million.

The company, founded in 2003, researches, develops and sells technologies to detect traditional, chemical, biological, radiological and nuclear weapons. It sells surveillance products, such as sensors and radar and thermal-imaging scanners. Top clients include U.S. Customs and Border Protection and the Transportation Security Administration, which are part of the Department of Homeland Security.

ICX traded on the Nasdaq and was priced Wednesday night at $16 a share, compared with the $17 to $19 estimated by underwriters. Shares closed yesterday at $12.85.

The company has 750 employees and has recruited aggressively, hiring a host of prominent executives who once served in the White House, on Capitol Hill, in the Air Force or at the Pentagon.

Spencer Abraham, energy secretary from 2001 through 2004 and a former U.S. senator from Michigan, and Rodney E. Slater, transportation secretary from 1997 to 2001, are on the company's board.

Kenneth P. Rapuano, the company's president of homeland security, was recently deputy homeland security adviser in the White House, and Dobie McArthur, vice president for strategic business development and government relations, was an aide to former deputy secretary of defense Paul D. Wolfowitz and was a senior U.S. official in Iraq.

ICx declined to make executives available for comment yesterday, citing Security and Exchange Commission rules governing a quiet period around initial public offerings.

The company's decision to go public comes as firms race to capitalize on the surge in government spending on security since the terrorist attacks of Sept. 11, 2001.

Private-equity firms in particular have been investing in homeland security concerns. ICx's chief executive and president, Hans Kobler, and its chairman, Mark P. Mills, are founding partners of Greenwich, Conn., private-equity firm Digital Power Capital, an affiliate of Wexford Capital, which maintains majority control of ICx.

ICx's sales rose 187 percent from 2005 to 2006, and sales rose 38 percent in the first quarter of 2007 from the comparable quarter in 2006, according to a prospectus filed with the SEC. Revenue in 2006 was $90 million.

The company, which has been aggressively buying and selling subsidiaries, has not earned a profit. In 2006, it lost $127.5 million and said it might not make a profit for the foreseeable future.

ICx said it has spent about $150 million on research and development and is targeting new work from the Pentagon.

ICx also said it is looking to expand its sales in other markets. The company is marketing its chemical sensors to detect pesticides, and thermal cameras to inspect brakes on commercial trucks. Customers include Walt Disney Co. and Federal Express.

The government contracting industry as a whole expects slower growth in federal spending in coming years. In its prospectus, ICx said: "We are counting on significant revenues from U.S. government contractors for the foreseeable future . . . A decline in security-related government spending, or a shift away from programs we address, could hurt our sales, put pressure on our prices and reduce our revenues and margins."

ICx is headquartered in Arlington. Its senior management works in the District.


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