I.D. Systems, Inc. Reports Third Quarter Financial Results

Woodcliff Lake, New Jersey, UNITED STATES


HACKENSACK, N.J., Nov. 1, 2007 (PRIME NEWSWIRE) -- I.D. Systems, Inc. (Nasdaq:IDSY) today announced its financial results for the third quarter of 2007. Revenues for the three months ended September 30, 2007, were $6.5 million, compared to $8.1 million for the three months ended September 30, 2006. GAAP net loss for the quarter was $790,000, or ($0.07) per basic and diluted share, compared to GAAP net income of $632,000, or $.06 per basic share and $.05 per diluted share, for the third quarter of 2006.

Non-GAAP net income for the third quarter of 2007 was $43,000, or break-even on a per-share basis, compared to non-GAAP net income of $1.4 million, or $0.13 per basic share and $0.11 per diluted share, for the third quarter of 2006. Non-GAAP results were calculated by adjusting GAAP net income (loss) for the impact of stock-based compensation, which was $833,000 for the third quarter of 2007 and $785,000 for the third quarter of 2006. A table entitled "Reconciliation of GAAP to Non-GAAP Financial Measures" is included in this press release.

"We are pleased with the quarter on several fronts," said Jeffrey Jagid, I.D. Systems' chairman and chief executive officer. "We received significant repeat business from several of our core customers, for whom our unique wireless technology continues to provide economic benefits by controlling, tracking and managing industrial vehicles. Our newly expanded, restructured sales and marketing organization has also made significant strides toward achieving its goal of diversifying our customer base and sources of revenue. I am also pleased to note that our gross margins remain strong. We are optimistic about the fourth quarter as well, as we focus on continued growth and a smoother, more predictable stream of quarter-to-quarter revenue."

For the quarter ended September 30, 2007, gross profit margin was 49.8%, compared to 44.3% for the corresponding period in 2006.

Selling, general and administrative expenses for the quarter increased 26.6% to $4.0 million, compared to $3.2 million for the third quarter in 2006. The increase was attributable primarily to increased payroll and related expenses resulting from the hiring of additional employees to position the company for growth.

Research and development expenditures increased 23.0% to $828,000 for the third quarter of 2007, compared to $673,000 for the corresponding period in 2006. The increase was attributable primarily to work performed relating to the development of European standards-compliant products.

Interest income for the quarter was $784,000, compared to $860,000 for the same period in 2006.

For the nine-month period ended September 30, 2007, revenues were $13.4 million, compared to $20.8 million for the nine months ended September 30, 2006. Gross profit margin for the nine-month period was 48.8%, compared to 46.3% for the comparable period in 2006. GAAP net loss for the nine-month period was $4.9 million, or ($.43) per basic and diluted share, compared to GAAP net income of $938,000, or $0.09 per basic share and $0.08 per diluted share for the first nine months of 2006.

Adjusting for $2.4 million in stock-based compensation expenses, non-GAAP net loss for the nine months ended September 30, 2007, was $2.5 million, or ($0.22) per basic and diluted share. For the corresponding period in 2006, non-GAAP net income was $2.7 million, or $0.27 per basic share and $0.23 per diluted share, adjusting for $1.8 million in stock-based compensation expenses. A table entitled "Reconciliation of GAAP to Non-GAAP Financial Measures" is included in this press release.

For the nine months ended September 30, 2007, SG&A expenses were $11.7 million compared to $8.8 million for the same period in 2006. The increase was attributable primarily to increased payroll and related expenses resulting from the hiring of additional employees. Research and development expenditures for the period were $2.1 million compared to $1.7 million for the nine months ended September 30, 2006. The increase was attributable primarily to an increase of $291,000 in stock-based compensation expense compared to the third quarter a year ago. Interest income for the first nine months of 2007 increased to $2.3 million from $1.7 million for the same period a year ago.

As of September 30, 2007, I.D. Systems had $63.1 million in cash, cash equivalents and marketable securities, and $72.6 million of working capital, compared to $70.4 million and $80.0 million, respectively, as of December 31, 2006. The decrease in cash, cash equivalents and marketable securities was attributable primarily to the company's stock repurchase program, announced on May 3, 2007.

