* Annual revenues of $40.2 million
* Annual Non-GAAP Operating Expenses Excluding Other Expenses Reduced
by 17% to $28.5 million
* Implementing Cost Reduction Program
FORT LEE, N.J., March 23, 2009 (GLOBE NEWSWIRE) -- 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 unaudited consolidated financial results for the fourth quarter and fiscal year ended December 31, 2008.
* Total revenues for the year ended December 31, 2008 were $40.2
million, a decrease of 8% compared to $43.5 million in the same
period last year. Revenues for the fourth quarter were $9.1
million, a decrease of 30% compared to $13.0 million in the same
period last year.
* Strong balance sheet with total assets at $96 million and cash,
cash equivalents and short term investments at $28.1 million as
of December 31, 2008.
* Operating expenses for the year ended December 31, 2008, on a
non-GAAP basis and excluding other operating expenses related to
extraordinary legal and marketing activities, decreased by 17% to
$28.5 million from $34.4 million for 2007. On a GAAP basis
operating expenses were $38.8 million, a 5% decrease compared to
$40.8 million in 2007.
* Operating loss for the year ended December 31, 2008, on a non-GAAP
basis and excluding other operating expenses related to
extraordinary legal and marketing activities, was $12.8 million,
a 23% decrease compared to $16.8 million in 2007. Operating Loss
on GAAP basis was $23.2 million compared to $23.3 million for
2007.
* Net loss for the year ended December 31, 2008, on a non-GAAP basis,
was $17.2 million, a 22% increase compared to $14.1 million in
2007. Net loss on GAAP basis was $24.8 million, a 20% increase
compared to $20.6 million in 2007.
* OTI management may recognize, if any, a GAAP non-cash impairment
charge against its goodwill and other intangible assets. The
Company's goodwill and other intangible assets, according to its
unaudited consolidated financial results for the fourth quarter
and fiscal year ended December 31, 2008, amount to $28.1 million.
These non-cash GAAP charges affecting goodwill acquired in the
past will be reflected, if any, in the Company's reported GAAP
earnings and per share earnings which will be included in OTI's annual
report to be filed on Form 20-F with the U.S. Securities Exchange
Commission (SEC).
Oded Bashan, Chairman and Chief Executive Officer of OTI, said: "OTI has a strong balance sheet and is financially sound. We were, and remain, very sensitive regarding the operating expenses level of the company. In 2008 we successfully implemented a cost cutting plan, and were able to reduce our operating expenses on a non-GAAP basis (excluding other operating expenses) by 17%. Since the beginning of 2009, we have taken additional steps to reduce our operating expenses. On February 1st we have started to implement a program to further control and reduce our operating expenses. The program includes:
* a 10 percent executive pay cut, * workforce reduction, * reduction in employee benefits, * closing certain development activities for low margin products, and * consolidating production centers
We believe that through the implementation of the cost cutting program we will be able to reach our target of reducing our operating expenses on a non-GAAP basis to $25 million annually."
Mr. Bashan continued: "We are taking actions to assure that on one hand we have lean and efficient operations, and on the other hand we are focusing on increasing the business opportunities and focus on high margin products with and projects that provide recurring revenues."
"For 2009, based on current visibility, and assuming no project execution will be impacted by the global market conditions and instability, we are targeting revenues between $45-$50 million."
Conference call and Webcast Information
The Company has scheduled a conference call and simultaneous web cast for Monday, March 23, 2009, at 9:00 a.m. EDT to discuss operating results and future outlook. To participate, call: 1-866-345-5855 (U.S. toll free), 1-800-227-297 (Israel toll free). To listen to the web cast, use the following link: http://www.otiglobal.com/content.aspx?id=226. For those unable to participate, the teleconference will be available for replay until midnight, March 30th, by calling U.S.: 1-888-269-0005 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 EITF 96-18, and amortization of intangible assets in 2008 and exclude non-cash equity-based compensation charges in accordance with SFAS 123(R), and amortization of intangible assets in 2007. 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, loyalty programs and secure campuses. 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 www.otiglobal.com, the content of which is not part of this press release.
