On Track Innovations (NASDAQ:OTIV)
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FORT LEE, N.J., Nov. 20 /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 third quarter and nine months ended September 30, 2006.
-- Revenues: $8.0 million for the three months ended September 30, 2006, a
decrease of 34% compared to $12.1 million in the same period last year.
Revenues for the first nine months of 2006 were $27.4 million, an
increase of 4% compared to $26.4 million in the same period last year.
-- Gross Margin: 43% compared to 35% in the third quarter of 2005. Gross
margin for the first nine months of 2006 was 45% compared to 35% in the
same period last year.
-- GAAP Net Loss: $(2.4) million, an increase of 14% compared to
$(2.1) million in the third quarter last year. GAAP net loss for the
first nine months of 2006 was $(6.3) million, a decrease of 7% compared
to $(6.8) million in the same period last year.
-- Non-GAAP Net Loss: $(1.7) million, a decrease of 19% compared to
$(2.1) million in the third quarter last year. Non-GAAP net loss for
the first nine months of 2006 was $(4.0) million, a 38% decrease
compared to $(6.5) million in the same period last year.
-- GAAP Loss per Share: $(0.16), compared to $(0.23) in the third quarter
of 2005. GAAP loss per share for the first nine months of 2006 was
$(0.47) compared to $(0.76) in the same period last year.
-- Non-GAAP Loss per Share: $(0.11) for the third quarter, compared to
$(0.22) for the same period last year. Non-GAAP net loss for the first
nine months of 2006, was $(0.29), compared to $(0.73) in the same
period last year.
Non-GAAP results for the third quarter and nine months of 2006 excludes the impact of SFAS 123(R) and amortization of intangible assets. Non-GAAP results for the third quarter and nine months of 2005 excludes amortization of intangible assets. Please see the attached tables for a full reconciliation of GAAP to Non-GAAP results.
"We are making good progress in our overall business," said Oded Bashan, President and CEO of OTI. "While we continued to see the effects of the protracted evaluation and validation period in the U.S. contactless payment cards market in Q3, we see no change in the positive long term outlook for this market and continue to expect acceleration of orders during 2007. All other segments of our business are tracking well and we have a strong pipeline of projects in each of our vertical markets."
Recent Developments
-- OTI to Acquire most of SuperCom's Assets
-- OTI and VeriFone demonstrated contactless reader solution at Cartes
show in Paris
-- OTI to provide USA Technologies next generation contactless payment
readers with initial orders for 10,000 readers
-- 'Yellow' Convenience Stores to distribute and add loading
infrastructure for EasyPark
-- Chevron selected OTI's EasyFuel as its petroleum payment and automated
fuel management Solution
-- OTI delivers Garanti Bank of Turkey contactless card solutions
Conference call and Webcast Information
The Company has scheduled a conference call and simultaneous Web cast for Monday, November 20, 2006, 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: 1-800-418-6860 (U.S. toll free) 1-809-245-917 (Israel toll free) 0-800-180-8316 (Germany toll free) 1-973-935-8756 (standard international) ID Code: OTI Q3 Conference call. 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 November 26th, by calling U.S.: 877-519-4471 or International; 973-341-3080 and entering the PIN number # 8126495 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: Media Relations
Galit Mendelson Adam Handelsman
Director of Corporate Communications 5W Public Relations
201 944 5200 ext. 111 212 999 5585
(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, the failure of the purchase of assets of SuperCom 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)
Nine months ended Three months ended
September 30 September 30
2006 2005 2006 2005
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues
Sales $24,754 $24,184 $7,381 $11,583
Licensing and
transaction fees 2,607 2,215 624 471
Total revenues 27,361 26,399 8,005 12,054
Cost of Revenues
Cost of sales 14,960 17,207 4,576 7,824
Total cost of revenues 14,960 17,207 4,576 7,824
