Image Sensing Systems Reports Sixth Consecutive Year of Record Financial Results

SAINT PAUL, Minn., Feb. 28 /PRNewswire-FirstCall/ -- Image Sensing Systems, Inc. (ISS) (Nasdaq: ISNS) announced today its sixth consecutive year of record financial results. On a comparative non-GAAP basis to 2006, without taking into account the...


SAINT PAUL, Minn., Feb. 28 /PRNewswire-FirstCall/ -- Image Sensing Systems, Inc. (ISS) (Nasdaq: ISNS) announced today its sixth consecutive year of record financial results. On a comparative non-GAAP basis to 2006, without taking into account the impact of the operations related to the assets purchased from EIS Electronic Integrated Systems Inc. ("EIS") from December 7, 2007 through year-end or the impact of EIS purchase price allocation accounting, which are required under U.S. generally accepted accounting principles, consistently applied ("GAAP"), non-GAAP net income for fiscal year end December 31, 2007 was $3.9 million or $1.02 per share ($1.00 per diluted share) versus net income of $3.1 million or $.83 per share ($.80 per diluted share) for 2006. On a similar basis, non-GAAP net income for the fourth quarter of 2007 was $1.3 million or $.34 per share ($.34 per diluted share) versus net income of $1.2 million or $.30 per share ($.30 per diluted share) for the same period in 2006. On a comparative non-GAAP basis, non-GAAP income from operations in fiscal year 2007 was $4.7 million versus $3.5 million in 2006 and for the fourth quarter of 2007 was $1.6 million versus $1.1 million for the same period in 2006.

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On a GAAP basis, net income for fiscal year 2007 was $872,000 or $.23 per share ($.22 per diluted share) and the net loss for the fourth quarter of 2007 was $1.7 million or $.44 per share. As part of the purchase price allocation of the EIS asset purchase, the Company recognized an in-process research and development charge of $4.5 million ($3.0 million net of tax) in the fourth quarter of 2007. Income (loss) from operations in fiscal year 2007 and in the fourth quarter of 2007 were $130,000 and $(3.0) million, respectively.

For fiscal year 2007, revenue was $15.1 million compared to $13.1 million in fiscal year 2006, an increase of 15%. Royalty income was $10.7 million in 2007 compared to $10.1 million in 2006, while international sales were $4.1 million compared to $3.0 million in 2006. The Company's North American distributor and international subsidiaries both rebounded from slower sales in the first half of 2007, which the Company believes was related in part to its transition to the Autoscope(R) Terra platform.

For the fourth quarter of 2007, revenue was $5.2 million versus $4.1 million for the same period in 2006, an increase of 26%. For the quarter, royalty income was $3.1 million in 2007 compared to $2.8 million in 2006, while international sales were $1.8 million in 2007 compared to $1.3 million in 2006. Gross margins in the fourth quarter of 2007 were negatively impacted by approximately $200,000 in inventory reserves recorded on non-Terra product.

The Company's research and development expense decreased in fiscal year 2007 compared to 2006 due to certain one-time expenses for the Terra development that occurred in 2006 and because the Company did not meet its goals for engineering headcount additions in 2007.

Ken Aubrey , CEO, commented, "We are gratified by these encouraging results, especially given the dip in financial performance early in the Terra platform transition. On a comparative basis, revenue and income improved solidly across the board, with revenue growth internationally being particularly noteworthy. We believe results for the second half of 2007 have confirmed that the market is enthusiastically accepting our Terra offerings. Our Terra transition activities continue and we anticipate introducing new general and country-specific features in the first half of 2008.

"We're also excited about our purchase of the assets of EIS and the RTMS(TM) radar-based CED product set. EIS posted revenue of $8.7 million in its fiscal year 2007 and was solidly profitable. We expect the purchase to add in excess of 50% to our total revenue in 2008 compared to 2007 and with the RTMS portfolio we are positioned to make the eventual leap to hybrid detection offerings, which we see as strategically pivotal."

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