Revenues up 38% with Gross Profit up 103% Compared to the Same
Period Last Year; Positive Cash Flow from Operating Activities FORT
LEE, N.J., May 30 /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 quarter
ended March 31, 2006. -- Revenues: $9.06 million, an increase of
38% compared to $6.55 million in the first quarter last year,
including revenues from licensing and transaction fees of $1.04
million, an increase of 26% from $0.83 million in the first quarter
last year. -- GAAP Gross Profit: $4.48 million, an increase of 103%
compared to $2.20 million in the first quarter of 2005. GAAP gross
margin was 49% compared to 34% in the first quarter of 2005. --
Non-GAAP Gross Profit: $4.49 million, an increase of 104% compared
to $2.20 million in the first quarter of 2005. Non-GAAP gross
margin was 50% compared to 34% in the first quarter of 2005. --
GAAP Net Loss: $(1.96) million, an increase of 17% compared to
$(1.67) million in the first quarter last year. -- Non-GAAP Net
Loss: $(1.11) million a decrease of 28% compared to $(1.55) million
in the first quarter last year. -- GAAP Loss per Share: $(0.16),
compared to $(0.20) in the first quarter of 2005. -- Non-GAAP Loss
per Share: $(0.09), compared to $(0.18) for the same period last
year. -- Cash flow: $0.39 million from operating activities.
Non-GAAP results for the first quarter of 2006 excludes the impact
of SFAS 123(R) and amortization of intangible assets. Non-GAAP
results for the first quarter of 2005 excludes amortization of
intangible assets. Please see the attached table for a full
reconciliation of GAAP to Non-GAAP results. "We are continuing to
execute on our strategy to position ourselves as a leader in our
major vertical markets," said Oded Bashan, President and CEO of
OTI. "We generated positive cash flow from operations this quarter,
and we strengthened our balance sheet with our cash position
reaching $52 million. We are investing in order to be prepared to
meet demand as the adoption of contactless solutions accelerates.
We continue to pursue a strategy of both internal and external
investment to meet these objectives." Operational Highlights -- OTI
delivers Taipei Fubon Bank key fobs as part of 2006 FIFA World
Cup(TM) promotion. MasterCard(R) PayPass(TM) contactless payment
featured on a 3-D Soccer Ball key chain -- OTI acquired InSeal SAS
to enhance support of contactless payments market -- OTI received
Vital Class A approval for Saturn 5000 contactless reader -- OTI
EasyFuel(TM) enters Costa Rica and Peru -- expanding presence in
Latin America Mr. Bashan continued, "We are pleased with our
progress, and all our major programs are on track. Although
visibility is low in terms of precise timing of full-scale
roll-outs, we believe the key indicators that we have previously
announced all remain positive." Conference call and Webcast
Information The Company has scheduled a conference call and
simultaneous Web cast for Tuesday, May 30, 2006, which will be
hosted by Oded Bashan, President and CEO, Guy Shafran, CFO, and
Ohad Bashan, Chief Marketing Officer and President OTI America, for
10:00 AM EDT to discuss operating results and future outlook. To
participate, call: 1-888-858-4723 (U.S. toll free) 1-809-245-917
(Israel toll free) 0-800-180-8316 (Germany toll free)
1-973-935-8508 (standard international) ID Code: OTI Q1 Conference
call. To attend the Web cast, 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 June 6th, by calling U.S.: 877-519-4471 or International;
973-341-3080 and entering the PIN number # 7405168 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
Company of the Year Award in the field of smart cards. For more
information on OTI, visit http://www.otiglobal.com/. OTI Contact:
Media Relations Galit Mendelson Adam Handelsman Director of
Corporate Communications 5W Public Relations 201 944 5200 ext. 111
212 999 5585 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. 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, 2005, 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. 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) Three months ended
March 31 2006 2005 (Unaudited) (Unaudited) Revenues Sales $8,017
$5,724 Licensing and transaction fees 1,038 825 Total revenues