(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 statements regarding actions we plan to take in 2009, statements regarding our balance sheet and financial condition, statements regarding our expectations to finish 2009 in a better position than 2008 and statements regarding our targeted non-GAAP operating expenses, revenues, gross margin and burn rate for 2009. Forward-looking statements could be impacted by the effects of the protracted evaluation and validation period in the U.S. contactless payment cards market, 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, 2007, 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
2007 2008 2007 2008
(AUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
---------- ---------- ---------- ----------
Revenues
Sales $ 40,854 $ 37,582 $ 12,237 $ 8,317
Licensing and
transaction fees 2,631 2,635 779 751
---------- ---------- ---------- ----------
Total revenues 43,485 40,217 13,016 9,068
---------- ---------- ---------- ----------
Cost of Revenues
Cost of sales 25,918 24,582 7,451 5,609
---------- ---------- ---------- ----------
Total cost of
revenues 25,918 24,582 7,451 5,609
---------- ---------- ---------- ----------
Gross profit 17,567 15,635 5,565 3,459
---------- ---------- ---------- ----------
Operating Expenses
Research and
development, net 12,265 11,129 4,062 2,220
Selling and
marketing 9,670 9,987 2,812 2,508
General and
administrative 17,593 13,621 4,149 3,547
Amortization of
intangible assets 1,314 1,367 328 342
---------- ---------- ---------- ----------
Total operating
expenses before
other operating
expenses
40,842 36,104 11,351 8,617
Other operating
expenses -- 2,702 -- 1,490
---------- ---------- ---------- ----------
Operating expenses 40,842 38,806 11,351 10,107
Operating loss (23,275) (23,171) (5,786) (6,648)
Financial income
(expenses), net 1,862 (528) 390 139
Other expenses, net (136) -- (25) --
---------- ---------- ---------- ----------
Loss before taxes on
income and minority
interests (21,549) (23,699) (5,421) (6,509)
Income tax benefit 226 205 29 28
Minority shares in
loss (income) of
subsidiary 1,038 (57) -- (57)
Equity in loss of
affiliate (358) (1,270) (86) (928)
---------- ---------- ---------- ----------
Net loss $ (20,643) $ (24,821) $ (5,478) $ (7,466)
========== ========== ========== ==========
Basic and diluted
net loss per
ordinary share
from:
Net loss $ (1.09) $ (1.22) $ (0.29) $ (0.35)
---------- ---------- ---------- ----------
Weighted average
number of ordinary
shares used in
computing basic and
diluted net loss per
ordinary share 18,896,214 20,413,578 19,220,122 21,378,887
========== ========== ========== ==========
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,
2008
Adjustments
GAAP Non-GAAP
(UNAUDITED) (UNAUDITED)
Revenues
Sales $ 37,582 -- $ 37,582
Licensing and
transaction fees 2,635 -- 2,635
---------- ----------
Total revenues 40,217 40,217
---------- ----------
Cost of Revenues
Cost of sales 24,582 (60)(a) 24,522
---------- ----------
Total cost of revenues 24,582 (60) 24,522
---------- ----------
Gross profit 15,635 60 15,695
---------- ----------
Operating Expenses
Research and development 11,129 (2,901)(a) 8,228
Selling and marketing 9,987 (1,258)(a) 8,729
General and administrative 13,621 (2,034)(a) 11,587
Amortization of
intangible assets 1,367 (1,367)(b) --
---------- ----------
Total operating expenses
before other
operating expenses 36,104 (7,560) 28,544
Other operating expenses 2,702 -- 2,702
---------- ----------
Total operating expenses 38,806 (7,560) 31,246
---------- ----------
Operating loss (23,171) 7,620 (15,551)
Financial expenses, net (528) -- (528)
---------- ---------- ----------
Loss before taxes on income
and minority interests
(23,699) 7,620 (16,079)
Taxes on income 205 -- 205
Minority interests (57) -- (57)
Equity in loss of affiliate (1,270) -- (1,270)
---------- ---------- ----------
Net loss $ (24,821) $ 7,620 $ (17,201)
========== ========== ==========
Basic and diluted net loss
per ordinary share $ (1.22) $ 0.38 $ (0.84)
---------- ---------- ----------
Weighted average
number of
ordinary shares
used in
computing basic
and diluted
net loss per
ordinary share 20,413,578 20,413,578
========== ==========
(a) The effect of stock-based compensation in accordance with SFAS
123(R) and EITF 96-18.
