On Track Innovations (NASDAQ:OTIV)
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- Annual revenues of $40.6 million; gross margin increased to 46% from 39% in 2005
FORT LEE, N.J., March 5 /PRNewswire-FirstCall/ -- On Track Innovations Ltd. (OTI) (NASDAQ:OTIV), a global leader in contactless microprocessor-based smart card solutions for homeland security, payments, petroleum payments and other applications, today announced its consolidated financial results for the fourth quarter and fiscal year ended December 31, 2006.
- Revenues: Revenues for the year ended December 31, 2006 were $40.6
million, an increase of 14% compared to $35.7 million in the same
period last year. Revenues for the fourth quarter reached $13.2
million, an increase of 42% compared to $9.3 million in the same period
last year.
- Gross Margin: Gross margin for the year ended December 31, 2006 was 46%
compared to 39% in the same period last year. Gross margin for the
fourth quarter was 48% compared to 52% in the fourth quarter of 2005.
- GAAP Net Income (Loss): GAAP net loss for the year decreased to $(6.6)
million from $(9.1) million in the same period last year. GAAP net loss
for the fourth quarter was $(0.3) million, a substantial decrease
compared to $(2.3) million in the fourth quarter last year.
- Non-GAAP Net Income (Loss): Non-GAAP net loss for the year ended
December 31, 2006 was $(3.4) million, a substantial decrease compared
to $(8.4) million in the same period last year. Non GAAP net income for
the fourth quarter was $0.5 million compared to a net loss of $(1.9)
million in the fourth quarter last year.
- GAAP Net Income (Loss) per Share: GAAP loss per share for the year was
$(0.47) compared to $(0.96) in the same period last year. GAAP loss per
share for the fourth quarter was $(0.02), compared to $(0.22) in the
fourth quarter of 2005.
- Non-GAAP Income (Loss) per Share: Non-GAAP net loss per share for the
year was $(0.25), compared to $(0.88) in the same period last year.
Non-GAAP net income per share for the fourth quarter was $0.03 compared
to a net loss per share of $(0.18) for the same period last year.
- Strong Balance Sheet with cash, equivalents and short term investment
totaling $48.3 Million.
- GAAP operating expenses: GAAP operating expenses for the year were
$26.8 million compared to $24.2 million for the same period last year.
GAAP operating expenses for the fourth quarter were $6.8 million
compared to $7.3 million for the same period last year.
- Non-GAAP Operating Expenses: $ 23.6 million for the year ended December
31, 2006 compared to $23.5 million for the same period last year. Non-
GAAP operating expenses for the fourth quarter were $6.0 million
compared to $6.9 million in the same period last year.
Non-GAAP results for the fourth quarter and fiscal year ended December 31, 2006 excludes the impact of SFAS 123(R) and amortization of intangible assets. Non-GAAP results for the fourth quarter and fiscal year of 2005 excludes amortization of intangible assets. Please see the attached tables for a full reconciliation of GAAP to Non-GAAP results.
Commenting on the results, Oded Bashan, Chairman, President & CEO of OTI, said, "We are pleased with the company results in 2006, we had good revenue performance, improved gross margin, which, together with our ability to control operating expenses on a Non-GAAP basis, enabled us to significantly reduce our GAAP loss and achieve a net profit on a non-GAAP basis. The modest decline in cash primarily reflects the need to invest in working capital to support large projects in hand and future growth.
"Looking ahead, we believe the two strategic acquisitions we completed during 2006 will enhance our capabilities in both the payments and ID markets and position us to increase market share and expand the number of opportunities. The primary impact of the SuperCom IPS assets acquisition will occur in the second half of 2007.
"While quarter to quarter lumpiness is characteristic of the early-stage markets in which we participate, we see no major changes in business conditions in any of our vertical markets and we expect to achieve our long term growth trend of 20%-25% for 2007, we expect the second half to be significantly stronger than the first half and growth to be driven mainly by the petroleum and ID markets as well as expansion in the payment markets."
