- Annual revenues of $40.6 million; gross margin increased to 46%
from 39% in 2005 FORT LEE, N.J., March 5 /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 fourth
quarter and fiscal year ended December 31, 2006. - Revenues:
Revenues for the year ended December 31, 2006 were $40.6 million,
an increase of 14% compared to $35.7 million in the same period
last year. Revenues for the fourth quarter reached $13.2 million,
an increase of 42% compared to $9.3 million in the same period last
year. - Gross Margin: Gross margin for the year ended December 31,
2006 was 46% compared to 39% in the same period last year. Gross
margin for the fourth quarter was 48% compared to 52% in the fourth
quarter of 2005. - GAAP Net Income (Loss): GAAP net loss for the
year decreased to $(6.6) million from $(9.1) million in the same
period last year. GAAP net loss for the fourth quarter was $(0.3)
million, a substantial decrease compared to $(2.3) million in the
fourth quarter last year. - Non-GAAP Net Income (Loss): Non-GAAP
net loss for the year ended December 31, 2006 was $(3.4) million, a
substantial decrease compared to $(8.4) million in the same period
last year. Non GAAP net income for the fourth quarter was $0.5
million compared to a net loss of $(1.9) million in the fourth
quarter last year. - GAAP Net Income (Loss) per Share: GAAP loss
per share for the year was $(0.47) compared to $(0.96) in the same
period last year. GAAP loss per share for the fourth quarter was
$(0.02), compared to $(0.22) in the fourth quarter of 2005. -
Non-GAAP Income (Loss) per Share: Non-GAAP net loss per share for
the year was $(0.25), compared to $(0.88) in the same period last
year. Non-GAAP net income per share for the fourth quarter was
$0.03 compared to a net loss per share of $(0.18) for the same
period last year. - Strong Balance Sheet with cash, equivalents and
short term investment totaling $48.3 Million. - GAAP operating
expenses: GAAP operating expenses for the year were $26.8 million
compared to $24.2 million for the same period last year. GAAP
operating expenses for the fourth quarter were $6.8 million
compared to $7.3 million for the same period last year. - Non-GAAP
Operating Expenses: $ 23.6 million for the year ended December 31,
2006 compared to $23.5 million for the same period last year. Non-
GAAP operating expenses for the fourth quarter were $6.0 million
compared to $6.9 million in the same period last year. Non-GAAP
results for the fourth quarter and fiscal year ended December 31,
2006 excludes the impact of SFAS 123(R) and amortization of
intangible assets. Non-GAAP results for the fourth quarter and
fiscal year of 2005 excludes amortization of intangible assets.
Please see the attached tables for a full reconciliation of GAAP to
Non-GAAP results. Commenting on the results, Oded Bashan, Chairman,
President & CEO of OTI, said, "We are pleased with the company
results in 2006, we had good revenue performance, improved gross
margin, which, together with our ability to control operating
expenses on a Non-GAAP basis, enabled us to significantly reduce
our GAAP loss and achieve a net profit on a non-GAAP basis. The
modest decline in cash primarily reflects the need to invest in
working capital to support large projects in hand and future
growth. "Looking ahead, we believe the two strategic acquisitions
we completed during 2006 will enhance our capabilities in both the
payments and ID markets and position us to increase market share
and expand the number of opportunities. The primary impact of the
SuperCom IPS assets acquisition will occur in the second half of
2007. "While quarter to quarter lumpiness is characteristic of the
early-stage markets in which we participate, we see no major
changes in business conditions in any of our vertical markets and
