On Track Innovations (NASDAQ:OTIV)
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Six Month Revenues up 7% Compared to the Same Period Last Year
FORT LEE, N.J., Aug. 27 /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 six months and the second quarter ended June 30, 2007.
* Revenues: Revenues for the six months ended June 30, 2007 were $20.6
million, an increase of 7% compared to $19.4 million in the same period
last year. Revenues in the second quarter were $10.2 million, a
decrease of 1% compared to $10.3 million in the same period last year.
* GAAP Gross Profit: GAAP Gross Profit for the six months ended June 30,
2007 was $8.4 million, a decrease of 6% compared to $9.0 million in the
same period last year. In the second quarter GAAP gross profit was $4.4
million, a decrease of 3% compared to $4.5 million in the second
quarter of 2006. GAAP gross margin for the six months ended June 30,
2007 was 41% compared to 46% in the same period last year. GAAP gross
margin in the quarter was 43% compared to 44% in the second quarter of
2006.
* Non-GAAP Gross Profit: Non-GAAP Gross Profit was $8.4 million, for the
six months ended June 30, 2007, a decrease of 6% compared to $9.0
million in the same period last year. Non-GAAP Gross Profit for the
second quarter of 2007 was $4.4 million, a decrease of 2% compared to
$4.5 million in the second quarter of 2006. Non-GAAP gross margin for
the six months ended June 30, 2007 was 41% compared to 46% in the same
period last year. Non-GAAP gross margin in the second quarter was 43%
compared to 44% in the second quarter of 2006.
* GAAP Net Loss: GAAP Net Loss for the six months ended June 30, 2007 was
$(7.3) million, an increase of 85% compared to $(3.9) million in the
same period last year. GAAP net loss for the second quarter of 2007 was
$(3.2) million, an increase of 61% compared to $(2.0) million in the
second quarter last year.
* Non-GAAP Net Loss: Non-GAAP Net Loss for the six months ended June 30,
2007 was $(4.3) million, an increase of 112% compared to $(2.0) million
in the same period last year. Non-GAAP net loss for the second quarter
of 2007 was $(1.8) million an increase of 99% compared to $(928,000) in
the second quarter last year.
* GAAP Loss per Share: GAAP Loss per Share for the six months ended June
30, 2007 was $(0.39) compared to $(0.31) in the same period last year.
GAAP loss per share for the second quarter of 2007 was $(0.17),
compared to $(0.15) in the second quarter of 2006.
* Non-GAAP Loss per Share: Non-GAAP Loss per Share for the six months
ended June 30, 2007 was $(0.23) compared to $(0.16) in the same period
last year. Non-GAAP loss per share for the second quarter of 2007 was
$(0.10), compared to $(0.07) in the second quarter of 2006.
* Strong Balance Sheet: Total assets were at $117.3 million with cash
equivalent and short term investments totaling $44.1 million.
Non-GAAP results for the second quarter and six months period of 2007 and 2006 exclude the impact of SFAS 123(R) and amortization of intangible assets. Please see the attached table for a full reconciliation of GAAP to Non-GAAP results.
"The first half revenues are in accordance with our initial expectations," said Oded Bashan, Chairman and CEO of OTI. "As we stated last quarter, we are expecting a stronger second half, with most of the growth realized towards the end of 2007."