Highlights of the third quarter ended September 30, 2007, included:



 * Receipt of additional purchase orders from existing customers,
   including:

    - Alcoa, which will deploy I.D. Systems' patented Wireless Asset
      Net(r) industrial vehicle management system on a fleet of
      material handling equipment at its new manufacturing complex in
      Iceland, one of the most modern aluminum production facilities
      in the world; and

    - Wal-Mart Stores, Inc., which, as reported in a Form 8-K filed
      with the Securities and Exchange Commission on August 27, 2007,
      expanded its deployment of I.D. Systems' Wireless Asset Net
      system to 13 additional sites, bringing the total number of
      Wal-Mart facilities utilizing the Wireless Asset Net to 21.

 * The decision by NACCO Materials Handling Group, Inc. (NMHG) to
   purchase and deploy I.D. Systems' Wireless Asset Net system at its
   primary U.S. parts distribution center. As both a manufacturer and
   user of forklifts, NMHG chose the Wireless Asset Net to optimize
   the fleet of forklifts involved in its own material handling
   operations.

 * Development of new prospective customers, including prominent
   industrial manufacturers and U.S. Government agencies.

 * Execution of a strategic marketing agreement with RedPrairie
   Corporation, a leading supply chain software provider.  By
   integrating I.D. Systems' real-time wireless asset monitoring
   capabilities with RedPrairie's backbone of supply chain
   optimization tools, the companies expect to achieve a synergy that
   will deliver unique economic benefits for both manufacturing and
   distribution enterprises.

 * The launch of AvRamp(tm), a version of I.D. Systems' Wireless Asset
   Net system branded specifically for the aircraft ground support
   equipment market.  The culmination of approximately $6 million
   invested jointly by the U.S. Transportation Security Administration
   and I.D. Systems, AvRamp provides a combination of intelligent
   vehicle control, real-time asset visibility, directed workforce
   management, and cost-free wireless communications designed to
   optimize management of aircraft ground support vehicles and the
   people who operate them.

 * The introduction of a new customer engagement program, called
   Advantage(tm) Support Services, designed to help customers target
   and quantify specific benefits to be realized by deploying I.D.
   Systems' Wireless Asset Net industrial vehicle management system,
   and to help ensure those benefits are achieved and sustained 
   following system deployment.  The program has been well received,
   with several customers entering into multi-year contracts for the
   service.


                       Investor Conference Call

I.D. Systems will hold a conference call for investors and analysts at 4:15 p.m. Eastern Time on November 1, 2007. Jeffrey Jagid, chairman and CEO, will lead a discussion on the results of the quarter and recent developments. After opening remarks, there will be a question and answer period. The conference call will be broadcast live over the Internet via the Investors section of the company's website at www.id-systems.com. To listen to the live call, go to the website at least 10 minutes early to download and install any necessary audio software.



                           Non-GAAP Measures

To supplement its financial statements presented in accordance with GAAP, I.D. Systems provides certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP net income/loss and non-GAAP net income/loss per basic and diluted share. Reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, or superior to, GAAP results. These non-GAAP measures are provided to enhance investors' overall understanding of I.D. Systems' current financial performance and provide further information for comparative information due to the adoption of accounting standard SFAS 123R. Specifically, I.D. Systems believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results and business outlook. Reconciliation to the nearest GAAP measure of all non-GAAP measures included in this press release can be found in the financial tables included in this press release.



                          About I.D. Systems

Based in Hackensack, NJ, I.D. Systems, Inc. is a leading provider of wireless solutions for managing and securing high-value enterprise assets. These assets include industrial vehicles, such as forklifts and airport ground support equipment, and rental vehicles. The Company's patented Wireless Asset Net system, which utilizes radio frequency identification, or RFID, technology, addresses the needs of organizations to control track, monitor and analyze their assets. For more information, visit www.id-systems.com.



     "Safe Harbor" statement under the Private Securities Litigation
                          Reform Act of 1995

This press release contains forward looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and that are subject to risk and uncertainties, including, but not limited to, future economic and business conditions, the loss of any of the Company's key customers or reduction in the purchase of its products by any such customers, the failure of the market for the Company's products to continue to develop, the inability to protect the Company's intellectual property, the inability to manage the Company's growth, the effects of competition from a wide variety of local, regional, national and other providers of wireless solutions and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K for the year ended December 31, 2006. These risks could cause actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, the Company. The Company assumes no obligation to update the information contained in this press release.