we expect to achieve our long term growth trend of 20%-25% for
2007, we expect the second half to be significantly stronger than
the first half and growth to be driven mainly by the petroleum and
ID markets as well as expansion in the payment markets." Conference
call and Webcast Information The Company has scheduled a conference
call and simultaneous Web cast for Monday, March 5, 2007, which
will be hosted by Oded Bashan, President and CEO, Guy Shafran, CFO,
and Ohad Bashan, Chief Marketing Officer and President OTI America,
for 9:00 AM EST to discuss operating results and future outlook. To
participate, call: 1-888-868-9083 (U.S. toll free), 1-809-245-917
(Israel toll free), 0-800-180-8316 (Germany toll free),
1-973-935-8512 (Standard international). 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 March 11th, by calling U.S/: 877-519-4471 or
International; 973-341-3080 and entering the PIN number # 8503799
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/. OTI Contact: Galit Mendelson
Director of Corporate Communications 201 944 5200 ext. 111 (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. 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 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, 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) Year ended Three months
ended December 31 December 31 2006 2005 2006 2005 Revenues Sales
$35,171 $32,266 $10,417 $8,082 Licensing and transaction fees 5,382
3,398 2,775 1,183 Total revenues 40,553 35,664 13,192 9,265 Cost of
Revenues Cost of sales 21,871 21,629 6,911 4,422 Total cost of
revenues 21,871 21,629 6,911 4,422 Gross profit 18,682 14,035 6,281
4,843 Operating Expenses Research and development 7,065 5,405 1,811
1,187 Less - participation by the Office of the Chief Scientist -
618 - (33) Research and development, net 7,065 4,787 1,811 1,220
Selling and marketing 7,072 7,620 1,952 2,811 General and
administrative 11,948 9,666 2,771 2,764 Amortization of intangible
assets 821 700 264 415 Expenses relating to raising of capital,
exchange of subsidiary's employees equity interests in equity
interest of the company and new acquisitions in the Far East* -
1,768 - - Loss (Gain) from sale of subsidiaries (122) (374) - 136
Total operating expenses 26,784 24,167 6,798 7,346 Operating loss
(8,102) (10,132) (517) (2,503) Financial income, net 1,712 669 434
107 Other expenses, net (75) (84) (95) (137) Loss before taxes on
income and minority interests (6,465) (9,547) (178) (2,533) Tax on
income 323 175 9 352 Minority interests 625 (185) 32 (106) Equity
in loss of affiliate (1,087) - (118) (5) Loss before extraordinary
item $(6,604) $(9,557) $(255) $(2,292) Extraordinary item - 444 - -
Net loss $(6,604) $(9,113) $(255) $(2,292) Basic and diluted net
loss per ordinary share from: Loss before extraordinary item $
(0.47) $ (1.01) $ (0.02) $ (0.22) Extraordinary item $ - $ 0.05 $-
$- Net loss $ (0.47) $ (0.96) $ (0.02) $ (0.22) Weighted average
number of ordinary shares used in computing basic and diluted net
loss per ordinary share 13,919,958 9,512,198 15,309,225 10,403,971
* Consist of: Research and development $- $78 $- $- Selling and
marketing - 231 - - General and administrative - 1,459 - - $-
$1,768 $- $- ON TRACK INNOVATIONS LTD CONDENSED NON-GAAP
CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except share
and per share data) Year ended Three months ended December 31
December 31 2006 2005 2006 2005 Revenues Sales $35,171 $32,266
$10,417 $8,802 Licensing and transaction fees 5,382 3,398 2,775
1,183 Total revenues 40,553 35,664 13,192 9,265 Cost of Revenues
Cost of sales 21,856 21,629 6,907 4,422 Total cost of revenues
21,856 21,629 6,907 4,422 Gross profit 18,697 14,035 6,285 4,843