Gross profit 12,401 9,192 3,429 4,230
Operating Expenses
Research and development 5,254 4,218 1,953 1,511
Less - participation by the
Office of the
Chief Scientist - 651 - 146
Research and development,
net 5,254 3,567 1,953 1,365
Selling and marketing 5,120 4,809 1,831 1,457
General and administrative 9,177 6,902 3,101 2,642
Amortization of intangible
assets 557 285 189 89
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 (122) (510) (122) -
Total operating expenses 19,986 16,821 6,952 7,321
Operating loss (7,585) (7,629) (3,523) (3,091)
Financial income, net 1,278 562 542 666
Other income, net 20 53 6 49
Loss before taxes on
income and minority
interests (6,287) (7,014) (2,975) (2,376)
Taxes on income 314 (177) 149 (133)
Minority interests 593 (79) 479 (79)
Equity in income (loss)
of affiliate (969) 5 (63) 5
Loss before extraordinary
item $(6,349) $(7,265) $(2,410) $(2,583)
Extraordinary item - 444 - 444
Net loss $(6,349) $(6,821) $(2,410) $(2,139)
Basic and diluted net loss
per ordinary share from:
Loss before extraordinary
item $ (0.47) $ (0.81) $ (0.16) $ (0.27)
Extraordinary item $ - $ 0.05 $ - $ 0.04
Net loss $ (0.47) $ (0.76) $ (0.16) $(0.23)
Weighted average number
of ordinary shares used
in computing basic and
diluted net loss per
ordinary share 13,456,869 8,985,072 15,097,867 9,495,554
* Consist of:
Research and
development $- $78 $- $78
Selling and marketing - 231 - 231
General and administrative - 1,459 - 1,459
$- $1,768 $- $1,768
ON TRACK INNOVATIONS LTD
CONDENSED NON-GAAP CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
Nine months ended Three months ended
September 30 September 30
2006 2005 2006 2005
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues
Sales $24,754 $24,184 $7,381 $11,583
Licensing and
transaction fees 2,607 2,215 624 471
Total revenues 27,361 26,399 8,005 12,054
Cost of Revenues
Cost of sales 14,949 17,207 4,572 7,824
Total cost of revenues 14,949 17,207 4,572 7,824
Gross profit 12,412 9,192 3,433 4,230
Operating Expenses
Research and development 4,456 4,218 1,709 1,511
Less - participation by the
Office of the
Chief Scientist - 651 - 146
Research and development,
net 4,456 3,567 1,709 1,365
Selling and marketing 5,022 4,809 1,804 1,457
General and administrative 8,260 6,902 2,821 2,642
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 (122) (510) (122) -
Total operating expenses 17,616 16,536 6,212 7,232
Operating loss (5,204) (7,344) (2,779) (3,002)
Financial income, net 1,278 562 542 666
Other income, net 20 53 6 49
Loss before taxes on income
and minority interests (3,906) (6,729) (2,231) (2,287)
Taxes on income 314 (177) 149 (133)
Minority interests 593 (79) 479 (79)
Equity in income (loss) of
affiliate (969) 5 (63) 5
Loss before extraordinary
item $(3,968) $(6,980) $(1,666) $(2,494)
Extraordinary item - 444 - 444
Net loss $(3,968) $(6,536) $(1,666) $(2,050)
Basic and diluted net loss
per ordinary share from:
Loss before extraordinary
item $ (0.29) $ (0.78) $ (0.11) $ (0.26)
Extraordinary item $ - $ 0.05 $ - $0.04
Net loss $ (0.29) $ (0.73) $ (0.11) $ (0.22)
Weighted average number
of ordinary shares used
in computing basic and
diluted net loss per
ordinary share 13,456,869 8,985,072 15,097,867 9,495,554
* Consist of:
Research and development $- $78 $- $78
Selling and marketing - 231 - 231
General and administrative - 1,459 - 1,459
$- $1,768 $- $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)
Nine Months
Ended
September 30, 2006
GAAP Adjustments Non-GAAP
(unaudited) (unaudited) (unaudited)
Revenues
Sales $24,754 - $24,754
Licensing and transaction fees 2,607 - 2,607
Total revenues 27,361 27,361
Cost of Revenues
Cost of sales 14,960 (11) (a) 14,949
Total cost of revenues 14,960 (11) 14,949
Gross profit 12,401 11 12,412
Operating Expenses
Research and development 5,254 (798) (a) 4,456
Selling and marketing 5,120 (98) (a) 5,022
General and administrative 9,177 (917) (a) 8,260
Amortization of intangible assets 557 (557) (b) -
Gain from sale of subsidiaries (122) - (122)
Total operating expenses 19,986 2,370 17,616
Operating loss (7,585) 2,381 (5,204)
Financial income, net 1,278 - 1,278
Other income, net 20 - 20
Loss before taxes on income and
minority interests (6,287) 2,381 (3,906)
Taxes on income 314 - 314