9,055 6,549 Cost of Revenues Cost of sales 4,573 4,346 Total cost
of revenues 4,573 4,346 Gross profit 4,482 2,203 Operating Expenses
Research and development 1,828 1,240 Less - participation by the
Office of the Chief Scientist - 154 Research and development, net
1,828 1,086 Selling and marketing 1,429 1,392 General and
administrative 3,146 1,742 Amortization of intangible assets 186
121 Gain from sale of a subsidiary - (510) Total operating expenses
6,589 3,831 Operating loss (2,107) (1,628) Financial income
(expenses), net 326 (13) Other income, net 19 4 Loss before taxes
on income and minority interests (1,762) (1,637) Taxes on income
(11) (37) Minority interest 7 - Equity in loss of affiliate (196) -
Net loss $(1,962) $(1,674) Basic and diluted net loss per ordinary
share $(0.16) $(0.20) Weighted average number of ordinary shares
used in computing basic and diluted net loss per ordinary share
12,365,227 8,530,008 ON TRACK INNOVATIONS LTD CONDENSED NON-GAAP
CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except share
and per share data) Three months ended March 31 2006 2005
(Unaudited) (Unaudited) Revenues Sales $8,017 $5,724 Licensing and
transaction fees 1,038 825 Total revenues 9,055 6,549 Cost of
Revenues Cost of sales 4,569 4,346 Total cost of revenues 4,569
4,346 Gross profit 4,486 2,203 Operating Expenses Research and
development 1,544 1,240 Less - participation by the Office of the
Chief Scientist - 154 Research and development, net 1,544 1,086
Selling and marketing 1,387 1,392 General and administrative 2,814
1,742 Gain from sale of a subsidiary - (510) Total operating
expenses 5,745 3,710 Operating loss (1,259) (1,507) Financial
income (expenses), net 326 (13) Other income, net 19 4 Loss before
taxes on income and minority interests (914) (1,516) Taxes on
income (11) (37) Minority interest 7 - Equity in loss of affiliate
(196) - Net loss $(1,114) $(1,553) Basic and diluted net loss per
ordinary share $(0.09) $(0.18) Weighted average number of ordinary
shares used in computing basic and diluted net loss per ordinary
share 12,365,227 8,530,008 See next tables for full reconciliation
of GAAP to Non-GAAP results. ON TRACK INNOVATIONS LTD
RECONCILIATION BETWEEN GAAP TO NON-GAAP STATEMENT OF OPERATIONS (In
thousands, except share and per share data) Three Months Ended
March 31, 2006 GAAP Adjustments Non-GAAP (unaudited) (unaudited)
(unaudited) Revenues Sales $8,017 - $8,017 Licensing and
transaction fees 1,038 - 1,038 Total revenues 9,055 9,055 Cost of
Revenues Cost of sales 4,573 (4)(a) 4,569 Total cost of revenues
4,573 (4) 4,569 Gross profit 4,482 4 4,486 Operating Expenses
Research and development 1,828 (284)(a) 1,544 Selling and marketing
1,429 (42)(a) 1,387 General and administrative 3,146 (332)(a) 2,814
Amortization of intangible assets 186 (186)(b) - Total operating
expenses 6,589 844 5,745 Operating loss (2,107) 848 (1,259)
Financial income, net 326 - 326 Other income, net 19 - 19 Loss
before taxes on income and minority interests (1,762) 848 (914)
Taxes on income (11) - (11) Minority interest 7 - 7 Equity in loss
of affiliate (196) - (196) Net loss $ (1,962) $848 $ (1,114) Basic
and diluted net loss per ordinary share $(0.16) $0.07 $(0.09)
Weighted average number of ordinary shares used in computing basic
and diluted net loss per ordinary share 12,365,227 12,365,227 (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
March 31, 2005 GAAP Adjustments Non-GAAP (unaudited) (unaudited)
(unaudited) Revenues Sales $5,724 - $5,724 Licensing and
transaction fees 825 - 825 Total revenues 6,549 - 6,549 Cost of
Revenues Cost of sales 4,346 - 4,346 Total cost of revenues 4,346 -
4,346 Gross profit 2,203 - 2,203 Operating Expenses Research and
development 1,240 - 1,240 Less - participation by the Office of the
Chief Scientist 154 - 154 Research and development, net 1,086 -
1,086 Selling and marketing 1,392 - 1,392 General and
administrative 1,742 - 1,742 Amortization of intangible assets 121
(121)(b) - Gain from sale of a subsidiary (510) - (510) Total
operating expenses 3,831 121 3,710 Operating loss (1,628) 121 1,507
Financial expense, net 13 - 13 Other income, net (4) - (4) Loss
before taxes on income and minority interests (1,637) 121 (1,516)
