OTI Reports FY 2008 First Nine Months and Third Quarter Financial Results

FORT LEE, N.J. , Dec. 1 /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...


FORT LEE, N.J. , Dec. 1 /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 first nine months and third quarter ended September 30, 2008 . Revenues for the first nine months were $31.1 million, compared to $30.5 million during the first nine months of 2007. Third quarter revenues increased by 10% to $10.9 million compared to $9.9 million in the third quarter of 2007. Gross margin for the first nine months was 39%, the same as the last period last year. Third quarter gross margin increased to 44% from 36% in the third quarter of 2007. Operating expenses on GAAP basis decreased by 24% to $9.5 million from $12.6 million in the third quarter of 2007; on non-GAAP basis, operating expenses decreased by 26% to $7.9 million from $10.7 million in the third quarter of 2007. Net loss for the first nine months on a GAAP basis increased by 14% to $17.4 million compared to $15.2 million for the first nine months of 2007. Net loss on a Non-GAAP basis for the first nine months increased by 8% to $11.2 million compared to $10.4 million for the first nine months of 2007. Net loss on a GAAP basis for the third quarter decreased by 39% to $4.8 million compared to $7.9 million in the third quarter of 2007. On a non-GAAP basis, net loss significantly decreased by 46% in the third quarter to $3.2 million from $6.0 million in the third quarter of 2007. See below for a reconciliation of GAAP to non-GAAP information. Total cash used in operating activities for the third quarter of 2008 decreased by 31% to $1.7 million from $2.5 million in the third quarter of 2007 and decreased by 59% from $4.2 million in the second quarter of 2008.

"We are primarily focusing on controlling and reducing our operating expenses to the most efficient and effective level required to carry out our current and pending pipeline of projects for '09 and '10," said Oded Bashan , OTI Chairman and CEO. "We believe that our strong and healthy balance sheet with $106 Million in total assets and $32 Million in cash, cash equivalents, and short term investments together with the continued shift in focus toward high margin projects with recurring revenues combined with commercial rollouts will pave a clear path to profitability for OTI."

Conference call and Webcast Information

The Company has scheduled a conference call and simultaneous Web cast for Monday, December 1, 2008 at 9:00 a.m. Eastern Standard Time to discuss operating results and future outlook which will hosted by Oded Bashan , Chairman and CEO, Ohad Bashan , President and Tanir Horn, CFO. To participate, call: 1-888-407-2553 (U.S. toll free), 1-800-270-345 ( Israel toll free), 0-800-182-3010 ( Germany toll free). To listen to the Web cast, use the following link: http://www.otiglobal.com/content.aspx?id=226

For those unable to participate, the teleconference will be available for replay until midnight December 8th , by calling U.S.: 1-877-456-0009 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 EITF 96-18, and amortization of intangible assets in 2008 and exclude non-cash equity-based compensation charges in accordance with SFAS 123( R ), and amortization of intangible assets in 2007. 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.

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