-- First Nine Months Revenues of $31.1 Million Compared to $30.5 Million in First Nine Months of 2007;
-- Third Quarter 2008 Compared to Third Quarter 2007: Revenues Up 10% to $10.9 million; Gross Margin Climbed to 44% from 36%; Non-GAAP Net Loss Down 46% to $3.2 Million; GAAP Net Loss Down 39% to $4.8 Million
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.
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
galit@otiglobal.com paulh@portfoliopr.biz
(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. Forward-looking statements include
statements regarding our goals, beliefs, future growth strategies, objectives,
plans or current expectations. For example, when we discuss our belief 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, 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,
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)
Nine months ended Three months ended
September 30 September 30
2008 2007 2008 2007
(Unaudited) (Unaudited) (Unaudited)(Unaudited)
Revenues
Sales $29,265 $28,617 $10,317 $9,328
Licensing and transaction fees 1,884 1,852 546 527
Total revenues 31,149 30,469 10,863 9,855
Cost of revenues
Cost of sales 19,093 18,467 6,052 6,260
Total cost of revenues 19,093 18,467 6,052 6,260
Gross profit 12,056 12,002 4,811 3,595
Operating expenses
Research and development 8,909 8,203 3,008 3,050
Selling and marketing 8,086 6,858 2,911 2,797
General and administrative 10,559 13,444 3,210 6,397
Amortization of intangible
assets 1,025 986 367 329
Total operating expenses 28,579 29,491 9,496 12,573
Operating loss (16,523) (17,489) (4,685) (8,978)
Financial income (expense), net (667) 1,472 (101) 281
Other expense, net - (111) - -
Loss before taxes on income
and minority interests (17,190) (16,128) (4,786) (8,697)
Taxes on income 177 197 55 66
Minority interest - 1,037 - 847
Equity in loss of affiliate (342) (271) (92) (109)
Net loss $(17,355) $(15,165) $(4,823) $(7,893)
Basic and diluted net loss per
ordinary share $(0.86) $(0.81) $(0.23) $(0.41)
Weighted average number of
ordinary shares used in
computing basic and diluted
net loss per ordinary
share 20,091,808 18,788,245 20,857,776 19,080,884
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, 2008
GAAP Adjustments Non-GAAP
Revenues
Sales $29,265 - $29,265
Licensing and transaction fees 1,884 - 1,884
Total revenues 31,149 31,149
Cost of Revenues
Cost of sales 19,093 (45) (a) 19,048
Total cost of revenues 19,093 (45) 19,048
Gross profit 12,056 45 12,101
Operating Expenses
Research and development 8,909 (2,368) (a) 6,541
Selling and marketing 8,086 (1,064) (a) 7,022
General and administrative 10,559 (1,657) (a) 8,902
Amortization of intangible
assets 1,025 (1,025) (b) -
Total operating expenses 28,579 (6,114) 22,465
Operating loss (16,523) 6,159 (10,364)
Financial expenses, net (667) - (667)
Loss before taxes on income
and minority interests (17,190) 6,159 (11,031)
Taxes on income 177 - 177
Equity in loss of affiliate (342) - (342)
Net loss $(17,355) $6,159 $(11,196)
Basic and diluted net loss
per ordinary share $(0.86) $0.30 $(0.56)
Weighted average number of
ordinary shares used in
computing basic and diluted
net loss per ordinary share 20,091,808 20,091,808
(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
September 30, 2008
GAAP Adjustments Non-GAAP
Revenues
Sales $10,317 - $10,317
Licensing and transaction fees 546 - 546
Total revenues 10,863 10,863
Cost of Revenues
Cost of sales 6,052 (15) (a) 6,037
Total cost of revenues 6,052 (15) 6,037
Gross profit 4,811 15 4,826
Operating Expenses
Research and development 3,008 (633) (a) 2,375
Selling and marketing 2,911 (139) (a) 2,772
General and administrative 3,210 (432) (a) 2,778
Amortization of intangible assets 367 (367) (b) -
Total operating expenses 9,496 (1,571) 7,925
Operating loss (4,685) 1,586 (3,099)
Financial expenses, net (101) - (101)
Loss before taxes on income
and minority interests (4,786) 1,586 (3,200)
Taxes on income 55 - 55
Equity in loss of an affiliate (92) - (92)
Net loss $(4,823) $1,586 $(3,237)
Basic and diluted net loss
per ordinary share $(0.23) $0.07 $(0.16)
Weighted average number of
ordinary shares in computing
basic and diluted net loss
per ordinary share 20,857,776 20,857,776
(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)
Nine months ended
September 30, 2007
GAAP Adjustments Non-GAAP
(unaudited) (unaudited) (unaudited)
Revenues
Sales $28,617 - $28,617
Licensing and transaction fees 1,852 - 1,852
Total revenues 30,469 30,469
Cost of Revenues
Cost of sales 18,467 (39) (a) 18,428
Total cost of revenues 18,467 (39) 18,428
Gross profit 12,002 39 12,041
Operating Expenses
Research and development 8,203 (1,633) (a) 6,570
Selling and marketing 6,858 (240) (a) 6,618
General and administrative 13,444 (1,896) (a) 11,548
Amortization of intangible assets 986 (986) (b) 0
Total operating expenses 29,491 (4,755) 24,736
Operating loss (17,489) 4,794 (12,695)
Financial income, net 1,472 - 1,472
Other expenses, net (111) - (111)
Loss before taxes on income