Operating Expenses Research and development 6,019 5,405 1,563 1,187
Less - participation by the Office of the Chief Scientist - 618 -
(33) Research and development, net 6,019 4,787 1,563 1,220 Selling
and marketing 6,957 7,620 1,935 2,811 General and administrative
10,769 9,666 2,509 2,764 Expenses relating to raising of capital,
exchange of subsidiary's employees equity interests in equity
interest of the company and new acquisitions in the Far East* -
1,768 - - Gain (Loss) from sale of subsidiaries (122) (374) - 136
Total operating expenses 23,623 23,467 6,007 6,931 Operating Gain
(loss) (4,926) (9,432) 278 (2,088) Financial income, net 1,712 669
434 107 Other expenses, net (75) (84) (95) (137) Gain (Loss) before
taxes on income and minority interests (3,289) (8,847) 617 (2,118)
Tax on income 323 175 9 352 Minority interests 625 (185) 32 (106)
Equity in loss of affiliate (1,087) - (118) (5) Gain (Loss) before
extraordinary item $(3,428) $(8,857) $540 $(1,877) Extraordinary
item - 444 - - Net gain (loss) $(3,428) $(8,413) $540 $(1,877)
Basic and diluted net loss per ordinary share from: Gain (loss)
before extraordinary item $ (0.25) $ (0.93) $0.03 $ (0.18)
Extraordinary item $ - $ 0.05 $ - $- Net income (loss) $ (0.25) $
(0.88) $0.03 $ (0.18) Weighted average number of ordinary shares
used in computing net income (loss) per ordinary share - Basic
13,919,958 9,512,198 15,309,225 10,403,971 Dilutive 13,919,958
9,512,198 15,978,747 10,403,971 * Consist of: Research and
development $- $78 $- $- Selling and marketing - 231 - - General
and administrative - 1,459 - - $- $1,768 $- $- 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) Year
ended December 31, 2006 GAAP Adjustments Non-GAAP Revenues Sales
$35,171 - $35,171 Licensing and transaction fees 5,382 - 5,382
Total revenues 40,553 40,553 Cost of Revenues Cost of sales 21,871
(15) (a) 21,856 Total cost of revenues 21,871 (15) 21,856 Gross
profit 18,682 15 18,697 Operating Expenses Research and development
7,065 (1,046) (a) 6,019 Selling and marketing 7,072 (115) (a) 6,957
General and administrative 11,948 (1,179) (a) 10,769 Amortization
of intangible assets 821 (821) (b) - Gain from sale of subsidiaries
(122) - (122) Total operating expenses 26,784 3,161 23,623
Operating loss (8,102) 3,176 (4,926) Financial income, net 1,712 -
1,712 Other expenses, net (75) - (75) Loss before taxes on income
and minority interests (6,465) 3,176 (3,289) Taxes on income 323 -
323 Minority interests 625 - 625 Equity in loss of affiliate
(1,087) - (1,087) Net loss $(6,604) $3,176 $ (3,428) Basic and
diluted net loss per ordinary share $(0.47) $0.22 $(0.25) Weighted
average number of ordinary shares used in computing basic and
diluted net loss per ordinary share 13,919,958 13,919,958 (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
December 31, 2006 GAAP Adjustments Non-GAAP Revenues Sales $10,417
- $10,417 Licensing and transaction fees 2,775 - 2,775 Total
revenues 13,192 13,192 Cost of Revenues Cost of sales 6,911 (4) (a)
6,907 Total cost of revenues 6,911 (4) 6,907 Gross profit 6,281 4
6,285 Operating Expenses Research and development 1,811 (248) (a)
1,563 Selling and marketing 1,952 (17) (a) 1,935 General and
administrative 2,771 (262) (a) 2,509 Amortization of intangible
assets 264 (264) (b) - Total operating expenses 6,798 791 6,007
Operating gain (loss) (517) 795 278 Financial income, net 434 - 434
Other expenses, net (95) - (95) Gain (Loss) before taxes on income
and minority interests (178) 795 617 Tax on income 9 - 9 Minority
interests 32 - 32 Equity in loss of affiliate (118) - (118) Net
Income(loss) $(255) $795 $540 Basic and diluted net income (loss)
per ordinary share $(0.02) $0.05 $0.03 Weighted average number of
ordinary shares used in computing basic net loss per ordinary share
