Top Image Systems Reports Third Quarter 2008 Results




    Record First 9 Month Revenues Totaled $26 Million, 56% Increase
                            Year-Over-Year

      Quarterly Revenues of $8.5 Million and Operating Income of
                             $0.2 Million

       Conference Call Today At 10:00 a.m. ET to Discuss Results

TEL AVIV, Israel, Nov. 12, 2008 (GLOBE NEWSWIRE) -- Top Image Systems, Ltd. (TIS) (Nasdaq:TISA) (TASE:TISA), the leading innovator of data capture solutions, today announced its financial results for the third quarter, ended September 30, 2008.

Highlights



    - Revenues reached $8.5 million, up 30% year-over-year
    - Operating income of $213 thousand
    - Improved gross margin to 54% from 39% in third quarter of
      last year
    - Continued strong sales pipeline
    - Operating profit over first 9 months of 2008 totaled
      $945 thousand

Third Quarter 2008 Results

Revenues for the quarter increased 30% reaching $8.5 million, compared to $6.5 million in the third quarter of last year, and a sequential increase of 1% over the $8.3 million reported in the prior quarter. Approximately, 50% of third quarter revenues were generated from products and 50% from services.

Operating income for the quarter totaled $213 thousand, a substantial improvement from the operating loss of $1,828 thousand for the third quarter of 2007 and a decrease of 28% compared to the operating income of $297 thousand reported in the prior quarter.

On a GAAP basis, net loss for the quarter totaled $1.0 million compared to a net loss of $2.0 million in the third quarter of last year, and a net loss of $1.3 million in the prior quarter. GAAP loss per share in the third quarter totaled $0.113, compared to a loss per share of $0.229 in the third quarter of 2007, and a loss per share of $0.140 in the prior quarter.

Non-GAAP net loss for the quarter totaled $0.9 million, compared to a non-GAAP net loss of $1.7 million in the third quarter of 2007 and a net loss of $1.3 million in the prior quarter.

Non-GAAP net income (loss) excludes stock option compensation and amortization of intangible acquired assets, which totaled $0.1 million in the third quarter of, $0.3 million in the third quarter of 2007 and a negligible amount in the prior quarter. A reconciliation between net income (loss) on a GAAP basis and a non-GAAP basis is included in the financial tables below.

Management comment

Dr. Ido Schechter, Top Image Systems' CEO, commented: "The first nine months of 2008 were a very exciting period and the strongest in our Company's history. In only the first three quarters of 2008, with $26.1 million in total revenues so far, we have already surpassed TIS's record annual revenue level. In fact, our growth in revenues of 30% over last year is all organic, and was driven by the robust performance of our branch offices worldwide, all of which are profitable. Our pipeline remains healthy and strong, and reflects our efforts to transition from a sales mix favoring hardware and third party components to software and services, especially in Asia Pacific. Thus, our pipeline now includes a higher proportion of projects based on solutions sales rather than hardware and third party components, and represents good ongoing revenue potential for us."

Dr. Schechter continued, "Nevertheless, we are aware that the world economy has deteriorated in a short period. While our results, our pipeline and visibility remain strong despite this development, we are taking preemptive steps to minimize any effects of a potentially sharp slowdown and to be prepared for the future. Over the past few months, we have strengthened our cooperation with our existing as well as new major partners throughout the world. Through these partnerships, we diversify and gain better access to many different local and vertical markets, thus building our pipeline and increasing the number of opportunities we approach."

Dr. Schechter concluded: "TIS has established itself as the clear global technological leader in document capture solutions. We strongly believe in the company's stability and look forward to maintaining our positive momentum going forward."

Conference Call

The Company will be holding a conference call today, November 12, 2008, at 10:00am ET (7:00am Pacific Time, 5:00pm Israel Time) to review the third 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: 1-888-642-5032
                  ISRAEL Dial-in Number: 03-918-0692
             INTERNATIONAL Dial-in Number: +972-3-918-0692

The call will also be broadcast live, and can be accessed through a link on Top Image Systems' website at: www.topimagesystems.com.

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.globenewswire.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,   Sept. 30,
                                                 2007        2008
                                               --------    --------
                                                 In thousands US$
 Assets

 Current assets:
 Cash and cash equivalents                        8,156       7,347
 Short term deposit                                  --         925
 Marketable securities                            5,050          --
 Trade receivables, net                           8,287       8,725

 Other account receivables and prepaid
  expenses                                        1,758       1,412
                                               --------    --------
 Total current assets                            23,251      18,409
                                               --------    --------
 Long term assets:
 Severance pay funds                                861       1,054
 Long-term deposits and long-term asset             600         685
 Long-term marketable securities                     --         630
 Property and equipment, net                        786         735
 Investment in affiliates                           596         680
 Intangible assets and deferred
  finance cost, net                               2,475       1,753
 Goodwill                                         7,665       7,554
                                               --------    --------
 Total long-term assets                          12,983      13,091
                                               --------    --------

                                               --------    --------
 Total assets                                    36,234      31,500
                                               ========    ========

