Six Month Revenues up 7% Compared to the Same Period Last Year FORT
LEE, N.J., Aug. 27 /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 six months and the
second quarter ended June 30, 2007. * Revenues: Revenues for the
six months ended June 30, 2007 were $20.6 million, an increase of
7% compared to $19.4 million in the same period last year. Revenues
in the second quarter were $10.2 million, a decrease of 1% compared
to $10.3 million in the same period last year. * GAAP Gross Profit:
GAAP Gross Profit for the six months ended June 30, 2007 was $8.4
million, a decrease of 6% compared to $9.0 million in the same
period last year. In the second quarter GAAP gross profit was $4.4
million, a decrease of 3% compared to $4.5 million in the second
quarter of 2006. GAAP gross margin for the six months ended June
30, 2007 was 41% compared to 46% in the same period last year. GAAP
gross margin in the quarter was 43% compared to 44% in the second
quarter of 2006. * Non-GAAP Gross Profit: Non-GAAP Gross Profit was
$8.4 million, for the six months ended June 30, 2007, a decrease of
6% compared to $9.0 million in the same period last year. Non-GAAP
Gross Profit for the second quarter of 2007 was $4.4 million, a
decrease of 2% compared to $4.5 million in the second quarter of
2006. Non-GAAP gross margin for the six months ended June 30, 2007
was 41% compared to 46% in the same period last year. Non-GAAP
gross margin in the second quarter was 43% compared to 44% in the
second quarter of 2006. * GAAP Net Loss: GAAP Net Loss for the six
months ended June 30, 2007 was $(7.3) million, an increase of 85%
compared to $(3.9) million in the same period last year. GAAP net
loss for the second quarter of 2007 was $(3.2) million, an increase
of 61% compared to $(2.0) million in the second quarter last year.
* Non-GAAP Net Loss: Non-GAAP Net Loss for the six months ended
June 30, 2007 was $(4.3) million, an increase of 112% compared to
$(2.0) million in the same period last year. Non-GAAP net loss for
the second quarter of 2007 was $(1.8) million an increase of 99%
compared to $(928,000) in the second quarter last year. * GAAP Loss
per Share: GAAP Loss per Share for the six months ended June 30,
2007 was $(0.39) compared to $(0.31) in the same period last year.
GAAP loss per share for the second quarter of 2007 was $(0.17),
compared to $(0.15) in the second quarter of 2006. * Non-GAAP Loss
per Share: Non-GAAP Loss per Share for the six months ended June
30, 2007 was $(0.23) compared to $(0.16) in the same period last
year. Non-GAAP loss per share for the second quarter of 2007 was
$(0.10), compared to $(0.07) in the second quarter of 2006. *
Strong Balance Sheet: Total assets were at $117.3 million with cash
equivalent and short term investments totaling $44.1 million.
Non-GAAP results for the second quarter and six 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. "The first half
revenues are in accordance with our initial expectations," said
Oded Bashan, Chairman and CEO of OTI. "As we stated last quarter,
we are expecting a stronger second half, with most of the growth
realized towards the end of 2007." Conference call and Webcast
Information The Company has scheduled a conference call and
simultaneous Web cast for Monday, August 27, 2007, which will be
hosted by Oded Bashan, Chairman and CEO, Ohad Bashan, President,
and Guy Shafran, CFO, for 09:00 AM EDT 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) 1-973-582-2815 (standard international) ID Code: OTI Q2 2007
Results 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 September 3rd, by calling U.S.: 877-519-4471
or International; 973-341-3080 and entering the PIN number #9133176
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 (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, such as those regarding
a stronger second half, with most of the growth realized towards
the end of 2007. 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) Six months ended June 30 Three months ended
June 30 2007 2006 2007 2006 (Unaudited) (Unaudited) (Unaudited)
