Quarterly Revenues of $8.3 Million and Operating Income
of $0.3 Million
Conference Call Today at 10:00 am ET to Discuss Results
TEL AVIV, Israel, Aug. 13, 2008 (PRIME NEWSWIRE) -- Top Image Systems, Ltd. (Nasdaq:TISA) (TASE:TISA), the leading innovator of data capture solutions, today announced its financial results for the second quarter, ended June 30, 2008.
Second Quarter Highlights
-- Revenues reached $8.3 million, up 36% year-over-year
-- Operating income of $297 thousand
-- Sales pipeline stands at a record of around $110 million
-- Improved gross margin to 59% from 50% in the previous
quarter
Second Quarter 2008 Results
Revenues for the quarter increased 36% reaching $8.3 million, compared to $6.1 million in the second quarter of last year, and a decrease of 10% over the $9.3 million reported in the prior quarter. Approximately, 49% of second quarter revenues were generated from products and 51% from services.
Operating income for the quarter totaled $297 thousand, a substantial improvement from the operating income of $65 thousand for the second quarter of 2007 and a decrease of 32% compared to the operating income of $435 thousand reported in the prior quarter.
The Company adopted Financial Accounting Standard Board Statement no. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("FAS 159") as of the start of 2008. Therefore the Company's debenture is currently accounted for at fair value. This fair value is based on a base debenture market price, and is volatile on daily basis and the exchange rate between the Israeli shekel and U.S. dollar. While the debenture value fluctuation affects financial expenses, it has no affect on operating income.
On a GAAP basis, net loss for the quarter totaled $1.3 million compared to a net loss of $97 thousand in the second quarter last year, and a $1.3 million net income in the prior quarter. GAAP fully diluted loss per share in the second quarter totaled $0.140, compared to fully diluted loss per share of $0.011 in the second quarter of 2007, and fully diluted loss per share of $0.131 in the prior quarter.
Non-GAAP net loss for the quarter totaled $1.3 million, compared to a non-GAAP net income of $0.1 million in the second quarter of 2007 and a net income of $1.6 million in the prior quarter.
Non-GAAP net income (loss) excludes stock option compensation and amortization of intangible acquired assets, which totaled a negligible amount in the second quarter of 2008, $0.2 million in the second quarter of 2007 and $0.3 million in the prior quarter. A reconciliation between net income (loss) on a GAAP basis and a non-GAAP basis is included at the end of this press release.
Management comment
Dr. Ido Schechter, Top Image Systems' CEO, commented: "The first half of 2008 was very exciting and the strongest first half in our Company's history. We harvested the fruits of our investment during 2007 in building a strong infrastructure. Our operations in Europe and the Americas are performing very well and the transition from a sales mix favoring hardware and third party components to software and service in APAC is progressing according to our plans. TIS has established itself as the clear global technological leader in document capture solutions, which has given us significant traction in all our markets."
"Our progress in the first half of the year reflects our synergistic M&A activities last year, and the restructuring completed at the end of the year. In addition, the company saw some additional positive trends. Our sales team is executing at high levels; sales cycles are shrinking; the sales mix is improving; and our pipeline is growing. We are proud that the investments we have made both in infrastructure and on acquisitions are meaningfully contributing to the company's positive momentum as we enter the second half of 2008," concluded Dr. Schechter.
Conference Call
The Company will be holding a conference call today, August 13, 2008, at 10:00am ET (7:00am Pacific Time, 5:00pm Israel Time) to review the second quarter 2008 financial results and other corporate events.
Dr. Ido Schechter, CEO, will be on-line to discuss these results and take part in a question and answer session.
To participate, please call one of the following teleconferencing numbers at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.
U.S. Dial-in Number: 1 866 3455 855
ISRAEL Dial-in Number: 03 918 0609
INTERNATIONAL Dial-in Number: +972 3 918 0609
For those unable to listen to the live call, a replay of the call will be available from the day after the call in the investor relations section of Top Image Systems' website at: www.topimagesystems.com
About Top Image Systems
Top Image Systems is a leading innovator of enterprise solutions for managing and validating content entering organizations from various sources. Whether originating from mobile, electronic, paper or other sources, TIS solutions deliver the content to applications that drive the organization. TIS's eFLOW Unified Content Platform is a common platform for the company's solutions. TIS markets its platform in more than 40 countries through a multi-tier network of distributors, system integrators, value-added resellers as well as strategic partners. Visit the company's website http://www.TopImageSystems.com for more information.
The Top Image Systems logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4212
Caution Concerning Forward-Looking Statements
Certain matters discussed in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, particularly statements regarding future operating or financial performance. Words such as "will," "expects," "anticipates," "estimates," "intends," "believes," "plans" and words and terms of similar substance in connection with any discussion of future operating or financial performance identify forward-looking statements. These statements are based on management's current expectations or beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially including, but not limited to, risks in product development plans and schedules, rapid technological change, changes and delays in product approval and introduction, customer acceptance of new products, the impact of competitive products and pricing, market acceptance, the lengthy sales cycle, proprietary rights of TIS and its competitors, risk of operations in Israel, government regulation, dependence on third parties to manufacture products, quarterly fluctuations in sales of products in the Data Capture market (where in general the fourth quarter is the strongest and the first quarter is the weakest), TIS's ability to successfully integrate businesses it acquires, litigation (including litigation over intellectual property rights), general economic conditions and other risk factors detailed in the Company's most recent annual report on Form 20-F and other subsequent filings with the United States Securities and Exchange Commission. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.