(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,
2008
Adjustments
GAAP Non-GAAP
(UNAUDITED) (UNAUDITED)
Revenues
Sales $ 8,317 -- $ 8,317
Licensing and
transaction fees 751 -- 751
---------- ----------
Total revenues 9,068 9,068
---------- ----------
Cost of Revenues
Cost of sales 5,609 (15)(a) 5,594
---------- ----------
Total cost of revenues 5,609 (15) 5,594
---------- ----------
Gross profit 3,459 15 3,474
---------- ----------
Operating Expenses
Research and development 2,220 (533)(a) 1,687
Selling and marketing 2,508 (194)(a) 2,314
General and administrative 3,547 (377)(a) 3,170
Amortization of
intangible assets 342 (342)(b) --
---------- ----------
Total operating expenses
before other
operating expenses 8,617 (1,446) 7,171
Other operating expenses 1,490 -- 1,490
---------- ----------
Total operating expenses 10,107 (1,446) 8,661
---------- ----------
Operating loss (6,648) 1,461 (5,187)
Financial income, net 139 -- 139
---------- ---------- ----------
Loss before taxes on
income and
minority interests (6,509) 1,461 (5,048)
Taxes on income 28 -- 28
Minority interests (57) -- (57)
Equity in loss of affiliate (928) -- (928)
---------- ---------- ----------
Net loss $ (7,466) $ 1,461 $ (6,005)
========== ========== ==========
Basic and diluted
net loss per
ordinary share $ (0.35) $ 0.07 $ (0.28)
---------- ---------- ----------
Weighted average
number of
ordinary shares
used in
computing basic
and diluted
net loss per
ordinary share 21,378,887 21,378,887
========== ==========
(a) The effect of stock-based compensation in accordance with SFAS
123(R) and EITF 96-18.
(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,
2007
Adjustments
GAAP Non-GAAP
(AUDITED) (UNAUDITED)
Revenues
Sales $ 40,854 -- $ 40,854
Licensing and
transaction fees 2,631 -- 2,631
---------- ----------
Total revenues 43,485 43,485
---------- ----------
Cost of Revenues
Cost of sales 25,918 (46)(a) 25,872
---------- ----------
Total cost of revenues 25,918 (46) 25,872
---------- ----------
Gross profit 17,567 46 17,613
---------- ----------
Operating Expenses
Research and development 12,265 (2,320)(a) 9,945
Selling and marketing 9,670 (449)(a) 9,221
General and administrative 17,593 (2,378)(a) 15,215
Amortization of
intangible assets 1,314 (1,314)(b) --
---------- ----------
Total operating expenses 40,842 (6,461) 34,381
---------- ----------
Operating loss (23,275) 6,507 (16,768)
Financial income, net 1,862 -- 1,862
Other expenses, net (136) -- (136)
---------- ----------
Loss before taxes
on income and
minority interests (21,549) 6,507 (15,042)
Taxes on income 226 -- 226
Minority interests 1,038 -- 1,038
Equity in loss of affiliate (358) -- (358)
---------- ----------
Net loss $ (20,643) $ 6,507 $ (14,136)
========== ========== ==========
Basic and diluted
net loss per
ordinary share $ (1.09) $ 0.34 $ (0.75)
---------- ----------
Weighted average
number of
ordinary shares
used in
computing basic
and diluted
net loss per
ordinary share 18,896,214 18,896,214
========== ==========
(a) The effect of stock-based compensation in accordance with SFAS
123(R).
(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
Three Months
Ended
December 31,
2007
Adjustments
GAAP Non-GAAP
(UNAUDITED) (UNAUDITED)
Revenues
Sales $ 12,237 -- $ 12,237
Licensing and
transaction fees 779 -- 779
---------- ----------
Total revenues 13,016 13,016
---------- ----------
Cost of Revenues
Cost of sales 7,451 (7)(a) 7,444
---------- ----------
Total cost of revenues 7,451 (7) 7,444
---------- ----------
Gross profit 5,565 7 5,572
---------- ----------
Operating Expenses
Research and development 4,062 (687)(a) 3,375
Selling and marketing 2,812 (209)(a) 2,603
General and administrative 4,149 (482)(a) 3,667
Amortization of
intangible assets 328 (328)(b) --
---------- ----------
Total operating expenses 11,351 (1,706) 9,645
---------- ----------
Operating gain (loss) (5,786) 1,713 (4,073)
Financial income, net 390 -- 390
Other expenses, net (25) -- (25)
---------- ---------- ----------
Gain (Loss) before
taxes on income and
minority interests (5,421) 1,713 (3,708)
Tax on income 29 -- 29
Minority interests -- -- --
Equity in loss of
affiliate (86) -- (86)
---------- ---------- ----------
Net Income(loss) $ (5,478) $ 1,713 $ (3,765)
========== ========== ==========
Basic and diluted
net loss per
ordinary share $ (0.29) $ 0.09 $ (0.20)
---------- ---------- ----------
Weighted average
number of ordinary
shares used in
computing basic and
diluted net loss per
ordinary share 19,220,122 19,220,122
========== ==========
(a) The effect of stock-based compensation in accordance with SFAS
123(R).