Taxes on income 37 - 37 Net loss (1,674) $121 (1,553) Basic and
diluted net loss per ordinary share $(0.20) $0.02 $(0.18) Weighted
average number of ordinary shares used in computing basic and
diluted net loss per ordinary share 8,530,008 8,530,008 (b) The
effect of amortization of intangible assets. ON TRACK INNOVATIONS
LTD CONDENSED CONSOLIDATED BALANCE SHEET (In thousands, except
share and per share data) March 31 December 31 2006 2005
(Unaudited) (Audited) Assets Current Assets Cash and cash
equivalents $42,115 $29,657 Short-term investments 9,743 20,004
Trade receivables (net of allowance for doubtful accounts of $ 785
as of March 31, 2006 and December 31, 2005) 8,004 8,350 Other
receivables and prepaid expenses 2,871 3,156 Inventories 7,254
6,747 Total current assets 69,987 67,914 Severance Pay Deposits
Fund 584 583 Long-Term Receivables 827 878 Investment in an
affiliated company 2,411 2,607 Property, Plant and Equipment, Net
7,669 7,009 Intangible Assets, Net 1,735 1,921 Goodwill 4,146 4,146
Total Assets $87,359 $85,058 ON TRACK INNOVATIONS LTD CONDENSED
CONSOLIDATED BALANCE SHEET (In thousands, except share and per
share data) March 31 December 31 2006 2005 (Unaudited) (Audited)
Liabilities and Shareholders' Equity Current Liabilities Short-term
bank credit and current maturities of long-term bank loans $1,191
$760 Trade payables 5,982 4,245 Other current liabilities 4,422
5,771 Total current liabilities 11,595 10,776 Long-Term Liabilities
Long-term loans, net of current maturities 1,529 1,535 Accrued
severance pay 2,243 1,909 Deferred tax liabilities 350 293 Total
long-term liabilities 4,122 3,737 Total liabilities 15,717 14,513
Minority interests 303 310 Shareholders' Equity Ordinary shares of
NIS 0.1 par value: authorized - 30,000,000 shares as of March 31,
2006 and December 31, 2005; issued and outstanding - 12,520,835 and
11,932,074 shares as of March 31, 2006 and December 31, 2005,
respectively 289 274 Additional paid-in capital 130,985 128,761
Deferred compensation - (833) Accumulated other comprehensive
income 226 232 Accumulated deficit (60,161) (58,199) Total
shareholders' equity 71,339 70,235 Total Liabilities and
Shareholders' Equity $87,359 $85,058 ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands,
except share and per share data) Three months ended March 31 2006
2005 (Unaudited)(Unaudited) Cash flows from operating activities
Net loss $(1,962) $(1,674) Adjustments required to reconcile net
loss to net cash provided by operating activities: Stock-based
compensation related to options and shares issued to employees and
others 943 1,261 Equity in loss of affiliate 196 - Gain from sale
of a subsidiary - (510) Amortization of intangible assets 186 145
Depreciation 364 136 Minority interests (7) - Accrued severance
pay, net 333 256 Decrease (increase) in trade receivables 360
(1,331) Decrease in other receivables and prepaid expenses 291 185
Decrease (increase) in inventories (520) 27 Increase in trade
payables 1,608 316 Increase (decrease) in other current liabilities
(1,349) 1,306 Other, net (53) (20) Net cash provided by operating
activities 390 97 Cash flows from investing activities Proceeds
from maturity of available-for sale securities 12,387 - Purchase of
available-for sale securities (2,044) (4,987) Purchase of property
and equipment (1,039) (157) Receipts on account of loans and
receivables 86 705 Other, net 10 (1) Net cash provided by (used in)
investing activities 9,400 (4,440) Cash flows from financing
activities Increase in short-term bank credit, net 616 219
Repayment of long-term bank loans (203) (224) Exercise of options
and warrants 2,253 947 Net cash provided by financing activities
2,666 942 Effect of exchange rate changes on cash 2 (42) Increase
(decrease) in cash and cash equivalents 12,458 (3,443) Cash and
cash equivalents at the beginning of the period 29,657 23,917 Cash
and cash equivalents at the end of the $42,115 $20,474 DATASOURCE:
On Track Innovations Ltd. CONTACT: Galit Mendelson, Director of
Corporate Communications for OTI, +1-201-944-5200 ext. 111, ; Media
Relations - Adam Handelsman of 5W Public Relations,
+1-212-999-5585, Web site: http://www.otiglobal.com/
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