Minority interests 593 - 593
Equity in loss of affiliate (969) - (969)
Net loss $(6,349) $2,381 $ (3,968)
Basic and diluted net loss
per ordinary share $(0.47) $0.18 $(0.29)
Weighted average number of
ordinary shares used in
computing basic and
diluted net loss per
ordinary share 13,456,869 13,456,869
(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
September 30, 2006
GAAP Adjustments Non-GAAP
(unaudited) (unaudited) (unaudited)
Revenues
Sales $7,381 - $7,381
Licensing and transaction fees 624 - 624
Total revenues 8,005 8,005
Cost of Revenues
Cost of sales 4,576 (4) (a) 4,572
Total cost of revenues 4,576 (4) 4,572
Gross profit 3,429 4 3,433
Operating Expenses
Research and development 1,953 (244) (a) 1,709
Selling and marketing 1,831 (27) (a) 1,804
General and administrative 3,101 (280) (a) 2,821
Amortization of intangible assets 189 (189) (b) -
Gain from sale of subsidiaries (122) - (122)
Total operating expenses 6,952 740 6,212
Operating loss (3,523) 744 (2,779)
Financial income, net 542 - 542
Other income, net 6 - 6
Loss before taxes on income
and minority interests (2,975) 744 (2,231)
Taxes on income 149 - 149
Minority interests 479 - 479
Equity in loss of affiliate (63) - (63)
Net loss $(2,410) $744 $(1,666)
Basic and diluted net loss
per ordinary share $(0.16) $0.05 $(0.11)
Weighted average number of
ordinary shares used in
computing basic and
diluted net loss per
ordinary share 15,097,867 15,097,867
(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)
Nine Months Ended
September 30, 2005
GAAP Adjustments Non-GAAP
(unaudited) (unaudited) (unaudited)
Revenues
Sales $24,184 - $24,184
Licensing and transaction fees 2,215 - 2,215
Total revenues 26,399 - 26,399
Cost of Revenues
Cost of sales 17,207 - 17,207
Total cost of revenues 17,207 - 17,207
Gross profit 9,192 - 9,192
Operating Expenses
Research and development 4,218 - 4,218
Less - participation by
the Office of the
Chief Scientist 651 - 651
Research and development, net 3,567 - 3,567
Selling and marketing 4,809 - 4,809
General and administrative 6,902 - 6,902
Amortization of intangible
assets 285 (285) (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 (510) - (510)
Total operating expenses 16,821 285 16,536
Operating loss (7,629) 285 (7,344)
Financial income, net 562 - 562
Other income, net 53 - 53
Loss before taxes on income
and minority interests (7,014) 285 (6,729)
Taxes on income (177) - (177)
Minority interests (79) - (79)
Equity in income of affiliate 5 - 5
Loss before extraordinary item (7,265) - (6,980)
Extraordinary item 444 - 444
Net loss $(6,821) $285 $(6,536)
Basic and diluted net loss
per ordinary share
Loss before extraordinary item $(0.81) $0.03 $(0.78)
Extraordinary item $0.05 - $0.05
Net loss $(0.76) $0.03 $(0.73)
Weighted average number of
ordinary shares used in
computing basic and
diluted net loss per
ordinary share 8,985,072 8,985,072
* 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)
Three Months Ended
September 30, 2005
GAAP Adjustments Non-GAAP
(unaudited) (unaudited) (unaudited)
Revenues
Sales $11,583 - $11,583
Licensing and transaction fees 471 - 471
Total revenues 12,054 - 12,054
Cost of Revenues
Cost of sales 7,824 - 7,824
Total cost of revenues 7,824 - 7,824
Gross profit 4,230 - 4,230
Operating Expenses
Research and development 1,511 - 1,511
Less - participation by the
Office of the Chief Scientist 146 - 146
Research and development, net 1,365 - 1,365
Selling and marketing 1,457 - 1,457
General and administrative 2,642 - 2,642
Amortization of intangible
assets 89 (89) (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
Total operating expenses 7,321 89 7,232
Operating loss (3,091) 89 (3,002)
Financial income, net 666 - 666
Other income, net 49 49
Loss before taxes on income
and minority interests (2,376) 89 (2,287)
Taxes on income (133) - (133)
Minority interests (79) - (79)
Equity income of affiliate 5 - 5
Loss before extraordinary item (2,583) - (2,494)
Extraordinary item 444 - 444
Net loss $(2,139) $89 $(2,050)
Basic and diluted net loss
per ordinary share
Loss before extraordinary item $(0.27) $0.01 $(0.26)
Extraordinary item $0.04 - $0.04
Net loss $(0.23) $0.01 $(0.22)
Weighted average number of
ordinary shares used in
computing basic and diluted