 Liabilities and Shareholders' Equity

 Current liabilities:
 Short-term bank loans                            1,991       4,048
 Trade payables                                   2,089       1,861
 Deferred revenues                                3,607       1,312
 Accrued expenses and accounts payable            5,539       3,158
                                               --------    --------
 Total current liabilities                       13,226      10,379
                                               --------    --------
 Long-term liabilities:
 Convertible debentures                           9,928       9,936
 Embedded derivative of Convertible debenture     1,671          --
 Accrued severance pay                            1,171       1,380
                                               --------    --------
 Total long-term liabilities                     12,770      11,316
                                               --------    --------
 Total liabilities                               25,996      21,695
                                               --------    --------
 Shareholders' equity
 Share capital - Ordinary share of NIS 0.04
  par value                                          98          98
 Additional paid-in capital                      31,025      31,115
 Accumulated other comprehensive income             102        (293)
 Accumulated deficit                            (20,987)    (21,115)
                                               --------    --------
 Total shareholders' equity                      10,238       9,805
                                               --------    --------

                                               --------    --------
 Total liabilities and shareholders' equity      36,234      31,500
                                               ========    ========


 Top Image Systems Ltd.
 Statements of Operations for the
 --------------------------------------------------------------------

                      Three months ended         Nine months ended
                    -----------------------   -----------------------
                          September 30,             September 30,
                    -----------------------   -----------------------
                       2007         2008         2007         2008
                    ----------   ----------   ----------   ----------
                         In thousands US$, except per share data
 Revenues
 Product sales           2,932        4,238        8,100       13,596
 Service revenues        3,555        4,212        8,550       12,482
                    ----------   ----------   ----------   ----------
 Total revenues          6,487        8,450       16,650       26,078
                    ----------   ----------   ----------   ----------
 Cost of revenues
 Product costs           1,869        1,578        2,918        4,930
 Service costs           2,109        2,348        5,499        7,010
                    ----------   ----------   ----------   ----------
 Total cost of
  revenues               3,978        3,926        8,417       11,940
                    ----------   ----------   ----------   ----------
 Gross profit            2,509        4,524        8,233       14,138
                    ----------   ----------   ----------   ----------

 Expenses
                    ----------   ----------   ----------   ----------
 Research and
  development
  costs, net               732          423        1,918        1,260
 Selling and
  marketing              2,235        2,010        6,240        6,823
 General and
  administrative         1,370        1,878        3,300        5,110
                    ----------   ----------   ----------   ----------
                         4,337        4,311       11,458       13,193
                    ----------   ----------   ----------   ----------
 Operating
  profit
  (loss)                (1,828)         213       (3,225)         945
                    ----------   ----------   ----------   ----------
 Financing
  income
  (expenses), net          (94)      (1,222)        (264)      (1,954)
                    ----------   ----------   ----------   ----------
 Income (loss)
  before taxes
  on income             (1,922)      (1,009)      (3,489)      (1,009)
                    ----------   ----------   ----------   ----------
 Taxes on Income           (11)          (1)         (45)         (38)
                    ----------   ----------   ----------   ----------
 Other income               --           --          110           --
                    ----------   ----------   ----------   ----------
 Minority's
  share
  in profit of a
  subsidiary              (104)          --         (104)          --
                    ----------   ----------   ----------   ----------
 Equity profit
  (loss) of
  invest in
  affiliates                --           --           --          100
                    ----------   ----------   ----------   ----------
 Net income
  (loss) for the
  period                (2,037)      (1,010)      (3,528)        (947)
                    ==========   ==========   ==========   ==========
 Basic net income
  (loss) per
  share                 (0.229)      (0.113)      (0.398)      (0.106)
                    ==========   ==========   ==========   ==========
 Weighted average
  number of
  shares used in
  computation of
  basic net
  income (loss)
  per share          8,879,770    8,925,638    8,872,094    8,920,713
                    ==========   ==========   ==========   ==========
 Diluted net
  income (loss)
  per share             (0.229)      (0.113)      (0.398)      (0.106)
                    ==========   ==========   ==========   ==========
 Weighted average
  number of
  shares used in
  computation of
  diluted net
  income (loss)
  per share          8,879,770    8,925,638    8,872,094    8,920,713
                    ==========   ==========   ==========   ==========


 A reconciliation of Non GAAP net income to GAAP net income is as
 follows (in thousands US$):

                      Three months ended         Nine months ended
                    -----------------------   -----------------------
                          September 30,             September 30,
                    -----------------------   -----------------------
                       2007         2008         2007         2008
                    ----------   ----------   ----------   ----------
 Net Income
  (loss) for the
  period                (2,037)      (1,010)      (3,528)        (947)
 Stock option
  compensation
  expenses                 158           23          298           68
 Amortization of
  acquired
  Intangible
  Assets                   190          109          378          394
                    ----------   ----------   ----------   ----------
 Non-GAAP Net
  Income (loss)         (1,689)        (878)      (2,852)        (485)


            

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