(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,
--------------------
2007 2008
(AUDITED) (UNAUDITED)
--------- ---------
Assets
Current assets
Cash and cash equivalents $ 35,470 $ 27,196
Short-term investments 6,379 904
Trade receivables (net of allowance
for doubtful accounts of $2,767 and
$3,315 as of December 31, 2007 and
2008, respectively) 8,028 4,567
Other receivables and
prepaid expenses 3,636 2,994
Inventories 13,242 12,343
--------- ---------
Total current assets 66,755 48,004
--------- ---------
Severance pay deposits fund 1,576 1,189
Investment in an
affiliated company 1,382 --
Property, plant and
equipment, net 20,851 18,613
Intangible assets, net 4,509 3,930
Goodwill 23,387 24,217
--------- ---------
Total assets $ 118,460 $ 95,953
========= =========
ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
December 31,
--------------------
2007 2008
(AUDITED) (UNAUDITED)
--------- ---------
Liabilities and Shareholders' Equity
Current Liabilities
Short-term bank credit and current maturities
of long-term bank loans $ 5,336 $ 4,984
Trade payables 10,291 8,071
Other current liabilities 5,344 3,517
--------- ---------
Total current liabilities 20,971 16,572
--------- ---------
Long-Term Liabilities
Long-term loans, net of current maturities 2,432 1,762
Accrued severance pay 3,981 3,672
Deferred tax liability 728 672
--------- ---------
Total long-term liabilities 7,141 6,106
--------- ---------
Total liabilities 28,112 22,678
--------- ---------
Commitments and Contingencies
Minority interests -- 415
Shareholders' Equity
Ordinary shares of NIS 0.1 par value:
Authorized - 50,000,000 shares as of
December 31, 2007 and December 31, 2008;
issued 19,627,068 and 21,534,788 shares as
of December 31, 2007 and December 31, 2008,
respectively; outstanding 19,434,011 and
21,495,409 shares as of December 31, 2007
and December 31, 2008, respectively 454 508
Additional paid-in capital 174,494 182,944
Accumulated other comprehensive income (loss) 846 (325)
Accumulated deficit (85,446) (110,267)
--------- ---------
Total shareholder's equity 90,348 72,860
--------- ---------
Total liabilities and shareholders' equity $ 118,460 $ 95,953
========= =========
ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands, except share and per share data)
2007 2008
(AUDITED) (UNAUDITED)
--------- ---------
Cash flows from operating activities
Net loss $ (20,643) $ (24,821)
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 6,947 6,253
Loss on sale of property and equipment 13 25
Amortization of intangible assets 1,314 1,367
Depreciation 2,580 3,044
Equity in net losses of an affiliated company 358 1,270
Accrued severance pay, net 283 78
Minority share in income (loss)
of subsidiaries (1,038) 57
Accrued interest and linkage differences
on long-term loans (294) (27)
Decrease in deferred tax liability (262) (241)
Decrease in trade receivables 104 2,702
Increase in allowance for doubtful account 2,533 548
Decrease (increase) in other receivables
and prepaid expenses (686) 567
Decrease (increase) in inventories (2,776) 869
Increase (decrease) in trade payables 3,314 (1,859)
Increase (decrease) in other
current liabilities 1,966 (2,008)
--------- ---------
Net cash used in operating activities (6,287) (12,176)
--------- ---------
Cash flows from investing activities
Receipts on account of loans and receivables 837 --
Acquisition of consolidated subsidiary,
net of cash acquired -- (565)
Purchase of property and equipment (6,190) (1,518)
Purchase of available-for-sale securities (136,094) (29,068)
Proceeds from maturity of
available-for-sale securities 148,049 34,551
Other, net -- 30
--------- ---------
Net cash provided by investing activities 6,602 3,430
--------- ---------
Cash flows from financing activities
Increase (decrease) in short-term
bank credit, net 4,804 (358)
Proceeds from long-term bank loans 739 --
Repayment of long-term bank loans (495) (508)
Proceeds from receipt on account of
shares and exercise of options
and warrants, net 11 1,464
--------- ---------
Net cash provided by financing activities 5,059 598
--------- ---------
--------- ---------
Effect of exchange rate changes on cash 47 (126)
--------- ---------
Increase (decrease) in cash and
cash equivalents 5,421 (8,274)
Cash and cash equivalents at the
beginning of the year 30,049 35,470
--------- ---------
Cash and cash equivalents at the
end of the year $ 35,470 $ 27,196
========= =========