updated 5/24/2011 7:46:31 AM ET 2011-05-24T11:46:31

  • Revenues of $12 Million
  • Gross Margin of 53%
  • Strong Balance Sheet with $37.2 Million in Cash, Cash Equivalents and Short Term Investments

ISELIN, N.J., May 24, 2011 (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 results of operations, revenues and gross margins slightly better than originally expected by the company for the first quarter ended March 31, 2011. The following are various financial figures that compare first quarter of 2011 to 2010.

  • Total revenues of $12 million, a 17% decrease compared to $14.4 million last year.
  • Revenues from Licensing and Transaction Fees of $1.2 million, a 32% increase compared to $874,000 last year.
  • Gross margin was 53% for the first quarter of 2011.
  • Non-GAAP operating expenses of $6.8 million, a 4% decrease compared to $7.1 million last year. GAAP operating expenses of $7.4 million, a 9% decrease compared to $8.2 million last year.
  • Non-GAAP operating loss of $445,000, compared to non-GAAP operating profit of $1.2 million last year. GAAP operating loss was $1.1 million, compared to GAAP operating profit of $75,000 last year.
  • Strong balance sheet with cash, cash equivalents and short-term investments of $37.2 million as of March 31, 2011.

Oded Bashan, Chairman and CEO of OTI, said: "We have opened 2011 with slightly higher revenues than expected by the company. The company is financially stronger, which will help us cope better with the growing pipeline of opportunities. We are introducing new products to existing growing markets such as the COPNI; we are establishing strategic channel partnerships to bring the various products to market. We maintain the previously provided guidance of annual operating profitability for 2011 on a non-GAAP basis with revenues expected to be back-loaded and grow from 2010 revenues to $55-$60 million."

Discontinued Operations

During the fourth calendar quarter of 2009, the Company signed an agreement for the sale of the assets of OTI's subsidiary Millennium Card's Technology Ltd ("MCT") including the machinery and inlay production IP of OTI to SMARTRAC NV. Results for the discontinued operations have been separated and are presented separately.

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 operating expenses, operating income, net income and earnings per share, which are adjustments from results based on GAAP to exclude non-cash equity-based compensation charges related to employees and non employees in accordance with the requirements of Accounting Standards Codification ("ASC") Topic 718 (originally issued as SFAS No. 123(R)) and ASC Subtopic 505-50 - Equity-Based Payments to Non-Employees (formerly EITF 96-18); amortization of intangible assets; and results from discontinued operations. 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. Reconciliations between GAAP measures and non-GAAP measures are provided later in this press release.

Conference call and Webcast Information

The Company has scheduled a conference call and simultaneous Web cast for May 24, 2011, at 9:00 AM ET to discuss operating results and future outlook. To participate, call: 1-888-407-2553 (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/Investors_Introduction

For those unable to participate, the teleconference will be available for replay until midnight May 31st, by calling U.S. 1-888-295-2634 on the web at: http://www.otiglobal.com/Investors_Introduction

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 www.otiglobal.com, the content of which is not part of this press release.

The On Track Innovations Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5736

(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. Forward-looking statements include statements regarding our goals, beliefs, future growth strategies, objectives, products, plans, future results of operations or current expectations. For example, we are using forward-looking statements when we say that we maintain the previously provided guidance of annual operating profitability on a non-GAAP basis with revenues expected to be back-loaded and grow to $55-$60 million for the year or when we discuss our unique position and our ability to cope better with the growing pipeline of opportunities. Forward-looking statements could be impacted by the effects of the protracted evaluation and validation periods in the U.S. and other markets for contactless payment cards, market acceptance of new and existing products and our ability to execute production on orders, as well as other risks and uncertainties, including those discussed in the "Risk Factors" section and elsewhere in our Annual Report on Form 20-F for the year ended December 31, 2010 and in subsequent filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be achieved. Except as otherwise required 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 BALANCE SHEET
(In thousands, except share and per share data)
 