Conference call and Webcast Information
The Company has scheduled a conference call and simultaneous Web cast for Monday, August 27, 2007, which will be hosted by Oded Bashan, Chairman and CEO, Ohad Bashan, President, and Guy Shafran, CFO, for 09:00 AM EDT to discuss operating results and future outlook. To participate, call: 1-866-491-4244 (U.S. toll free) 180-924-5917 (Israel toll free) 0-800-180-8316 (Germany toll free) 1-973-582-2815 (standard international) ID Code: OTI Q2 2007 Results 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 September 3rd, by calling U.S.: 877-519-4471 or International; 973-341-3080 and entering the PIN number #9133176 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/, the content of which is not part of this press release
OTI Contact: Investor Relations:
Galit Mendelson Miri Segal
Director of Corporate Communications Strategic Growth International
201 944 5200 ext. 111 212 838 1444
(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, such as those regarding a stronger second half, with most of the growth realized towards the end of 2007. Forward-looking statements could be impacted by 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, 2006, 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. Except as otherwise provided by law, 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)
Six months ended June 30 Three months ended June 30
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues
Sales $ 19,289 $ 17,373 $ 9,791 $ 9,356
Licensing
and transaction
fees 1,325 1,983 448 945
Total revenues 20,614 19,356 10,239 10,301
Cost of Revenues
Cost of sales 12,207 10,384 5,865 5,811
Total cost of
revenues 12,207 10,384 5,865 5,811
Gross profit 8,407 8,972 4,374 4,490
Operating Expenses
Research and
development 5,153 3,301 2,559 1,473
Selling and
marketing 4,061 3,289 2,189 1,860
General and
administrative 7,047 6,076 3,239 2,930
Amortization of
intangible assets 657 368 329 182
Total operating
expenses 16,918 13,034 8,316 6,445
Operating loss (8,511) (4,062) (3,942) (1,955)
Financial income,
net 1,191 736 594 410
Other income
(expense), net (111) 14 - (5)
Loss before taxes
on income and
minority interests (7,431) (3,312) (3,348) (1,550)
Taxes on income 131 165 65 176
Minority interest 190 114 148 107
Equity in loss of
affiliate (162) (906) (42) (710)
Net loss (7,272) (3,939) (3,177) (1,977)
Basic and diluted
net loss per
ordinary share $ (0.39) $ (0.31) $ (0.17) $ (0.15)
Weighted average
number of
ordinary
shares used in
computing basic
and diluted net
loss per
ordinary
share 18,641,927 12,641,778 18,942,626 12,905,557
ON TRACK INNOVATIONS LTD
RECONCILIATION BETWEEN GAAP TO NON-GAAP
STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
Six months ended
June 30, 2007
GAAP Adjustments Non-GAAP
Revenues
Sales $ 19,289 - $ 19,289
Licensing and
transaction fees 1,325 - 1,325
Total revenues 20,614 20,614
Cost of Revenues
Cost of sales 12,207 (24) (a) 12,183
Total cost of revenues 12,207 (24) 12,183
Gross profit 8,407 24 8,431
Operating Expenses
Research and development 5,153 (1,061) (a) 4,092
Selling and marketing 4,061 (168) (a) 3,893
General and
administrative 7,047 (1,038) (a) 6,009
Amortization of
intangible assets 657 (657) (b) 0
Total operating
expenses 16,918 (2,924) 13,994
Operating loss (8,511) 2,948 (5,563)
Financial income, net 1,191 - 1,191
Other expenses, net (111) - (111)
Loss before taxes on
income and minority
interests (7,431) 2,948 (4,483)
Taxes on income 131 - 131
Minority interests 190 - 190
Equity in loss of an
affiliate (162) - (162)
Net loss $ (7,272) $ 2,948 $ (4,324)
Basic and diluted net
loss per ordinary
share $ (0.39) $ 0.16 $ (0.23)
Weighted average
number of ordinary
shares used in
computing basic
and diluted
net loss per
ordinary share 18,641,927 18,641,927
(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
June 30, 2007
GAAP Adjustments Non-GAAP
Revenues
Sales $ 9,791 - $ 9,791
Licensing and
transaction fees 448 - 448
Total revenues 10,239 10,239
Cost of Revenues
Cost of sales 5,865 (13) (c) 5,852
Total cost of
revenues 5,865 (13) 5,852
Gross profit 4,374 13 4,387
Operating Expenses
Research and
development 2,559 (574) (c) 1,985
Selling and
marketing 2,189 (96) (c) 2,093
General and
administrative 3,239 (319) (c) 2,920
Amortization of
intangible assets 329 (329) (d) 0
Total operating
expenses 8,316 (1,318) 6,998
Operating loss (3,942) 1,331 (2,611)
Financial income,
net 594 - 594
Other expenses, net - - -
Loss before taxes
on income and
minority interests (3,348) 1,331 (2,017)
Taxes on income 65 - 65
Minority interests 148 - 148
Equity in loss of
an affiliate (42) - (42)
Net loss $ (3,177) $ 1,331 $ (1,846)
Basic and diluted
net loss
per ordinary
share $ (0.17) $ 0.07 $ (0.10)
Weighted average
number of ordinary
shares used in
computing basic
and diluted net
loss per
ordinary
share 18,942,626 18,942,626
(c) 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.