15,309,225 15,309,225 Weighted average number of ordinary shares
used in computing diluted net loss per ordinary share 15,978,747
15,978,747 (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) Year ended December 31,
2005 GAAP Adjustments Non-GAAP Revenues Sales $32,266 - $32,266
Licensing and transaction fees 3,398 - 3,398 Total revenues 35,664
- 35,664 Cost of Revenues Cost of sales 21,629 - 21,629 Total cost
of revenues 21,629 - 21,629 Gross profit 14,035 - 14,035 Operating
Expenses Research and development 5,405 - 5,405 Less -
participation by the Office of the Chief Scientist 618 - 618
Research and development, net 4,787 - 4,787 Selling and marketing
7,620 - 7,620 General and administrative 9,666 - 9,666 Amortization
of intangible assets 700 (700) (b) - Expenses relating to raising
of capital, exchange of subsidiary's employees equity interests in
equity interest of the company and new acquisitions in the Far
East* 1,768 - 1,768 Gain from sale of subsidiaries (374) - (374)
Total operating expenses 24,167 700 23,467 Operating loss (10,132)
700 (9,432) Financial income, net 669 - 669 Other expenses, net
(84) - (84) Loss before taxes on income and minority interests
(9,547) 700 (8,847) Tax on income 175 - 175 Minority interests
(185) - (185) Loss before extraordinary item (9,557) - (8,857)
Extraordinary item 444 - 444 Net loss $(9,113) $700 $(8,413) Basic
and diluted net loss per ordinary share Loss before extraordinary
item $(1.01) $0.07 $(0.93) Extraordinary item $0.05 - $0.05 Net
loss $(0.96) $0.07 $(0.88) Weighted average number of ordinary
shares used in computing basic and diluted net loss per ordinary
share 9,512,198 9,512,198 * Consist of: Research and development
$78 Selling and marketing 231 General and administrative 1,459
$1,768 (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) GAAP Three Months Ended Non-GAAP December 31, 2005
Adjustments Revenues Sales $8,802 - $8,802 Licensing and
transaction fees 1,183 - 1,183 Total revenues 9,265 - 9,265 Cost of
Revenues Cost of sales 4,422 - 4,422 Total cost of revenues 4,422 -
4,422 Gross profit 4,843 - 4,843 Operating Expenses Research and
development 1,187 - 1,187 Less - participation by the Office of the
Chief Scientist (33) - (33) Research and development, net 1,220 -
1,220 Selling and marketing 2,811 - 2,811 General and
administrative 2,764 - 2,764 Amortization of intangible assets 415
(415) (b) - Loss from sale of subsidiaries 136 136 Total operating
expenses 7,346 (415) 6,931 Operating loss (2,503) 415 (2,088)
Financial income, net 107 - 107 Other expenses, net (137) (137)
Loss before taxes on income and minority interests (2,533) 415
(2,118) Tax on income 352 - 352 Minority interests (106) - (106)
Equity loss of affiliate (5) - (5) Net loss $(2,292) $415 $(1,877)
Basic and diluted net loss per ordinary share $(0.22) $0.04 $(0.18)
Weighted average number of ordinary shares used in computing basic
and diluted net loss per ordinary share 10,403,971 10,403,971 (b)
The effect of amortization of intangible assets. ON TRACK
INNOVATIONS LTD CONDENSED CONSOLIDATED BALANCE SHEET (In thousands,
except share and per share data) December 31 December 31 2006 2005
Assets Current Assets Cash and cash equivalents $30,049 $29,657
Short-term investments 18,232 20,004 Trade receivables (net of
allowance for doubtful accounts of $234 and $785 as of December 31,
2006 and December 31, 2005, respectively) 10,155 8,350 Other
receivables and prepaid expenses 2,109 3,156 Inventories 10,344
6,747 Total current assets 70,889 67,914 Severance Pay Deposits
Fund 1,087 583 Long-Term Receivables 1,043 878 Investment in an
affiliated company 1,627 2,607 Property, Plant and Equipment, Net
13,318 7,009 Intangible Assets, Net 5,823 1,921 Goodwill 23,387