  March 31 December 31
  2011 2010
  (Unaudited) (Audited)
Assets    
     
Current assets    
Cash and cash equivalents $ 26,286  $  15,409 
Short-term investments  10,880   8,594 
Trade receivables (net of allowance for doubtful accounts of $263 and $2,832 as of March 31, 2011 and December 31, 2010, respectively)  9,031   5,072 
Receivables from sale of operation  1,864   2,336 
Other receivables and prepaid expenses  2,164  1,532
Inventories 9,036 8,448
     
Total current assets  59,261  41,391
     
Severance pay deposits fund  1,384  1,355
     
     
Property, plant and equipment, net  15,450   14,826 
     
Intangible assets, net  996   942 
     
Goodwill 465 --
     
     
     
     
     
Total Assets $ 77,556 $ 58,514

 

 

 
ON TRACK INNOVATIONS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
     
  March 31 December 31
  2011 2010
  (Unaudited) (Audited)
Liabilities and Equity    
     
Current Liabilities    
Short-term bank credit and current maturities of long-term bank loans $ 5,493  $ 6,881 
Trade payables  8,713  6,874
Other current liabilities  11,033   8,954 
Total current liabilities  25,239   22,709 
     
Long-Term Liabilities    
Long-term loans, net of current maturities  4,841   5,189 
Accrued severance pay  3,927  3,727
Deferred tax liability  74   84 
Total long-term liabilities  8,842   9,000 
     
Total Liabilities  34,081   31,709 
     
Liabilities related to discontinued operation 567 689
     
Commitments and Contingencies    
     
Equity    
Shareholders' Equity    
Ordinary shares of NIS 0.1 par value: Authorized – 50,000,000 shares as of March 31, 2011 and December 31, 2010; issued: 31,705,166 and 25,384,010 shares as of March 31, 2011 and December 31, 2010, respectively; outstanding: 31,142,691 and 24,821,535 shares  as of March 31, 2011 and December 31, 2010, respectively  792   610 
Additional paid-in capital  208,479   190,933 
Treasury shares at cost –562,475 shares as of March 31, 2011 and December 31, 2010. (1,136) (1,136)
Accumulated other comprehensive income  856  645
Accumulated deficit (165,924) (164,812)
Shareholder's equity  43,067  26,240
Non-controlling interest  (159)   (124) 
     
Total Equity  42,908  26,116
     
     
Total Liabilities and Equity $ 77,556 $ 58,514
 
ON TRACK INNOVATIONS LTD.
GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
 
  Three months ended March 31
  2011 2010
  (Unaudited) (Unaudited)
Revenues    
Sales  $ 10,870   $ 13,540 
Licensing and transaction fees  1,153   874 
     
Total revenues  12,023   14,414 
     
Cost of revenues    
Cost of sales  5,708  6,158
Total cost of revenues  5,708  6,158
     
Gross profit  6,315  8,256
Operating expenses    
Research and development  2,197   2,048 
Selling and marketing  2,841  3,733
General and administrative  2,255   2,256 
Amortization of intangible assets  151   144 
     
Total operating expenses  7,444   8,181 
     
Operating profit (loss) (1,129) 75
Financial income (expense), net  49   (545) 
     
Loss before taxes on income (1,080) (470)
     
Taxes on income  (65)   (82) 
     
Net loss from continuing operations (1,145) (552)
Net profit from discontinued operations -- 59
     
Net loss (1,145) (493)
     
Net loss attributable to noncontrolling interest 33 9
Net loss attributable to shareholders $ (1,112) $ (484)
     
Basic and diluted net profit (loss) attributable to shareholders per ordinary share    
From continuing operations $ (0.04) $ (0.02)
From discontinued operations $ -- $  0.00
  $ (0.04) $ (0.02)
Weighted average number of ordinary shares used in computing basic net profit (loss) per ordinary share 29,494,848 24,155,916
Weighted average number of ordinary shares used in computing diluted net profit (loss) per ordinary share 29,494,848 26,865,470
 
ON TRACK INNOVATIONS LTD.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENT
The following tables reflect selected On Track Innovations Ltd, non-GAAP results reconciled to GAAP results:
(In thousands, except share and per share data)
 