Top Image Systems Ltd.
Consolidated Balance Sheet as at
Dec. 31, June 30,
2007 2008
------- -------
In thousands US$
Assets
Current assets:
Cash and cash equivalents 8,156 5,887
Short-term deposit -- 316
Marketable securities 5,050 --
Trade receivables and unbilled customers,
net 8,287 10,036
Other account receivables and prepaid
expenses 1,758 1,675
------- -------
Total current assets 23,251 17,914
------- -------
Long term assets:
Severance funds payable 861 994
Long-term deposits and long-term asset 600 702
Long-term marketable securities -- 950
Property and equipment, net 786 777
Investment in affiliates 596 698
Intangible assets and deferred finance cost,
net 2,475 2,013
Goodwill 7,665 8,059
------- -------
Total long-term assets 12,983 14,193
------- -------
Total assets 36,234 32,107
======= =======
Liabilities and Shareholders' Equity
Current liabilities:
Short-term bank loans 1,991 2,783
Trade payables 2,089 1,494
Deferred revenues 3,607 2,023
Accrued expenses and accounts payable 5,539 3,748
------- -------
Total current liabilities 13,226 10,048
------- -------
Long-term liabilities:
Convertible debentures *) 9,928 9,499
Embedded derivative of Convertible
debenture *) 1,671 --
Accrued severance payable 1,171 1,336
------- -------
Total long-term liabilities 12,770 10,835
------- -------
Total liabilities 25,996 20,883
------- -------
Shareholders' equity
Share capital - Ordinary share of
NIS 0.04 par value 98 98
Additional paid-in capital 31,025 31,092
Accumulated other comprehensive income 102 138
Accumulated deficit (20,987) (20,104)
------- -------
Total shareholders' equity 10,238 11,224
------- -------
Total liabilities and shareholders'
equity 36,234 32,107
======= =======
*) The Company adopted SFAS No. 159 as of the beginning of 2008 and
elected to apply the fair value option to convertible debentures
Top Image Systems Ltd.
Consolidated Statements of Operations for the
----------------------------------------------------------------------
Three months ended Six months ended
--------- ---------- --------- ---------
June 30, June 30, June 30, June 30,
--------- ---------- --------- ---------
2007 2008 2007 2008
--------- ---------- --------- ---------
In thousands US$, except per share data
Revenues
Product sales 3,421 4,118 5,168 9,358
Service
revenues 2,701 4,225 4,995 8,270
--------- ---------- --------- ---------
Total
revenues 6,122 8,343 10,163 17,628
--------- ---------- --------- ---------
Cost of revenues
Product costs 469 1,134 1,049 3,352
Service costs 1,836 2,283 3,390 4,662
--------- ---------- --------- ---------
Total cost of
revenues 2,305 3,417 4,439 8,014
--------- ---------- --------- ---------
Gross profit 3,817 4,926 5,724 9,614
--------- ---------- --------- ---------
Expenses
Research and
development
costs, net 619 460 1,186 837
Selling and
marketing 2,170 2,393 4,005 4,813
General and
administrative 963 1,776 1,930 3,232
--------- ---------- --------- ---------
3,752 4,629 7,121 8,882
--------- ---------- --------- ---------
Operating
profit (loss) 65 297 (1,397) 732
Financial
expenses, net (137) (1,506) (170) (732)
--------- ---------- --------- ---------
Loss before
taxes on income (72) (1,209) (1,567) --
Taxes on
Income (25) (16) (34) (37)
Other income -- -- 110 --
Equity profit
(loss) of
investment
in affiliates -- (29) -- 100
--------- ---------- --------- ---------
Net income
(loss) for
the period (97) (1,254) (1,491) 63
========= ========= ========= =========
Basic net income
(loss) per share (0.011) (0.140) (0.168) 0.007
========= ========= ========= =========
Weighted average
number of shares
used in computation
of basic net
income (loss)
per share 8,878,574 8,927,308 8,868,192 8,918,223
========= ========= ========= =========
Diluted net
income (loss)
per share (0.011) (0.140) (0.168) 0.007
========= ========= ========= =========
Weighted average
number of shares
used in computation
of diluted net
income (loss)
per share 8,878,574 8,948,920 8,868,192 8,940,156
========= ========= ========= =========
A reconciliation of Non GAAP net income to GAAP net income is as
follows (in thousands US$):
Three months ended Six months ended
--------- ---------- --------- ---------
June 30, June 30, June 30, June 30,
--------- ---------- --------- ---------
2007 2008 2007 2008
--------- ---------- --------- ---------
Net Income
(loss) for
the period (97) (1,254) (1,491) 63
Stock option
compensation
expenses 76 22 152 45
Amortization of
acquired
Intangible
Assets 130 (26) 205 285
--------- ---------- --------- ---------
Non-GAAP Net
Income (loss) 109 (1,258) (1,134) 393
========= ========== ========= =========