Nine Month Revenues up 11% and Third Quarter Revenues up 23% FORT
LEE, N.J., Nov. 26 /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 other applications and machinery,
today announced its consolidated financial results for nine months
and the third quarter ended September 30, 2007. * Revenues:
Revenues for the nine months ended September 30, 2007 were $30.5
million, an increase of 11% compared to $27.4 million in the same
period last year. Revenues in the third quarter were $9.9 million,
an increase of 23% compared to $8.0 million in the same period last
year. * GAAP Gross Profit: GAAP Gross Profit for the nine months
ended September 30, 2007 was $12.0 million, a decrease of 3%
compared to $12.4 million in the same period last year. In the
third quarter GAAP gross profit was $3.6 million, an increase of 5%
compared to $3.4 million in the third quarter of 2006. GAAP gross
margin for the nine months ended September 30, 2007 was 39%
compared to 45% in the same period last year. GAAP gross margin in
the quarter was 36% compared to 43% in the third quarter of 2006. *
Non-GAAP Gross Profit: Non-GAAP Gross Profit was $12.0 million for
the nine months ended September 30, 2007, a decrease of 3% compared
to $12.4 million in the same period last year. Non-GAAP Gross
Profit for the third quarter of 2007 was $3.6 million, an increase
of 5% compared to $3.4 million in the third quarter of 2006.
Non-GAAP gross margin for the nine months ended September 30, 2007
was 40% compared to 45% in the same period last year. Non-GAAP
gross margin in the third quarter was 37% compared to 43% in the
third quarter of 2006. * GAAP Net Loss: GAAP Net Loss for the nine
months ended September 30, 2007 was $(15.2) million, an increase of
139% compared to $(6.3) million in the same period last year. GAAP
net loss for the third quarter of 2007 was $(7.9) million, an
increase of 228% compared to $(2.4) million in the third quarter
last year. * Non-GAAP Net Loss: Non-GAAP Net Loss for the nine
months ended September 30, 2007 was $(10.4) million, an increase of
161% compared to $(4.0) million in the same period last year.
Non-GAAP net loss for the third quarter of 2007 was $(6.0) million,
an increase of 263% compared to $(1.7) million in the third quarter
last year. * GAAP Loss per Share: GAAP Loss per Share for the nine
months ended September 30, 2007 was $(0.81) compared to $(0.47) in
the same period last year. GAAP loss per share for the third
quarter of 2007 was $(0.41), compared to $(0.16) in the third
quarter of 2006. * Non-GAAP Loss per Share: Non-GAAP Loss per Share
for the nine months ended September 30, 2007 was $(0.55) compared
to $(0.29) in the same period last year. Non-GAAP loss per share
for the third quarter of 2007 was $(0.31), compared to $(0.11) in
the third quarter of 2006. * Strong Balance Sheet: Total assets
were at $113.1 million with cash equivalent and short term
investments totaling $41.4 million. Non-GAAP results for the third
quarter and nine 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. "During the first nine months of 2007, OTI's revenues have
grown slower than expected and our loss was bigger than expected.
The increase in operating expenses on a Non-GAAP basis included a
$2.5 million provision for doubtful accounts based on management
decision. These results reflect the fact that OTI is involved in
large scale projects that are characterized by long implementation
cycles, we therefore update our forecast for 2007 to reflect
revenue growth of about 10% compared to 2006 and we update our
forecasted gross margin for the year to be between 39%-41%," said
Oded Bashan, Chairman and CEO of OTI. "Although this is not always
reflected in our financial results, we are making progress in the
overall business. The number of projects in the pipeline have
increased, the large projects we are involved in are progressing,
and we are introducing new products and expanding our IP."