(Unaudited) Revenues Sales $ 19,289 $ 17,373 $ 9,791 $ 9,356
Licensing and transaction fees 1,325 1,983 448 945 Total revenues
20,614 19,356 10,239 10,301 Cost of Revenues Cost of sales 12,207
10,384 5,865 5,811 Total cost of revenues 12,207 10,384 5,865 5,811
Gross profit 8,407 8,972 4,374 4,490 Operating Expenses Research
and development 5,153 3,301 2,559 1,473 Selling and marketing 4,061
3,289 2,189 1,860 General and administrative 7,047 6,076 3,239
2,930 Amortization of intangible assets 657 368 329 182 Total
operating expenses 16,918 13,034 8,316 6,445 Operating loss (8,511)
(4,062) (3,942) (1,955) Financial income, net 1,191 736 594 410
Other income (expense), net (111) 14 - (5) Loss before taxes on
income and minority interests (7,431) (3,312) (3,348) (1,550) Taxes
on income 131 165 65 176 Minority interest 190 114 148 107 Equity
in loss of affiliate (162) (906) (42) (710) Net loss (7,272)
(3,939) (3,177) (1,977) Basic and diluted net loss per ordinary
share $ (0.39) $ (0.31) $ (0.17) $ (0.15) Weighted average number
of ordinary shares used in computing basic and diluted net loss per
ordinary share 18,641,927 12,641,778 18,942,626 12,905,557 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, 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. 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 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) (c) 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) (c) 1,985
Selling and marketing 2,189 (96) (c) 2,093 General and
administrative 3,239 (319) (c) 2,920 Amortization of intangible
assets 329 (329) (d) 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 (c) 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. (d) 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) Six Months Ended June 30, 2006 GAAP
Adjustments Non-GAAP (unaudited) (unaudited) (unaudited) Revenues
Sales $17,373 - $17,373 Licensing and transaction fees 1,983 -
1,983 Total revenues 19,356 19,356 Cost of Revenues Cost of sales
10,384 (8) (a) 10,376 Total cost of revenues 10,384 (8) 10,376
Gross profit 8,972 8 8,980 Operating Expenses Research and
development 3,301 (642) (a) 2,659 Selling and marketing 3,289 (240)
(a) 3,049 General and administrative 6,076 (639) (a) 5,437
Amortization of intangible assets 368 (368) (b) - Total operating
expenses 13,034 (1,889) 11,145 Operating loss (4,062) 1,897 (2,165)
Financial income, net 736 - 736 Other income, net 14 - 14 Loss
before taxes on income and minority interests (3,312) 1,897 (1,415)
Taxes on income 165 - 165 Minority interest 114 - 114 Equity in
loss of affiliate (906) - (906) Net loss $(3,939) $1,897 $ (2,042)
Basic and diluted net loss per ordinary share $ (0.31) $ 0.15 $
(0.16) Weighted average number of ordinary shares used in computing
basic and diluted net loss per ordinary share 12,641,778 12,641,778
(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 June
30, 2006 GAAP Adjustments Non-GAAP (unaudited) (unaudited)
(unaudited) Revenues Sales $9,356 - $9,356 Licensing and
transaction fees 945 - 945 Total revenues 10,301 10,301 Cost of
Revenues Cost of sales 5,811 (4) (c) 5,807 Total cost of revenues
5,811 (4) 5,807 Gross profit 4,490 4 4,494 Operating Expenses
Research and development 1,473 (358) (c) 1,115 Selling and
marketing 1,860 (198) (c) 1,662 General and administrative 2,930
(307) (c) 2,623 Amortization of intangible assets 182 (182) (d) -
Total operating expenses 6,445 (1,045) 5,400 Operating loss (1,955)
1,049 (906) Financial income, net 410 - 410 Other income, net (5) -
(5) Loss before taxes on income and minority interests (1,550)
1,049 (501) Taxes on income 176 - 176 Minority interest 107 - 107
Equity in loss of affiliate (710) - (710) Net loss $(1,977) $1,049
$(928) Basic and diluted net loss per ordinary share $ (0.15) $
0.08 $ (0.07) Weighted average number of ordinary shares used in
computing basic and diluted net loss per ordinary share 12,905,557
12,905,557 (c) 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. (d) 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 2007 2006 (Unaudited)