Conference call and Webcast Information
The Company has scheduled a conference call and simultaneous Web cast for Monday, March 5, 2007, which will be hosted by Oded Bashan, President and CEO, Guy Shafran, CFO, and Ohad Bashan, Chief Marketing Officer and President OTI America, for 9:00 AM EST to discuss operating results and future outlook. To participate, call: 1-888-868-9083 (U.S. toll free), 1-809-245-917 (Israel toll free), 0-800-180-8316 (Germany toll free), 1-973-935-8512 (Standard international).
To attend the Web cast, use the following links: http://www.otiglobal.com/content.aspx?id=226
For those unable to participate, the teleconference will be available for replay until midnight March 11th, by calling U.S/: 877-519-4471 or International; 973-341-3080 and entering the PIN number # 8503799 or on the web at: http://www.otiglobal.com/content.aspx?id=226
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, OTI uses non-GAAP measures of gross profit, net income and earnings per share, which are adjustments from results based on GAAP to exclude non-cash equity-based compensation charges in accordance with SFAS 123(R) and amortization of intangible assets. OTI management believes the non-GAAP financial information provided in this release provides meaningful supplemental information regarding our performance and enhances the understanding of the Company's on-going economic performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in evaluating and operating the business and as such deemed it important to provide all this information to investors.
About OTI
Established in 1990, OTI (NASDAQ:OTIV) designs, develops and markets secure contactless microprocessor-based smart card technology to address the needs of a wide variety of markets. Applications developed by OTI include product solutions for petroleum payment systems, homeland security solutions, electronic passports and IDs, payments, mass transit ticketing, parking and loyalty programs. OTI has a global network of regional offices to market and support its products. The company was awarded the Frost & Sullivan 2005 and
2006 Company of the Year Award in the field of smart cards. For more information on OTI, visit http://www.otiglobal.com/.
OTI Contact:
Galit Mendelson
Director of Corporate Communications
201 944 5200 ext. 111
(TABLES TO FOLLOW)
Safe Harbor for Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws. Whenever we use words such as "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions, we are making forward-looking statements. Because such statements deal with future events and are based on OTI's current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of OTI could differ materially from those described in or implied by the statements in this press release. For example, forward-looking statements include statements regarding our goals, beliefs, future growth strategies, objectives, plans or current expectations. Forward-looking statements could be impacted by the effects of the protracted evaluation and validation period in the U.S. contactless payment cards market , our inability to successfully integrate the purchase of assets of SuperCom or to otherwise achieve the expected benefits of the acquisition, to close to due a failure to satisfy closing conditions, market acceptance of new and existing products and our ability to execute production on orders, as well as the other risk factors discussed in OTI's Annual Report on Form 20-F for the year ended December 31, 2005, which is on file with the Securities and Exchange Commission. Although OTI believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved. OTI disclaims any intention or obligation to update or revise any forward-looking statements, which speak only as of the date hereof, whether as a result of new information, future events or circumstances or otherwise.
ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
Year ended Three months ended
December 31 December 31
2006 2005 2006 2005
Revenues
Sales $35,171 $32,266 $10,417 $8,082
Licensing and
transaction fees 5,382 3,398 2,775 1,183
Total revenues 40,553 35,664 13,192 9,265
Cost of Revenues
Cost of sales 21,871 21,629 6,911 4,422
Total cost of revenues 21,871 21,629 6,911 4,422
Gross profit 18,682 14,035 6,281 4,843
Operating Expenses
Research and development 7,065 5,405 1,811 1,187
Less - participation by
the Office of the
Chief Scientist - 618 - (33)
Research and development,
net 7,065 4,787 1,811 1,220
Selling and marketing 7,072 7,620 1,952 2,811
General and
administrative 11,948 9,666 2,771 2,764
Amortization of
intangible assets 821 700 264 415
Expenses relating to
raising of capital,
exchange of subsidiary's
employees equity interests
in equity interest of
the company and new
acquisitions in the
Far East* - 1,768 - -
Loss (Gain) from sale
of subsidiaries (122) (374) - 136
Total operating
expenses 26,784 24,167 6,798 7,346
Operating loss (8,102) (10,132) (517) (2,503)
Financial income, net 1,712 669 434 107
Other expenses, net (75) (84) (95) (137)
Loss before taxes on
income and minority
interests (6,465) (9,547) (178) (2,533)
Tax on income 323 175 9 352
Minority interests 625 (185) 32 (106)
Equity in loss of
affiliate (1,087) - (118) (5)
Loss before
extraordinary item $(6,604) $(9,557) $(255) $(2,292)
Extraordinary item - 444 - -
Net loss $(6,604) $(9,113) $(255) $(2,292)
Basic and diluted
net loss per ordinary
share from:
Loss before
extraordinary item $ (0.47) $ (1.01) $ (0.02) $ (0.22)
Extraordinary item $ - $ 0.05 $- $-
Net loss $ (0.47) $ (0.96) $ (0.02) $ (0.22)
Weighted average number
of ordinary shares
used in computing
basic and diluted
net loss per
ordinary share 13,919,958 9,512,198 15,309,225 10,403,971
* Consist of:
Research and
development $- $78 $- $-
Selling and marketing - 231 - -
General and
administrative - 1,459 - -
$- $1,768 $- $-
ON TRACK INNOVATIONS LTD
CONDENSED NON-GAAP CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
Year ended Three months ended
December 31 December 31
2006 2005 2006 2005
Revenues
Sales $35,171 $32,266 $10,417 $8,802
Licensing and
transaction fees 5,382 3,398 2,775 1,183
Total revenues 40,553 35,664 13,192 9,265
Cost of Revenues
Cost of sales 21,856 21,629 6,907 4,422
Total cost of revenues 21,856 21,629 6,907 4,422
Gross profit 18,697 14,035 6,285 4,843
Operating Expenses
Research and development 6,019 5,405 1,563 1,187
Less - participation by
the Office of the Chief
Scientist - 618 - (33)
Research and development,
net 6,019 4,787 1,563 1,220
Selling and marketing 6,957 7,620 1,935 2,811
General and
administrative 10,769 9,666 2,509 2,764
Expenses relating to
raising of capital,
exchange of subsidiary's
employees equity
interests in equity
interest of the company
and new acquisitions
in the Far East* - 1,768 - -
Gain (Loss) from sale
of subsidiaries (122) (374) - 136
Total operating
expenses 23,623 23,467 6,007 6,931
Operating Gain (loss) (4,926) (9,432) 278 (2,088)
Financial income, net 1,712 669 434 107
Other expenses, net (75) (84) (95) (137)
Gain (Loss) before taxes
on income and
minority interests (3,289) (8,847) 617 (2,118)
Tax on income 323 175 9 352
Minority interests 625 (185) 32 (106)
Equity in loss
of affiliate (1,087) - (118) (5)
Gain (Loss) before
extraordinary item $(3,428) $(8,857) $540 $(1,877)
Extraordinary item - 444 - -
Net gain (loss) $(3,428) $(8,413) $540 $(1,877)
Basic and diluted
net loss per
ordinary share from:
Gain (loss) before
extraordinary item $ (0.25) $ (0.93) $0.03 $ (0.18)
Extraordinary item $ - $ 0.05 $ - $-
Net income (loss) $ (0.25) $ (0.88) $0.03 $ (0.18)
Weighted average number
of ordinary shares used
in computing net income
(loss) per ordinary
share -
Basic 13,919,958 9,512,198 15,309,225 10,403,971
Dilutive 13,919,958 9,512,198 15,978,747 10,403,971
* Consist of:
Research and
development $- $78 $- $-
Selling and marketing - 231 - -
General and
administrative - 1,459 - -
$- $1,768 $- $-
See next tables for full reconciliation of GAAP to Non-GAAP results.