Conference call and Webcast Information The Company has scheduled a
conference call and simultaneous Webcast for Monday, November 26,
2007, which will be hosted by Oded Bashan, Chairman and CEO, Ohad
Bashan, President, and Guy Shafran, CFO, for 09:30 AM EST 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); and 1-973-582-2815 (standard
international) ID Code: OTI Q3 2007 Results Conference Call. To
attend the Webcast, 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 December 3rd, by calling U.S: 877-519-4471 or
International; 973-341-3080 and entering the PIN number # 9478392,
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 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
our expected financial results for the full year. 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) Nine months ended Three months ended September
30 September 30 2007 2006 2007 2006 (Unaudited)
(Unaudited)(Unaudited)(Unaudited) Revenues Sales $28,617 $24,754
$9,328 $7,381 Licensing and transaction fees 1,852 2,607 527 624
Total revenues 30,469 27,361 9,855 8,005 Cost of Revenues Cost of
sales 18,467 14,960 6,260 4,576 Total cost of revenues 18,467
14,960 6,260 4,576 Gross profit 12,002 12,401 3,595 3,429 Operating
Expenses Research and development 8,203 5,254 3,050 1,953 Selling
and marketing 6,858 5,120 2,797 1,831 General and administrative
13,444 9,177 6,397 3,101 Amortization of intangible assets 986 557
329 189 Gain from sale of subsidiaries - (122) - (122) Total
operating expenses 29,491 19,986 12,573 6,952 Operating loss
(17,489) (7,585) (8,978) (3,523) Financial income, net 1,472 1,278
281 542 Other income (expense), net (111) 20 - 6 Loss before taxes
on income and minority interests (16,128) (6,287) (8,697) (2,975)
Taxes on income 197 314 66 149 Minority interest 1,037 593 847 479
Equity in loss of affiliate (271) (969) (109) (63) Net loss
$(15,165) $(6,349) $(7,893) $(2,410) Basic and diluted net loss per
ordinary share $(0.81) $(0.47) $(0.41) $(0.16) Weighted average
number of ordinary shares used in computing basic and diluted net
loss per ordinary share 18,788,245 13,456,869 19,080,884 15,097,867
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, 2007 Adjustments GAAP
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 income (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. 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 September 30, 2007
Adjustments GAAP 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 income (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. 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) Nine months ended September 30, 2006
Adjustments GAAP Non-GAAP (unaudited) (unaudited) (unaudited)
Revenues Sales $24,754 - $24,754 Licensing and transaction fees
2,607 - 2,607 Total revenues 27,361 27,361 Cost of Revenues Cost of
sales 14,960 (11) (a) 14,949 Total cost of revenues 14,960 (11)
14,949 Gross profit 12,401 11 12,412 Operating Expenses Research
and development 5,254 (798) (a) 4,456 Selling and marketing 5,120
(98) (a) 5,022 General and administrative 9,177 (917) (a) 8,260
Amortization of intangible assets 557 (557) (b) - Gain from sale of
subsidiaries (122) - (122) Total operating expenses 19,986 2,370
17,616 Operating loss (7,585) 2,381 (5,204) Financial income, net
1,278 - 1,278 Other income (expenses), net 20 - 20 Loss before
taxes on income and minority interests (6,287) 2,381 (3,906) Taxes
on income 314 - 314 Minority interests 593 - 593 Equity in loss of
affiliate (969) - (969) Net loss $(6,349) $2,381 $(3,968) Basic and
diluted net loss per ordinary share $(0.47) $ 0.18 $(0.29) Weighted
average number of ordinary shares used in computing basic and
diluted net loss per ordinary share 13,456,869 13,456,869 (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
September 30, 2006 Adjustments GAAP Non-GAAP (unaudited)
(unaudited) (unaudited) Revenues Sales $7,381 - $7,381 Licensing
and transaction fees 624 - 624 Total revenues 8,005 - 8,005 Cost of
Revenues Cost of sales 4,576 (4) (a) 4,572 Total cost of revenues
4,576 (4) 4,572 Gross profit 3,429 4 3,433 Operating Expenses
Research and development 1,953 (244) (a) 1,709 Selling and
marketing 1,831 (27) (a) 1,804 General and administrative 3,101
(280) (a) 2,821 Amortization of intangible assets 189 (189) (b) -
Gain from sale of subsidiaries (122) - (122) Total operating
expenses 6,952 740 6,212 Operating loss (3,523) 744 (2,779)
Financial income, net 542 - 542 Other income (expenses), net 6 - 6
Loss before taxes on income and minority interests (2,975) 744