(Audited) Assets Current assets Cash and cash equivalents $ 8,914 $
30,049 Short-term investments 35,197 18,232 Trade receivables (net
of allowance for doubtful accounts of $213 and $234 as of June 30,
2007 and December 31, 2006, respectively) 9,555 10,155 Other
receivables and prepaid expenses 2,457 2,109 Inventories 11,704
10,344 Total current assets 67,827 70,889 Severance pay deposits
fund 1,084 1,087 Long-term receivables 873 1,043 Investment in an
affiliated company 1,506 1,627 Property, plant and equipment, net
17,423 13,318 Intangible assets, net 5,185 5,823 Goodwill 23,387
23,387 Total assets $117,285 $117,174 ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED BALANCE SHEET (In thousands, except share
and per share data) June 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 $1,502 $498 Trade payables 6,531 6,869 Other current
liabilities 3,874 3,331 Total current liabilities 11,907 10,698
Long-term liabilities Long-term loans, net of current maturities
1,950 2,117 Accrued severance pay 3,409 3,209 Deferred tax
liabilities 860 992 Total long-term liabilities 6,219 6,318 Total
liabilities 18,126 17,016 Minority interests 828 1,004
Shareholders' equity Ordinary shares of NIS 0.1 par value:
authorized - 50,000,000 shares as of June 30, 2007 and December 31,
2006; issued 19,246,508 and 18,592,880 shares as of June 30, 2007
and December 31, 2006, respectively; outstanding 19,011,810 and
18,243,539 shares as of June 30, 2007 and December 31, 2006,
respectively 445 431 Additional paid-in capital 169,352 163,102
Accumulated other comprehensive income 609 424 Accumulated deficit
(72,075) (64,803) Total shareholders' equity 98,331 99,154 Total
Liabilities and Shareholders' Equity $117,285 $117,174 ON TRACK
INNOVATIONS LTD CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (In
thousands, except share and per share data) Six months ended June
30 2007 2006 (Unaudited) (Unaudited) Cash flows from operating
activities Net loss $(7,272) $(3,939) Adjustments required to
reconcile net loss to net cash provided By (used in) operating
activities: Stock-based compensation related to options and shares
issued to employees and others 2,693 1,834 Equity in loss of
affiliate 162 906 Amortization of intangible assets 657 368
Depreciation 1,184 814 Minority interests (190) (114) Accrued
severance pay, net 203 771 Increase (decrease) in deferred tax
liabilities (132) 2 Decrease in trade receivables 711 1,109
Decrease (increase) in other receivables and prepaid expenses (347)
894 Increase in inventories (1,279) (465) Increase (decrease) in
trade payables (408) 1,139 Increase (decrease) in other current
liabilities 514 (1,850) Other, net (341) (397) Net cash provided by
(used in) operating activities (3,845) 1,072 Cash flows from
investing activities Acquisition of a consolidated subsidiary, net
of cash acquired - (23) Proceeds from maturity of available-for
sale securities 33,294 19,001 Purchase of available-for sale
securities (49,941) (8,622) Purchase of property and equipment
(1,631) (2,661) Receipts on account of loans and receivables 160
173 Other, net (19) 3 Net cash provided by (used in) investing
activities (18,137) 7,871 Cash flows from financing activities
Increase in short-term bank credit, net 1,018 823 Repayment of
long-term bank loans (208) (376) Proceeds from minority in
subsidiary - 1,941 Exercise of options and warrants 5 3,234 Net
cash provided by financing activities 815 5,622 Effect of exchange
rate changes on cash 32 2 Increase (decrease) in cash and cash
equivalents (21,135) 14,567 Cash and cash equivalents at the
beginning of the period 30,049 29,657 Cash and cash equivalents at
the end of the period $8,914 $44,224 DATASOURCE: On Track
Innovations Ltd. CONTACT: Galit Mendelson, Director of Corporate
Communications of On Track Innovations Ltd., +1-201-944-5200, Ext.
111, ; or Investors, Miri Segal of Strategic Growth International,
+1-212-838-1444, Web site: http://www.otiglobal.com/
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