                            I.D. Systems, Inc.
                   GAAP Condensed Statements of Operations
                               (Unaudited)

                       Three months ended        Nine months ended
                          September 30,             September 30,
                   ------------------------- -------------------------
                       2006          2007        2006          2007
                   ------------ ------------ ------------ ------------
 Revenue:
 Products          $ 5,751,000  $ 5,466,000  $14,465,000  $ 8,481,000
 Services            2,323,000    1,052,000    6,361,000    4,881,000
                   ------------ ------------ ------------ ------------
                     8,074,000    6,518,000   20,826,000   13,362,000
 Cost of Revenue:
 Cost of products    2,995,000    2,725,000    7,245,000    4,282,000
 Cost of services    1,504,000      546,000    3,930,000    2,564,000
                   ------------ ------------ ------------ ------------
                     4,499,000    3,271,000   11,175,000    6,846,000

 Gross Profit        3,575,000    3,247,000    9,651,000    6,516,000

 Selling,
  general and
  administrative
  expenses           3,162,000    4,004,000    8,820,000   11,708,000
 Research and
  development
  expenses             673,000      828,000    1,726,000    2,128,000
                   ------------ ------------ ------------ ------------

 Loss from
  operations          (260,000)  (1,585,000)    (895,000)  (7,320,000)
 Interest income       860,000      784,000    1,741,000    2,344,000
 Interest expense       (6,000)      (2,000)     (23,000)      (9,000)
 Other income           38,000       13,000      115,000       89,000
                   ------------ ------------ ------------ ------------

 Net income
  (loss)           $   632,000  $  (790,000) $   938,000  $(4,896,000)

 Net income
  (loss)
  per share
  - basic          $      0.06  $     (0.07) $      0.09  $     (0.43)
                   ============ ============ ============ ============

 Net income
  (loss)
  per share
  - diluted        $      0.05  $     (0.07) $      0.08  $     (0.43)
                   ============ ============ ============ ============

 Weighted average
  common shares
  outstanding
  - basic           11,202,000   11,150,000   10,238,000   11,265,000
                   ============ ============ ============ ============

 Weighted average
  common shares
  outstanding
  - diluted         12,871,000   11,150,000   11,991,000   11,265,000
                   ============ ============ ============ ============



                          I.D. Systems, Inc.
        Reconciliation of GAAP to Non-GAAP Financial Measures
                             (Unaudited)

                   Three Months Three Months  Nine Months  Nine Months
                       Ended        Ended        Ended        Ended
                     Sept. 30,    Sept. 30,    Sept. 30,    Sept. 30,
                       2006         2007         2006         2007

 Net income (loss)
  attributable to
  common
  stockhol            $632,000    $(790,000) $   938,000  $(4,896,000)

 Stock-based
  compensation         785,000      833,000    1,783,000    2,435,000

 Non-GAAP net
  income (loss)    $ 1,417,000  $    43,000  $ 2,721,000  $(2,461,000)

 Non-GAAP net
  income (loss)
  per share
  - basic          $      0.13  $      0.00  $      0.27  $     (0.22)

 Non-GAAP net
  income (loss)
  per share
  - diluted        $      0.11  $      0.00  $      0.23  $     (0.22)



                            I.D. Systems, Inc.
                         Condensed Balance Sheets

                                           December 31,  September 30, 
                                              2006           2007
                                                          (Unaudited)
                                           ------------  ------------
 ASSETS
 Cash and cash equivalents                 $  9,644,000  $  3,681,000
 Marketable securities                       60,716,000    59,463,000
 Accounts receivable, net                     5,101,000     6,653,000
 Unbilled receivables                         1,042,000       131,000
 Inventory                                    6,430,000     4,124,000
 Officer loan                                     8,000            --
 Interest receivable                            179,000       101,000
 Prepaid expenses and other current assets      271,000       362,000
                                           ------------  ------------
    Total current assets                     83,391,000    74,515,000

 Fixed assets, net                            1,394,000     1,361,000
 Deferred contract costs                         33,000         8,000
 Other assets                                    87,000        87,000
                                           ------------  ------------