  Three months ended December 31
  2011 2010
  (Unaudited) (Unaudited)
     
Operating expenses    
 GAAP operating expenses $ 7,444  $ 8,181 
 Less:    
 Stock based compensation expenses  (531)   (976) 
 Amortization of intangible assets  (151)   (144) 
     
Non GAAP Operating expenses $ 6,762  $ 7,061 
     
Operating profit (loss)    
 GAAP Operating profit (loss) $ (1,129) $ 75
 Plus:    
 Stock based compensation expenses 533   982 
 Amortization of intangible assets  151   144 
     
Non GAAP Operating profit (loss) $ (445) $ 1,201
     
Net profit (loss) attributable to shareholders    
 GAAP Net loss attributable to shareholders $  (1,112) $ (484)
 Plus:    
 Stock based compensation expenses  533   982 
 Amortization of intangible assets  151  144 
 Net profit from discontinued operations  -- (59) 
     
Non GAAP net profit (loss) attributable to shareholders  

$  (428)
 

$ 583
     
Basic net profit (loss) attributable to shareholders per ordinary share    
GAAP Basic net loss attributable to shareholders per ordinary share $ (0.04) $ (0.02)
 Plus:    
 Stock based compensation expenses  0.02  0.04
 Amortization of intangible assets  0.01  0.00
 Net profit from discontinued operations  --  0.00
Non GAAP Basic net profit (loss) attributable to shareholders per ordinary share  

$ (0.01)
 

$ 0.02
 
ON TRACK INNOVATIONS LTD.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands, except share and per share data)
 
  Three months ended March 31
  2011 2010
  (Unaudited) (Unaudited)
Cash flows from operating activities    
Net loss from continuing operations $ (1,145) $ (552)
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 533 982
Gain on sale of property and equipment (4)  (6) 
Amortization of intangible assets 151  144 
Depreciation 429  370 
     
Accrued severance pay, net  171   78 
Accrued interest and linkage differences on long-term loans 47 14
Decrease in deferred tax liability  (10)  (9)
linkage differences on receivable from sale of operation (151) --
Decrease (increase) in trade receivables, net (3,896) 2,217
Increase in other receivables and prepaid expenses (614) (68)
Increase in inventories (351) (2,804)
Increase (decrease) in trade payables 1,569 (1,543)
Increase in other current liabilities  2,010  10,664
Net cash provided by (used in) continuing operating activities (1,261) 9,487
     
Cash flows from investing activities    
     
Purchase of property and equipment (582) (179)
Purchase of available-for-sale securities (2,449) (2,830)
Acquisition of business operation (400) --
Proceeds from maturity and sale of available-for-sale securities 178  984 
Other, net
Net cash used in continuing investing activities (3,246) (2,019)
     
     
Cash flows from financing activities    
Decrease in short-term bank credit, net (1,852) (972)
Proceeds from long-term bank loans 151  419 
Repayment of long-term bank loans (336) (110)
Proceeds from issuance of shares, net of issuance expenses 16,644 --
Proceeds from exercise of options and warrants, net 189  18 
Net cash provided by (used in) continuing financing activities 14,796   (645) 
     
Cash flows from discontinued operations    
Net cash used in discontinued operating activities (122) (306)
Net cash provided by discontinued investing activities 623 --
Total net cash provided by (used in) discontinued activities 501 (306)
     
Effect of exchange rate changes on cash 87  (15) 
     
Increase in cash and cash equivalents 10,877  6,502 
Cash and cash equivalents at the beginning of the period  15,409   26,884 
     
Cash and cash equivalents at the end of the period $ 26,286  $ 33,386 
CONTACT:  OTI Contact:	
          Galit Mendelson 	
          Vice President of Corporate Relations
          732 429 1900 ext. 111	
          galit@otiglobal.com

          Investor Relations:
          Miri Segal 
          MS-IR LLC 
          917-607-8654
          msegal@ms-ir.com

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