net loss per ordinary share 9,495,554 9,495,554
* 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
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
September 30 December 31
2006 2005
(Unaudited) (Audited)
Assets
Current Assets
Cash and cash equivalents $40,144 $29,657
Short-term investments 10,017 20,004
Trade receivables (net of allowance for
doubtful accounts of $296 and $785
as of September 30, 2006 and
December 31, 2005, respectively) 7,740 8,350
Other receivables and prepaid expenses 4,055 3,156
Inventories 8,752 6,747
Total current assets 70,708 67,914
Severance Pay Deposits Fund 585 583
Long-Term Receivables 615 878
Investment in an affiliated company 1,733 2,607
Property, Plant and Equipment, Net 10,732 7,009
Intangible Assets, Net 3,948 1,921
Goodwill 5,766 4,146
Total Assets $94,087 $85,058
Liabilities and Shareholders' Equity
Current Liabilities
Short-term bank credit and current maturities
of long-term bank loans $1,703 $ 760
Trade payables 5,871 4,245
Other current liabilities 4,326 5,771
Total current liabilities 11,900 10,776
Long-Term Liabilities
Long-term loans, net of current maturities 1,333 1,535
Accrued severance pay 3,162 1,909
Deferred tax liabilities 1,070 293
Total long-term liabilities 5,565 3,737
Total liabilities 17,465 14,513
Minority interests 530 310
Shareholders' equity
Ordinary shares of NIS 0.1 par value:
authorized - 50,000,000 shares as of
September 30, 2006 and 30,000,000 as of
December 31, 2005; issued 15,556,008 and
11,932,074 shares as of September 30, 2006
and December 31, 2005, respectively;
outstanding 15,164,893 and 11,932,074
shares as of September 30, 2006 and
December 31, 2005, respectively 358 274
Additional paid-in capital 140,024 128,761
Deferred compensation - (833)
Accumulated other comprehensive income 258 232
Accumulated deficit (64,548) (58,199)
Total shareholders' equity 76,092 70,235
Total Liabilities and Shareholders' Equity $94,087 $85,058
ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands, except share and per share data)
Nine months ended September 30
2006 2005
(Unaudited) (Unaudited)
Cash flows from operating activities
Net loss $(6,349) $(6,821)
Adjustments required to reconcile net loss
to net cash used by operating activities:
Stock-based compensation related to options
and shares issued to employees and others 2,922 7,137
Gain from sale of subsidiaries (122) (510)
Equity in loss (income) of affiliate 969 (5)
Extraordinary gain in business combination - (444)
Amortization of intangible assets 557 424
Depreciation 1,218 595
Minority share in income (loss) of subsidiaries (593) 79
Accrued severance pay, net 1,251 519
Increase (decrease) in deferred tax liabilities (52) 4
Decrease (increase) in trade receivables 366 (1,761)
Decrease (increase) in other receivables and
prepaid expenses 389 (46)
Decrease in inventories (1,946) (1,402)
Increase in trade payables 1,528 417
Increase (decrease) in other current liabilities (1,043) 800
Other, net (374) (37)
Net cash used in operating activities (1,279) (1,051)
Cash flows from investing activities
Acquisition of consolidated subsidiaries,
net of cash acquired (23) 80
Proceeds from maturity of available -
for sale securities 19,079 6,603
Purchase of available-for sale securities (8,863) (16,642)
Purchase of property and equipment (3,502) (1,384)
Receipts on account of loans and receivables 261 876
Other, net (102) 22
Net cash provided by (used in) investing
activities 6,850 (10,445)
Cash flows from financing activities
Increase in short-term bank credit, net 1,024 66
Exercise of options and warrants 3,246 4,387
Repayment of long-term bank loans (430) (600)
Proceeds from minority in subsidiary 1,036 -
Net cash provided by financing activities 4,876 3,853
Effect of exchange rate changes on cash 40 (99)
Increase (decrease) in cash and
cash equivalents 10,487 (7,742)
Cash and cash equivalents at the beginning
of the period 29,657 23,917
Cash and cash equivalents at the end
of the period $40,144 $16,175
DATASOURCE: On Track Innovations Ltd.
CONTACT: Galit Mendelson, Director of Corporate Communications of OTI,
+1-201-944-5200 ext. 111, ; or Media Relations, Adam
Handelsman of 5W Public Relations, +1-212-999-5585,
Web site: http://www.otiglobal.com/