                                           $ 84,905,000  $ 75,971,000
                                           ============  ============
 LIABILITIES
 Accounts payable and accrued expenses     $  2,950,000  $  1,537,000
 Current portion of long term debt              221,000        75,000
 Deferred revenue                               221,000       310,000
                                           ------------  ------------
    Total current liabilities                 3,392,000     1,922,000

 Long term debt                                  19,000            --
 Deferred revenue                               133,000       182,000
 Deferred rent                                   77,000        61,000
                                           ------------  ------------
    Total liabilities                         3,621,000     2,165,000
                                           ------------  ------------
 STOCKHOLDERS' EQUITY
 Preferred stock; authorized 5,000,000
  shares, $.01 par value; none issued                --            --
 Common stock; authorized 50,000,000
  shares, $.01 par value; 11,337,000 and
  11,549,000 issued at December 31, 2006
  and September 30, 2007, respectively,
  shares outstanding, 11,297,000 and
  11,052,000 at December 31, 2006 and
  September 30, 2007, respectively              113,000       115,000
 Additional paid-in capital                  93,423,000    96,157,000
 Accumulated deficit                        (12,151,000)  (17,047,000)
 Accumulated other comprehensive income          12,000         6,000
                                           ------------  ------------
                                             81,397,000    79,231,000
 Treasury stock; 40,000 shares and 497,000
  shares at cost                               (113,000)   (5,425,000)
                                           ------------  ------------
  Total stockholders' equity                 81,284,000    73,806,000
                                           ------------  ------------
   Total liabilities and stockholders'
    equity                                 $ 84,905,000  $ 75,971,000
                                           ============  ============



                          I.D. Systems, Inc.
                        Statements of Cash Flows
                              (Unaudited)

                                                 Nine months ended
                                                   September 30,
                                            --------------------------
                                                2006          2007
                                            ------------  ------------
Cash flows from operating activities:

 Net income (loss)                          $    938,000  $ (4,896,000)
 Adjustments to reconcile net income (loss)
  to cash used in operating activities:
   Inventory reserve                                  --       175,000
   Accrued interest income                       (41,000)      120,000
   Stock-based compensation expense            1,783,000     2,435,000
   Depreciation and amortization expense         344,000       401,000
   Deferred rent expense                         (16,000)      (16,000)
   Deferred revenue                               83,000       138,000
   Deferred contract costs                        53,000        25,000
   Changes in:
    Accounts receivable                       (1,461,000)   (1,552,000)
    Unbilled receivables                        (898,000)      911,000
    Inventory                                 (2,172,000)    2,131,000
    Prepaid expenses and other assets           (243,000)      (91,000)
    Investment in sales type leases              467,000            --
    Accounts payable and accrued expenses     (1,041,000)   (1,757,000)
                                            --------------------------
     Net cash used in operating activities    (2,204,000)   (1,976,000)
                                            --------------------------

 Cash flows from investing activities:
  Purchase of fixed assets                      (553,000)     (368,000)
  Purchase of investments                    (58,103,000)  (10,940,000)
  Maturities of investments                    3,364,000    12,145,000
                                            --------------------------

     Net cash (used in) provided by
      investing activities                   (55,292,000)      837,000
                                            --------------------------

 Cash flows from financing activities:
  Repayment of term loan                        (156,000)     (165,000)
  Proceeds from exercise of stock options        718,000       301,000
  Purchase of treasury shares                         --    (4,968,000)
  Collection of officer loan                       8,000         8,000
  Net  proceeds from stock offering           63,961,000            --
                                            --------------------------

     Net cash provided by (used in)
      financing activities                    64,531,000    (4,824,000)
                                            --------------------------
 Net increase (decrease) in cash and cash
  equivalents                                  7,035,000    (5,963,000)
                                            --------------------------
 Cash and cash equivalents - beginning of
  period                                       2,138,000     9,644,000
                                            --------------------------
 Cash and cash equivalents - end of period  $  9,173,000  $  3,681,000
                                            ==========================
 Supplemental disclosure of cash flow
  information:
  Cash paid for:
   Interest                                 $     23,000  $      9,000
                                            ==========================
  Non-cash financing activity:
   Shares withheld pursuant to stock
    issuances                               $         --  $    344,000
                                            ==========================


        

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