FORT LEE, N.J. , Aug. 28 /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 half and second quarter ended June 30, 2008 . Revenues for the first half
were
"These results are due to a shift in the revenue mix in the payment sector from components intended for the US contactless card payments market to greater sales of readers, solutions for the mass transit market, EasyPark and more, as well as contactless payments in non-US markets," said Oded Bashan , OTI Chairman and CEO.
Mr. Bashan continued: "We continue to focus 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'. While
we have steadily reduced headcount, the resultant savings take two to three
quarters to show up in the P& L. We continue to shift our focus toward high
margin projects with recurring revenues combined with commercial rollouts. We
believe our actions will pave a clear path to profitability for OTI. We
continue to have a strong and healthy balance sheet with
"As we've indicated before, it is our belief that most of the significant delays are behind us and we are confident about the Company's growth," said Mr. Bashan. "We still believe that 2008 will be a turning point for OTI in terms of showing a clear path to profitability and will reflect revenue growth of about 10% over 2007, with most of the growth expected in the fourth quarter of the year."
Conference call and Webcast Information
The Company has scheduled a conference call and simultaneous Webcast for Thursday, August 28, 2008 , which will be hosted by Oded Bashan , Chairman and CEO, Ohad Bashan , President, and Guy Shafran , CFO, for 9:30 AM EDT to discuss operating results and future outlook. To participate, call: 1-866-345-5855 (U.S. toll free), 1-800-270-345 ( Israel toll free), 0-800-182-6846 ( Germany toll free). To listen to the Webcast, 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 September 4th , 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.
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, loyalty programs and secure campuses. 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 www.otiglobal.com, the content of which is not part of this press release.
OTI Contact: Investor Relations: Galit Mendelson Paul Holm Vice President of Corporate Relations portfoliopr 201 944 5200 ext. 111 212 888 4570 [email protected] [email protected]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. Forward-looking statements include statements regarding our goals, beliefs, future growth strategies, objectives, plans or current expectations. For example, when we discuss our continuing focus on controlling and reducing our operating expenses, or the shift of our focus toward high margin projects with recurring revenues combined with commercial rollouts, or our belief that our actions will pave a clear path to profitability for OTI, or our belief that most of the significant delays are behind us and we are confident about our growth, or that 2008 will be a turning point for us in terms of showing a clear path to profitability and will reflect a revenue growth of about 10% over 2007, with most of the growth expected in the fourth quarter of the year, we are using a forward looking statement. 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. 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, 2007 , 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 required 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 2008 2007 2008 2007 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues Sales $18,948 $19,289 $10,202 $9,791 Licensing and transaction fees 1,338 1,325 763 448 Total revenues 20,286 20,614 10,965 10,239 Cost of revenues Cost of sales 13,041 12,207 6,703 5,865 Total cost of revenues 13,041 12,207 6,703 5,865 Gross profit 7,245 8,407 4,262 4,374 Operating expenses Research and development 5,901 5,153 2,904 2,559 Selling and marketing 5,175 4,061 2,798 2,189 General and administrative 7,349 7,047 3,755 3,239 Amortization of intangible assets 658 657 329 329 Total operating expenses 19,083 16,918 9,786 8,316 Operating loss (11,838) (8,511) (5,524) (3,942) Financial income (expense), net (566) 1,191 (90) 594 Other expense, net - (111) - - Loss before taxes on income and minority interests (12,404) (7,431) (5,614) (3,348) Taxes on income 122 131 59 65 Minority interest - 190 - 148 Equity in loss of affiliate (250) (162) (127) (42) Net loss (12,532) (7,272) (5,682) (3,177) Basic and diluted net loss per ordinary share $(0.64) $(0.39) $(0.29) $(0.17) Weighted average number of ordinary shares used in computing basic and diluted net loss per ordinary share 19,708,825 18,641,927 19,861,051 18,942,626 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, 2008 GAAP Adjustments Non-GAAP Revenues Sales $ 18,948 - $ 18,948 Licensing and transaction fees 1,338 - 1,338 Total revenues 20,286 20,286 Cost of Revenues Cost of sales 13,041 (30)(a) 13,011 Total cost of revenues 13,041 (30) 13,011 Gross profit 7,245 30 7,275 Operating Expenses Research and development 5,901 (1,735)(a) 4,166 Selling and marketing 5,175 (925)(a) 4,250 General and administrative 7,349 (1,225)(a) 6,124 Amortization of intangible assets 658 (658)(b) - Total operating expenses 19,083 (4,543) 14,540 Operating loss (11,838) 4,573 (7,265) Financial expenses, net (566) - (566) Loss before taxes on income and minority interests (12,404) 4,573 (7,831) Taxes on income 122 - 122 Equity in loss of affiliate (250) - (250) Net loss $(12,532) $4,573 $(7,959) Basic and diluted net loss per ordinary share $ (0.64) $0.24 $(0.40) Weighted average number of ordinary shares used in computing basic and diluted net loss per ordinary share 19,708,825 19,708,825 (a) The effect of stock-based compensation in accordance with SFAS 123(R) and EITF 96-18. (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, 2008 GAAP Adjustments Non-GAAP Revenues Sales $10,202 - $ 10,202 Licensing and transaction fees 763 - 763 Total revenues 10,965 10,965 Cost of Revenues Cost of sales 6,703 (15)(a) 6,688 Total cost of revenues 6,703 (15) 6,688 Gross profit 4,262 15 4,277 Operating Expenses Research and development 2,904 (930)(a) 1,974 Selling and marketing 2,798 (635)(a) 2,163 General and administrative 3,755 (651)(a) 3,104 Amortization of intangible assets 329 (329)(b) - Total operating expenses 9,786 (2,545) 7,241 Operating loss (5,524) 2,560 (2,964) Financial expenses, net (90) - (90) Loss before taxes on income and minority interests (5,614) 2,560 (3,054) Taxes on income 59 - 59 Equity in loss of an affiliate (127) - (127) Net loss $(5,682) $2,560 $(3,122) Basic and diluted net loss per ordinary share $(0.29) $0.13 $(0.16) Weighted average number of ordinary shares used in computing basic and diluted net loss per ordinary share 19,861,051 19,861,051 (a) The effect of stock-based compensation in accordance with SFAS 123( R ) and EITF 96-18. (b) The effect of amortization of intangible assets. 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 in accordance with SFAS 123( R ). (b) The effect of amortization of intangible assets. 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)(a) 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)(a) 1,985 Selling and marketing 2,189 (96)(a) 2,093 General and administrative 3,239 (319)(a) 2,920 Amortization of intangible assets 329 (329)(b) 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 (a) The effect of stock-based compensation in accordance with SFAS 123( R ). (b) 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 2008 2007 (Unaudited) (Audited) Assets Current Assets Cash and cash equivalents $ 12,131 $ 35,470 Short-term investments 22,218 6,379 Trade receivables (net of allowance for doubtful accounts of $ 2,813 and $2,767 as of June 30, 2008 and December 31, 2007) 6,743 8,028 Other receivables and prepaid expenses 3,913 3,636 Inventories 12,915 13,242 Total current assets 57,920 66,755 Severance Pay Deposits Fund 2,007 1,576 Investment In An Affiliated Company 1,300 1,382 Property, Plant and Equipment, Net 19,986 20,851 Intangible Assets, Net 4,665 4,509 Goodwill 24,217 23,387 Total Assets $110,095 $118,460 ON TRACK INNOVATIONS LTD CONDENSED CONSOLIDATED BALANCE SHEET (In thousands, except share and per share data) June 30 December 31 2008 2007 (Unaudited) (Audited) Liabilities and Shareholders' Equity Current Liabilities Short-term bank credit and current maturities of long-term bank loans $5,952 $5,336 Trade payables 7,650 10,291 Other current liabilities 5,171 5,344 Total current liabilities 18,773 20,971 Long-Term Liabilities Long-term loans, net of current maturities 2,354 2,432 Accrued severance pay 4,802 3,981 Deferred tax liabilities 788 728 Total long-term liabilities 7,944 7,141 Total liabilities 26,717 28,112 Shareholders' Equity Ordinary shares of NIS 0.1 par value: authorized - 50,000,000 shares as of June 30, 2008 and December 31, 2007; issued 20,641,025 and 19,627,068 shares as of June 30, 2008 and December 31, 2007, respectively; Outstanding 20,525,709 and 19,434,011 as of June 30, 2008 and December 31, 2007, respectively 484 454 Additional paid-in capital 179,783 174,494 Accumulated other comprehensive income 1,089 846 Accumulated deficit (97,978) (85,446) Total shareholders' equity 83,378 90,348 Total Liabilities and Shareholders' $110,095 $118,460 Equity ON TRACK INNOVATIONS LTD CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands, except share and per share data) Six months ended June 30 2008 2007 (Unaudited) (Unaudited) Cash flows from operating activities Net loss $(12,532) $(7,272) 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 3,916 2,693 Equity in loss of affiliate 250 162 Amortization of intangible assets 658 657 Depreciation 1,707 1,184 Minority interests - (190) Accrued severance pay, net 390 203 Decrease in deferred tax liabilities (125) (132) Decrease in trade receivables 1,328 711 Increase in other receivables and prepaid expenses (248) (347) Decrease (increase) in inventories 403 (1,279) Decrease in trade payables (2,713) (408) Increase (decrease) in other current liabilities (206) 514 Other, net 34 (341) Net cash used in operating activities (7,138) (3,845) Cash flows from investing activities Acquisition of a consolidated subsidiary, net of cash acquired (565) - Proceeds from maturity of available - for sale securities 4,290 33,294 Purchase of available-for sale securities (20,097) (49,941) Purchase of property and equipment (643) (1,631) Receipts on account of loans and receivables - 160 Other, net 21 (19) Net cash used in investing activities (16,994) (18,137) Cash flows from financing activities Increase in short-term bank credit, net 594 1,018 Repayment of long-term bank loans (214) (208) Exercise of options and warrants 388 5 Net cash provided by financing activities 768 815 Effect of exchange rate changes on cash 25 32 Decrease in cash and cash equivalents (23,339) (21,135) Cash and cash equivalents at the beginning of the period 35,470 30,049 Cash and cash equivalents at the end of the period $12,131 $8,914SOURCE On Track Innovations Ltd.