(2,231) Taxes on income 149 - 149 Minority interests 479 - 479
Equity in loss of affiliate (63) - (63) Net loss $(2,410) $744
$(1,666) Basic and diluted net loss per ordinary share $(0.16)
$0.05 $(0.11) Weighted average number of ordinary shares used in
computing basic and diluted net loss per ordinary share 15,097,867
15,097,867 (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 stock-based compensation. ON TRACK INNOVATIONS LTD CONDENSED
CONSOLIDATED BALANCE SHEET (In thousands, except share and per
share data) September 30 December 31 2007 2006 (Unaudited)
(Audited) Assets Current assets Cash and cash equivalents $26,145
$30,049 Short-term investments 15,290 18,232 Trade receivables (net
of allowance for doubtful accounts of $2,752 and $234 as of
September 30, 2007 and December 31, 2006, respectively) 6,416
10,155 Other receivables and prepaid expenses 2,860 2,109
Inventories 12,884 10,344 Total current assets 63,595 70,889
Severance pay deposits fund 1,413 1,087 Long-term receivables 451
1,043 Investment in an affiliated company 1,426 1,627 Property,
plant and equipment, net 18,007 13,318 Intangible assets, net 4,856
5,823 Goodwill 23,387 23,387 Total assets $113,135 $117,174 ON
TRACK INNOVATIONS LTD CONDENSED CONSOLIDATED BALANCE SHEET (In
thousands, except share and per share data) September 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 $2,503 $498 Trade payables 7,143
6,869 Other current liabilities 3,990 3,331 Total current
liabilities 13,636 10,698 Long-term liabilities Long-term loans,
net of current maturities 1,935 2,117 Accrued severance pay 3,725
3,209 Deferred tax liabilities 794 992 Total long-term liabilities
6,454 6,318 Total liabilities 20,090 17,016 Minority interests -
1,004 Shareholders' equity Ordinary shares of NIS 0.1 par value:
authorized - 50,000,000 shares as of September 30, 2007 and
December 31, 2006; issued 19,364,458 and 18,592,880 shares as of
September 30, 2007 and December 31, 2006, respectively; outstanding
19,131,005 and 18,243,539 shares as of September 30, 2007 and
December 31, 2006, respectively 448 431 Additional paid-in capital
171,712 163,102 Accumulated other comprehensive income 853 424
Accumulated deficit (79,968) (64,803) Total shareholders' equity
93,045 99,154 Total Liabilities and Shareholders' Equity $113,135
$117,174 ON TRACK INNOVATIONS LTD CONDENSED CONSOLIDATED STATEMENT
OF CASH FLOWS (In thousands, except share and per share data) Nine
months ended September 30 2007 2006 (Unaudited) (Unaudited) Cash
flows from operating activities Net loss $(15,165) $(6,349)
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 5,053 2,922 Gain from
sale of subsidiaries - (122) Equity in loss of an affiliate company
271 969 Amortization of intangible assets 986 557 Depreciation
1,792 1,218 Minority interest (1,037) (593) Accrued severance pay,
net 190 1,251 Decrease in deferred tax liabilities (197) (52)
Decrease in trade receivables 4,400 366 Decrease (increase) in
other receivables and prepaid expenses (768) 389 Increase in
inventories (2,312) (1,946) Increase in trade payables 83 1,528
Increase (decrease) in other current liabilities 579 (1,043) Other,
net (257) (374) Net cash used in operating activities (6,382)
(1,279) Cash flows from investing activities Acquisition of
consolidated subsidiaries, net of cash acquired - (23) Proceeds
from maturity of available -for sale securities 67,569 19,079
Purchase of available-for sale securities (64,356) (8,863) Purchase
of property and equipment (2,795) (3,502) Receipts on account of
loans and receivables 237 261 Other, net (19) (102) Net cash
provided by investing activities 636 6,850 Cash flows from
financing activities Increase in short-term bank credit, net 2,003
1,024 Exercise of options and warrants 8 3,246 Repayment of
long-term bank loans (257) (430) Proceeds from minority in
subsidiary - 1,036 Net cash provided by financing activities 1,754
4,876 Effect of exchange rate changes on cash 88 40 Increase
(decrease) in cash and cash equivalents (3,904) 10,487 Cash and
cash equivalents at the beginning of the period 30,049 29,657 Cash
and cash equivalents at the end of the period $26,145 $40,144
DATASOURCE: On Track Innovations Ltd. CONTACT: Galit Mendelson,
Director of Corporate Communications of OTI, +1-201-944-5200 Ext.
111, ; or Investor Relations, Miri Segal of Strategic Growth
International for OTI, +1-212-838-1444, Web site:
http://www.otiglobal.com/
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