ON TRACK INNOVATIONS LTD
RECONCILIATION BETWEEN GAAP TO NON-GAAP
STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
Year ended December
31, 2006
GAAP Adjustments Non-GAAP
Revenues
Sales $35,171 - $35,171
Licensing and transaction fees 5,382 - 5,382
Total revenues 40,553 40,553
Cost of Revenues
Cost of sales 21,871 (15) (a) 21,856
Total cost of revenues 21,871 (15) 21,856
Gross profit 18,682 15 18,697
Operating Expenses
Research and development 7,065 (1,046) (a) 6,019
Selling and marketing 7,072 (115) (a) 6,957
General and administrative 11,948 (1,179) (a) 10,769
Amortization of intangible assets 821 (821) (b) -
Gain from sale of subsidiaries (122) - (122)
Total operating expenses 26,784 3,161 23,623
Operating loss (8,102) 3,176 (4,926)
Financial income, net 1,712 - 1,712
Other expenses, net (75) - (75)
Loss before taxes on income
and minority interests (6,465) 3,176 (3,289)
Taxes on income 323 - 323
Minority interests 625 - 625
Equity in loss of affiliate (1,087) - (1,087)
Net loss $(6,604) $3,176 $ (3,428)
Basic and diluted net loss
per ordinary share $(0.47) $0.22 $(0.25)
Weighted average number of
ordinary shares used in
computing basic and diluted
net loss per ordinary share 13,919,958 13,919,958
(a) The effect of stock-based compensation. The Company adopted the
provisions of Statement of Financial Accounting Standards No. 123(R),
"Share-Based Payment" on January 1, 2006 using the modified-
prospective transition method.
(b) The effect of amortization of intangible assets.
ON TRACK INNOVATIONS LTD
RECONCILIATION BETWEEN GAAP TO NON-GAAP
STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
Three months
ended
December 31, 2006
GAAP Adjustments Non-GAAP
Revenues
Sales $10,417 - $10,417
Licensing and transaction fees 2,775 - 2,775
Total revenues 13,192 13,192
Cost of Revenues
Cost of sales 6,911 (4) (a) 6,907
Total cost of revenues 6,911 (4) 6,907
Gross profit 6,281 4 6,285
Operating Expenses
Research and development 1,811 (248) (a) 1,563
Selling and marketing 1,952 (17) (a) 1,935
General and administrative 2,771 (262) (a) 2,509
Amortization of intangible assets 264 (264) (b) -
Total operating expenses 6,798 791 6,007
Operating gain (loss) (517) 795 278
Financial income, net 434 - 434
Other expenses, net (95) - (95)
Gain (Loss) before taxes on income
and minority interests (178) 795 617
Tax on income 9 - 9
Minority interests 32 - 32
Equity in loss of affiliate (118) - (118)
Net Income(loss) $(255) $795 $540
Basic and diluted net income
(loss) per ordinary share $(0.02) $0.05 $0.03
Weighted average number of
ordinary shares used in
computing basic net loss
per ordinary share 15,309,225 15,309,225
Weighted average number of
ordinary shares used in
computing diluted net loss
per ordinary share 15,978,747 15,978,747
(a) The effect of stock-based compensation. The Company adopted the
provisions of Statement of Financial Accounting Standards No. 123(R),
"Share-Based Payment" on January 1, 2006 using the modified-
prospective transition method.
(b) The effect of amortization of intangible assets.