4,146 Total Assets $117,174 $85,058 Liabilities and Shareholders'
Equity Current Liabilities Short-term bank credit and current
maturities of long-term bank loans $498 $ 760 Trade payables 6,869
4,245 Other current liabilities 3,331 5,771 Total current
liabilities 10,698 10,776 Long-Term Liabilities Long-term loans,
net of current maturities 2,117 1,535 Accrued severance pay 3,209
1,909 Deferred tax liabilities 992 293 Total long-term liabilities
6,318 3,737 Total liabilities 17,016 14,513 Minority interests
1,004 310 Shareholders' equity Ordinary shares of NIS 0.1 par
value: authorized - 50,000,000 shares as of December 31, 2006 and
30,000,000 as of December 31, 2005; issued 18,592,880 and
11,932,074 shares as of December 31, 2006 and December 31, 2005,
respectively; outstanding 18,243,539 and 11,932,074 shares as of
December 31, 2006 and December 31, 2005, respectively 431 274
Additional paid-in capital 163,102 128,761 Deferred compensation -
(833) Accumulated other comprehensive income 424 232 Accumulated
deficit (64,803) (58,199) Total shareholders' equity 99,154 70,235
Total Liabilities and Shareholders' Equity $117,174 $85,058 ON
TRACK INNOVATIONS LTD CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS (In thousands, except share and per share data) Year ended
December, 31 2006 2005 Cash flows from operating activities Net
loss $(6,604) $(9,113) 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 3,783
9,841 Extraordinary item - (444) Gain from sale of subsidiaries
(122) (374) Loss (gain) on sale of property and equipment 44 (20)
Amortization of intangible assets 821 700 Depreciation 1,862 981
Equity in net losses of an affiliated company 1,087 - Accrued
severance pay, net 796 560 Minority share in income (loss) of
subsidiaries (625) (185) Accrued interest and linkage differences
on long-term loans (254) 67 Increase (decrease) in deferred tax
liabilities (216) 13 Decrease in short-term investments - -
Increase in trade receivables (2,424) (587) Decrease (increase) in
other receivables and prepaid expenses 1,142 (1,168) Increase in
inventories (3,204) (987) Increase (decrease) in trade payables
2,558 (1,119) Increase (decrease) in other current liabilities
(2,147) 895 Net cash used in operating activities (3,503) (940)
Cash flows from investing activities Receipts on account of loans
and receivables 350 909 Acquisition of business operations, net of
cash acquired (Supplement C) (23) 80 Sale of a consolidated
subsidiary, net of cash disposed of (Supplement D) (105) -
Investment in an affiliated company - (2,444) Purchase of property
and equipment (3,107) (1,918) Purchase of available-for-sale
securities (23,643) (17,875) Proceeds from maturity of
available-for-sale securities 25,446 2,431 Other, net (9) 20 Net
cash used in investing activities (1,091) (18,797) Cash flows from
financing activities Increase (decrease) in short-term bank credit,
net (231) (630) Proceeds from issuance of shares and detachable
warrants, net of issuance expenses - 20,051 Proceeds from long-term
bank loans 978 - Repayment of long-term bank loans (570) (721)
Proceeds from minority in subsidiary 1,548 - Proceeds from exercise
of options and warrants, net 3,196 6,709 Net cash provided by
financing activities 4,921 25,409 Effect of exchange rate changes
on cash 65 68 Increase in cash and cash equivalents 392 5,740 Cash
and cash equivalents at the beginning of the year 29,657 23,917
Cash and cash equivalents at the end of the year $30,049 $29,657
DATASOURCE: On Track Innovations Ltd. CONTACT: Galit Mendelson,
Director of Corporate Communications of On Track Innovations Ltd.,
+1-201-944-5200 ext. 111, or Web site: http://www.otiglobal.com/
http://www.otiglobal.com/content.aspx?id=226
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