and minority interests (16,128) 4,794 (11,334)
Taxes on income 197 - 197
Minority interests 1,037 - 1,037
Equity in loss of an affiliate (271) - (271)
Net loss $(15,165) $4,794 $(10,371)
Basic and diluted net loss
per ordinary share $(0.81) $0.26 $(0.55)
Weighted average number of
ordinary shares used in
computing basic and diluted
net loss per ordinary share 18,788,245 18,788,245
(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
September 30, 2007
GAAP Adjustments Non-GAAP
(unaudited) (unaudited) (unaudited)
Revenues
Sales $9,328 - $9,328
Licensing and transaction fees 527 - 527
Total revenues 9,855 9,855
Cost of Revenues
Cost of sales 6,260 (14) (a) 6,246
Total cost of revenues 6,260 (14) 6,246
Gross profit 3,595 14 3,609
Operating Expenses
Research and development 3,050 (572) (a) 2,478
Selling and marketing 2,797 (72) (a) 2,725
General and administrative 6,397 (859) (a) 5,538
Amortization of intangible assets 329 (329) (b) 0
Total operating expenses 12,573 (1,832) 10,741
Operating loss (8,978) 1,846 (7,132)
Financial income, net 281 - 281
Other expenses, net - - -
Loss before taxes on income
and minority interests (8,697) 1,846 (6,851)
Taxes on income 66 - 66
Minority interests 847 - 847
Equity in loss of an affiliate (109) - (109)
Net loss $(7,893) $1,846 $(6,047)
Basic and diluted net loss
per ordinary share $(0.41) $0.10 $(0.31)
Weighted average number of
ordinary shares used in
computing basic and diluted
net loss per ordinary share 19,080,884 19,080,884
(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)
September 30 December 31
2008 2007
(Unaudited) (Audited)
Assets
Current Assets
Cash and cash equivalents $21,633 $35,470
Short-term investments 10,323 6,379
Trade receivables (net of allowance for
doubtful accounts of $ 2,837 and $2,767 as of
September 30, 2008 and December 31, 2007,
respectively) 7,158 8,028
Other receivables and prepaid expenses 3,472 3,636
Inventories 12,131 13,242
Total current assets 54,717 66,755
Severance pay deposits fund 2,091 1,576
Investment in an affiliated company 1,217 1,382
Property, plant and equipment, net 19,179 20,851
Intangible assets, net 4,285 4,509
Goodwill 24,569 23,387
Total Assets $106,058 $118,460
ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
September 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 $5,662 $5,336
Trade payables 7,886 10,291
Other current liabilities 4,720 5,344
Total current liabilities 18,268 20,971
Long-Term Liabilities
Long-term loans, net of current maturities 2,097 2,432
Accrued severance pay 4,862 3,981
Deferred tax liabilities 730 728
Total long-term liabilities 7,689 7,141
Total liabilities 25,957 28,112
Minority interests 352 -
Shareholders' Equity
Ordinary shares of NIS 0.1 par value:
authorized - 50,000,000 shares as of September 30,
2008 and December 31, 2007; issued 21,135,190 and
19,627,068 shares as of September 30, 2008 and
December 31, 2007, respectively;
Outstanding 21,021,838 and 19,434,011 as
of September 30, 2008 and December 31, 2007,
respectively 497 454
Additional paid-in capital 181,438 174,494
Accumulated other comprehensive income 615 846
Accumulated deficit (102,801) (85,446)
Total shareholders' equity 79,749 90,348
Total Liabilities and Shareholders' Equity $106,058 $118,460
ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands, except share and per share data)
Nine months ended
September 30
2008 2007
(Unaudited)(Unaudited)
Cash flows from operating activities
Net loss $(17,355) $(15,165)
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 5,134 5,053
Equity in loss of an affiliate company 342 271
Amortization of intangible assets 1,025 986
Depreciation 2,578 1,792
Minority interest - (1,037)
Accrued severance pay, net 366 190
Decrease in deferred tax liabilities (183) (197)
Decrease in trade receivables 878 4,400
Decrease (increase) in other receivables and
prepaid expenses 240 (768)
Decrease (increase) in inventories 1,127 (2,312)
Increase (decrease) in trade payables (2,420) 83
Increase (decrease) in other current liabilities (631) 579
Other, net 17 (257)
Net cash used in operating activities $(8,882) $(6,382)
Cash flows from investing activities
Acquisition of consolidated subsidiaries, net of
cash acquired (565) -
Proceeds from maturity of available -for sale
securities 24,621 67,569
Purchase of available-for sale securities (28,574) (64,356)
Purchase of property and equipment (1,176) (2,795)
Receipts on account of loans and receivables - 237
Other, net 21 (19)
Net cash provided by (used in) investing
activities $(5,673) $636
Cash flows from financing activities
Increase in short-term bank credit, net 333 2,003
Exercise of options and warrants 768 8
Repayment of long-term bank loans (389) (257)
Net cash provided by financing activities 712 1,754
Effect of exchange rate changes on cash 6 88
Decrease in cash and cash equivalents (13,837) (3,904)
Cash and cash equivalents at the beginning of the
period 35,470 30,049
Cash and cash equivalents at the end of the period $21,633 $26,145
SOURCE On Track Innovations Ltd.