(d) 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)
Six Months Ended
June 30, 2006
GAAP Adjustments Non-GAAP
(unaudited) (unaudited) (unaudited)
Revenues
Sales $17,373 - $17,373
Licensing and
transaction fees 1,983 - 1,983
Total revenues 19,356 19,356
Cost of Revenues
Cost of sales 10,384 (8) (a) 10,376
Total cost of
revenues 10,384 (8) 10,376
Gross profit 8,972 8 8,980
Operating Expenses
Research and
development 3,301 (642) (a) 2,659
Selling and
marketing 3,289 (240) (a) 3,049
General and
administrative 6,076 (639) (a) 5,437
Amortization of
intangible assets 368 (368) (b) -
Total operating
expenses 13,034 (1,889) 11,145
Operating loss (4,062) 1,897 (2,165)
Financial income,
net 736 - 736
Other income, net 14 - 14
Loss before taxes on
income and minority
interests (3,312) 1,897 (1,415)
Taxes on income 165 - 165
Minority interest 114 - 114
Equity in loss of
affiliate (906) - (906)
Net loss $(3,939) $1,897 $ (2,042)
Basic and diluted
net loss
per ordinary
share $ (0.31) $ 0.15 $ (0.16)
Weighted average
number of ordinary
shares used in
computing basic
and diluted net
loss per ordinary
share 12,641,778 12,641,778
(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
June 30, 2006
GAAP Adjustments Non-GAAP
(unaudited) (unaudited) (unaudited)
Revenues
Sales $9,356 - $9,356
Licensing and
transaction fees 945 - 945
Total revenues 10,301 10,301
Cost of Revenues
Cost of sales 5,811 (4) (c) 5,807
Total cost of
revenues 5,811 (4) 5,807
Gross profit 4,490 4 4,494
Operating Expenses
Research and
development 1,473 (358) (c) 1,115
Selling and
marketing 1,860 (198) (c) 1,662
General and
administrative 2,930 (307) (c) 2,623
Amortization of
intangible assets 182 (182) (d) -
Total operating
expenses 6,445 (1,045) 5,400
Operating loss (1,955) 1,049 (906)
Financial income,
net 410 - 410
Other income, net (5) - (5)
Loss before taxes on
income and minority
interests (1,550) 1,049 (501)
Taxes on income 176 - 176
Minority interest 107 - 107
Equity in loss of
affiliate (710) - (710)
Net loss $(1,977) $1,049 $(928)
Basic and diluted
net loss
per ordinary
share $ (0.15) $ 0.08 $ (0.07)
Weighted average
number of ordinary
shares used in
computing basic
and diluted net
loss per
ordinary share 12,905,557 12,905,557
(c) 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.
(d) The effect of amortization of intangible assets.
ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
June 30 December 31
2007 2006
(Unaudited) (Audited)
Assets
Current assets
Cash and cash equivalents $ 8,914 $ 30,049
Short-term investments 35,197 18,232
Trade receivables (net of allowance for
doubtful accounts of $213 and $234
as of June 30, 2007 and December 31,
2006, respectively) 9,555 10,155
Other receivables and prepaid expenses 2,457 2,109
Inventories 11,704 10,344
Total current assets 67,827 70,889
Severance pay deposits fund 1,084 1,087
Long-term receivables 873 1,043
Investment in an affiliated company 1,506 1,627
Property, plant and equipment, net 17,423 13,318
Intangible assets, net 5,185 5,823
Goodwill 23,387 23,387
Total assets $117,285 $117,174
ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
June 30 December 31
2007 2006
(Unaudited) (Audited)
Liabilities and shareholders' equity
Current liabilities
Short-term bank credit and current
maturities of long-term bank loans $1,502 $498
Trade payables 6,531 6,869
Other current liabilities 3,874 3,331
Total current liabilities 11,907 10,698
Long-term liabilities
Long-term loans, net of current maturities 1,950 2,117
Accrued severance pay 3,409 3,209
Deferred tax liabilities 860 992
Total long-term liabilities 6,219 6,318
Total liabilities 18,126 17,016
Minority interests 828 1,004
Shareholders' equity
Ordinary shares of NIS 0.1 par value:
authorized - 50,000,000 shares as of
June 30, 2007 and December 31, 2006;
issued 19,246,508 and 18,592,880 shares
as of June 30, 2007 and December 31, 2006,
respectively; outstanding 19,011,810
and 18,243,539 shares as of
June 30, 2007 and December 31, 2006,
respectively 445 431
Additional paid-in capital 169,352 163,102
Accumulated other comprehensive income 609 424
Accumulated deficit (72,075) (64,803)
Total shareholders' equity 98,331 99,154
Total Liabilities and Shareholders' Equity $117,285 $117,174
ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands, except share and per share data)
Six months ended June 30
2007 2006
(Unaudited) (Unaudited)
Cash flows from operating activities
Net loss $(7,272) $(3,939)
Adjustments required to reconcile net loss to
net cash provided By (used in) operating activities:
Stock-based compensation related to options and
shares issued to employees and others 2,693 1,834
Equity in loss of affiliate 162 906
Amortization of intangible assets 657 368
Depreciation 1,184 814
Minority interests (190) (114)
Accrued severance pay, net 203 771
Increase (decrease) in deferred tax liabilities (132) 2
Decrease in trade receivables 711 1,109
Decrease (increase) in other receivables and
prepaid expenses (347) 894
Increase in inventories (1,279) (465)
Increase (decrease) in trade payables (408) 1,139
Increase (decrease) in other current liabilities 514 (1,850)
Other, net (341) (397)
Net cash provided by (used in) operating
activities (3,845) 1,072
Cash flows from investing activities
Acquisition of a consolidated subsidiary, net
of cash acquired - (23)
Proceeds from maturity of available-for
sale securities 33,294 19,001
Purchase of available-for sale securities (49,941) (8,622)
Purchase of property and equipment (1,631) (2,661)
Receipts on account of loans and receivables 160 173
Other, net (19) 3
Net cash provided by (used in) investing
activities (18,137) 7,871
Cash flows from financing activities
Increase in short-term bank credit, net 1,018 823
Repayment of long-term bank loans (208) (376)
Proceeds from minority in subsidiary - 1,941
Exercise of options and warrants 5 3,234
Net cash provided by financing activities 815 5,622
Effect of exchange rate changes on cash 32 2
Increase (decrease) in cash and cash
equivalents (21,135) 14,567
Cash and cash equivalents at the
beginning of the period 30,049 29,657
Cash and cash equivalents at the
end of the period $8,914 $44,224
DATASOURCE: On Track Innovations Ltd.
CONTACT: Galit Mendelson, Director of Corporate Communications of On
Track Innovations Ltd., +1-201-944-5200, Ext. 111, ; or
Investors, Miri Segal of Strategic Growth International, +1-212-838-1444,
Web site: http://www.otiglobal.com/