ON TRACK INNOVATIONS LTD
RECONCILIATION BETWEEN GAAP TO NON-GAAP
STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
Year ended
December 31, 2005
GAAP Adjustments Non-GAAP
Revenues
Sales $32,266 - $32,266
Licensing and transaction fees 3,398 - 3,398
Total revenues 35,664 - 35,664
Cost of Revenues
Cost of sales 21,629 - 21,629
Total cost of revenues 21,629 - 21,629
Gross profit 14,035 - 14,035
Operating Expenses
Research and development 5,405 - 5,405
Less - participation by the
Office of the Chief Scientist 618 - 618
Research and development, net 4,787 - 4,787
Selling and marketing 7,620 - 7,620
General and administrative 9,666 - 9,666
Amortization of intangible assets 700 (700) (b) -
Expenses relating to raising
of capital, exchange of
subsidiary's employees equity
interests in equity interest of
the company and new acquisitions
in the Far East* 1,768 - 1,768
Gain from sale of subsidiaries (374) - (374)
Total operating expenses 24,167 700 23,467
Operating loss (10,132) 700 (9,432)
Financial income, net 669 - 669
Other expenses, net (84) - (84)
Loss before taxes on income and
minority interests (9,547) 700 (8,847)
Tax on income 175 - 175
Minority interests (185) - (185)
Loss before extraordinary item (9,557) - (8,857)
Extraordinary item 444 - 444
Net loss $(9,113) $700 $(8,413)
Basic and diluted net loss
per ordinary share
Loss before extraordinary item $(1.01) $0.07 $(0.93)
Extraordinary item $0.05 - $0.05
Net loss $(0.96) $0.07 $(0.88)
Weighted average number of
ordinary shares used in
computing basic and diluted
net loss per ordinary share 9,512,198 9,512,198
* Consist of:
Research and development $78
Selling and marketing 231
General and administrative 1,459
$1,768
(b) The effect of amortization of intangible assets.
ON TRACK INNOVATIONS LTD
RECONCILIATION BETWEEN GAAP TO NON-GAAP
STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
GAAP Three Months Ended Non-GAAP
December 31, 2005
Adjustments
Revenues
Sales $8,802 - $8,802
Licensing and transaction fees 1,183 - 1,183
Total revenues 9,265 - 9,265
Cost of Revenues
Cost of sales 4,422 - 4,422
Total cost of revenues 4,422 - 4,422
Gross profit 4,843 - 4,843
Operating Expenses
Research and development 1,187 - 1,187
Less - participation by the
Office of the Chief Scientist (33) - (33)
Research and development, net 1,220 - 1,220
Selling and marketing 2,811 - 2,811
General and administrative 2,764 - 2,764
Amortization of intangible
assets 415 (415) (b) -
Loss from sale of subsidiaries 136 136
Total operating expenses 7,346 (415) 6,931
Operating loss (2,503) 415 (2,088)
Financial income, net 107 - 107
Other expenses, net (137) (137)
Loss before taxes on income
and minority interests (2,533) 415 (2,118)
Tax on income 352 - 352
Minority interests (106) - (106)
Equity loss of affiliate (5) - (5)
Net loss $(2,292) $415 $(1,877)
Basic and diluted net loss
per ordinary share $(0.22) $0.04 $(0.18)
Weighted average number of
ordinary shares used in
computing basic and
diluted net loss per
ordinary share 10,403,971 10,403,971
(b) The effect of amortization of intangible assets.
ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
December 31 December 31
2006 2005
Assets
Current Assets
Cash and cash equivalents $30,049 $29,657
Short-term investments 18,232 20,004
Trade receivables (net of allowance for
doubtful accounts of $234 and $785 as of
December 31, 2006 and December 31, 2005,
respectively) 10,155 8,350
Other receivables and prepaid expenses 2,109 3,156
Inventories 10,344 6,747
Total current assets 70,889 67,914
Severance Pay Deposits Fund 1,087 583
Long-Term Receivables 1,043 878
Investment in an affiliated company 1,627 2,607
Property, Plant and Equipment, Net 13,318 7,009
Intangible Assets, Net 5,823 1,921
Goodwill 23,387 4,146
Total Assets $117,174 $85,058
Liabilities and Shareholders' Equity
Current Liabilities
Short-term bank credit and current
maturities of long-term bank loans $498 $ 760
Trade payables 6,869 4,245
Other current liabilities 3,331 5,771
Total current liabilities 10,698 10,776
Long-Term Liabilities
Long-term loans, net of current maturities 2,117 1,535
Accrued severance pay 3,209 1,909
Deferred tax liabilities 992 293
Total long-term liabilities 6,318 3,737
Total liabilities 17,016 14,513
Minority interests 1,004 310
Shareholders' equity
Ordinary shares of NIS 0.1 par value:
authorized - 50,000,000 shares as of
December 31, 2006 and 30,000,000 as of
December 31, 2005; issued 18,592,880 and
11,932,074 shares as of December 31, 2006
and December 31, 2005, respectively;
outstanding 18,243,539 and 11,932,074 shares
as of December 31, 2006 and December 31,
2005, respectively 431 274
Additional paid-in capital 163,102 128,761
Deferred compensation - (833)
Accumulated other comprehensive income 424 232
Accumulated deficit (64,803) (58,199)
Total shareholders' equity 99,154 70,235
Total Liabilities and Shareholders' Equity $117,174 $85,058
ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands, except share and per share data)
Year ended December, 31
2006 2005
Cash flows from operating activities
Net loss $(6,604) $(9,113)
Adjustments required to reconcile net loss
to net cash used in operating activities:
Stock-based compensation related to options
and shares issued to employees and others 3,783 9,841
Extraordinary item - (444)
Gain from sale of subsidiaries (122) (374)
Loss (gain) on sale of property and equipment 44 (20)
Amortization of intangible assets 821 700
Depreciation 1,862 981
Equity in net losses of an affiliated company 1,087 -
Accrued severance pay, net 796 560
Minority share in income (loss) of subsidiaries (625) (185)
Accrued interest and linkage differences on
long-term loans (254) 67
Increase (decrease) in deferred tax liabilities (216) 13
Decrease in short-term investments - -
Increase in trade receivables (2,424) (587)
Decrease (increase) in other receivables and
prepaid expenses 1,142 (1,168)
Increase in inventories (3,204) (987)
Increase (decrease) in trade payables 2,558 (1,119)
Increase (decrease) in other current
liabilities (2,147) 895
Net cash used in operating activities (3,503) (940)
Cash flows from investing activities
Receipts on account of loans and receivables 350 909
Acquisition of business operations, net of
cash acquired (Supplement C) (23) 80
Sale of a consolidated subsidiary, net of
cash disposed of (Supplement D) (105) -
Investment in an affiliated company - (2,444)
Purchase of property and equipment (3,107) (1,918)
Purchase of available-for-sale securities (23,643) (17,875)
Proceeds from maturity of available-for-sale
securities 25,446 2,431
Other, net (9) 20
Net cash used in investing activities (1,091) (18,797)
Cash flows from financing activities
Increase (decrease) in short-term bank
credit, net (231) (630)
Proceeds from issuance of shares and
detachable warrants, net of issuance expenses - 20,051
Proceeds from long-term bank loans 978 -
Repayment of long-term bank loans (570) (721)
Proceeds from minority in subsidiary 1,548 -
Proceeds from exercise of options and
warrants, net 3,196 6,709
Net cash provided by financing activities 4,921 25,409
Effect of exchange rate changes on cash 65 68
Increase in cash and cash equivalents 392 5,740
Cash and cash equivalents at the beginning
of the year 29,657 23,917
Cash and cash equivalents at the
end of the year $30,049 $29,657
DATASOURCE: On Track Innovations Ltd.
CONTACT: Galit Mendelson, Director of Corporate Communications of On
Track Innovations Ltd., +1-201-944-5200 ext. 111, or
Web site: http://www.otiglobal.com/
http://www.otiglobal.com/content.aspx?id=226