Press Release Source: On Track Innovations Ltd.
OTI Reports Record FY 2004 Fourth Quarter and Year End Financial Results
Monday March 28, 8:00 am ET
- FY 2004 Record Revenues Climb 18% to $23.2MFourth Quarter Record Revenues Climb 35% to $7.8M Compared to the Same Period Last YearOperating Cash Flow About Breakeven ($330,000)Growth Related to Initial Orders Delivered in the Commercial Implementation in the China ID and MasterCard PayPass Projects
FORT LEE, N.J., March 28 /PRNewswire-FirstCall/ -- On Track Innovations Ltd. (OTI) (Nasdaq: OTIV - News; Prime Standard (Frankfurt): OT5), a global leader in contactless microprocessor-based smart card solutions for homeland security, payments, petroleum payments and other applications, today announced its consolidated financial results for the fourth quarter and fiscal year ended December 31, 2004.
Business developments in 2004 include:
-- First commercial orders in support of MasterCard PayPass(TM) rollout
have been delivered.
-- Initial commercial quantities of our contactless readers have been
delivered to Hypercom Corporation to support contactless payment
programs such as MasterCard PayPass(TM).
-- Approximately 18 million chips incorporating OTI's technology delivered
in 2004 to the China ID Project.
-- OTI America Inc., OTI's U.S. subsidiary, has been granted a contract
for the U.S. e-passport program. The contract is for the testing stage.
One or more vendor(s) are expected to be selected for the production
-- Sasol Oil, the largest oil company in South Africa, is in the process
of implementing our petroleum payment solution.
-- Revenues for the year ended December 31, 2004 increased by 18% to $23.2
million from $19.6 million for the same period of last year. Revenues
for the fourth quarter were up 35% to $7.8 million from $5.8 million in
the same period last year.
-- Licensing and transaction fees for the year ended December 31, 2004
were up 177% to $2.2 million from $808,000 for the same time last year.
-- Gross Profit for the year ended December 31, 2004 was $10.4 million up
from $10.1 million in 2003.
-- The operating loss for FY 2004 increased by 281% to $8.8 million from
$2.3 million in the same period in 2003, mainly due to $3.2 million one
time expenses related to raising of capital and restructuring and $1.6
million increase in marketing expenses related mainly to marketing
-- Operational Cash Flow was about breakeven, with $330,000 of cash used
in operating activities.
-- OTI raised $15.1 million in private placement financing which
strengthened our balance sheet and enabled us to support any size of
project as a prime contractor.
-- OTI acquired ASEC S.A. of Poland to enable OTI to provide end-to-end
solutions for the Emerging European markets.
-- OTI sold one of our German subsidiaries, InterCard KartenSysteme GmbH.
Oded Bashan, President and CEO of OTI commented: "the coming years present a window of opportunities for OTI to become a leading player in the ID and payments markets. To succeed in capturing the leading position in these markets we raised capital, we invest more in management resources, and expenses related to Marketing & Sales, Research & Development and General & Administrative. In addition OTI signed strategic alliances and aligned our corporate structure with our strategy.
"OTI is making progress with its business model with more projects reaching commercial deployment, generating more transaction and license fees revenues, such as with the programs of BP, China ID and EasyPark. Transaction and license fees revenues increased 177% to 10% from 4% in 2003. However, the financial model is not fully reflected in our gross profit due to first stage of implementations of additional projects in the payments and ID markets that are characterized by high customization cost and infrastructure.
"Financially, OTI had a record breaking quarter and year. Revenues have never been higher, generating $7.8 million with more revenues from our core businesses of payments, petroleum and ID. OTI is reaching operational breakeven from a cash perspective, and combined with the raise of capital the Company had $28.5 million in cash, cash equivalents and short term investments at the end of the year.
"Our operating loss of $8.8 million for the year was mainly due to expenses related to the raising of capital and restructuring that resulted in $3.2 million as explained in our Operating and Financial Review and as shown in our P&L. The restructuring of our marketing support strategy has also added expenses and affected our results. For example, Marketing and Sales expenses for the year rose by 47% to $6.0 million from $4.1 million. As mentioned, we believe these activities will better position the company and contribute to a better stream of revenues in the future."
Revenues for the year ended December 31, 2004 increased to $23.2 million from $19.6 million for the same period of last year. Revenues for the fourth quarter were up $7.8 million from $5.8 million in the same period last year. The increase was due to the growing implementation of contactless programs around the world. Gross Profit for the year ended December 31, 2004 was $10.4 million up from $10.1 million for the same period last year. The operating loss for FY 2004 increased by 281% to $8.8 million from $2.3 million in the same period in 2003, mainly due to $3.2 million one time expenses related to raising of capital and the exchange of subsidiary's employees equity interest in equity interest of the Company, $1.6 million increase in marketing expenses related mainly to marketing efforts and due to the reduction of $459,000 in the participation of the Office of Chief Scientist. Net loss increased to $9.3 million, from $3.6 million for the same period in 2003. The increase is mainly due to the increase in the operating loss.
During 2004, $15.1 million were raised resulting in total balance of cash and cash equivalents and short term investments of $28.5 million at December 31, 2004.
The Company has scheduled an annual results review investors meeting with conference call and simultaneous Web cast for Monday, March 28, 2005, which will be hosted by Oded Bashan, President and CEO, Guy Shafran, CFO, and Ohad Bashan, Head of Global Marketing and President OTI America, for 11:00 AM EST to discuss operating results and future outlook. The meeting will be held at the Intercontinental Hotel, 111 East 48th Street, New York, NY. To participate in the conference call please dial: 1-800-963-8290 (U.S. toll free), 1-809-457-877 (Israel toll free), 0-800-181-5287 (Germany toll free), or 1-973-409-9260 (standard international) ID Code: OTI. To listen to the web cast please go to: www.otiglobal.com/content.aspx?id=98
For those unable to participate, the teleconference will be available for replay until midnight April 4th by calling U.S.: 877-519-4471 or International: 973-341-3080 and entering the PIN number # 5848498.
Established in 1990, OTI (Nasdaq: OTIV - News; Prime Standard: OT5) 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, micropayments, 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 prestigious ESCAT Award for smart card innovation in both 1998 and 2000. For more information on OTI, visit www.otiglobal.com.
This press release contains forward-looking statements. These statements can be identified by their use of the words "will", "anticipates" and "expects" and other similar expressions, as well as by such phrases as "starting to see" and "we believe". Each of these statements is subject to certain risks and uncertainties, such as market acceptance of new products and our ability to execute production on orders, which could cause actual results to differ materially from those in the statements included in this press release. 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 otherwise. results could differ materially from expected results.
This press release and other releases are available on www.otiglobal.com and www.portfoliopr.com
OTI Contact: Media Relations IR Contact:
Galit Mendelson Adam Handelsman Paul Holm
Director of Corporate 5W Public Relations PortfolioPR
Communication, OTI 212 999 5585 212 736 9224
201 944 5200 ext. 111 email@example.com firstname.lastname@example.org
ON TRACK INNOVATIONS LTD.
CONSOLIDATED BALANCE SHEETS
US dollars in thousands, except per share data
On Track Innovations Ltd.
and its subsidiaries
Cash and cash equivalents $9,712 $23,917
Short-term investments 999 4,559
Trade receivables (net of allowance for doubtful
accounts of $ 282 and $ 329 as of December 31,
2003 and 2004, respectively) 3,223 3,477
Other receivables and prepaid expenses 881 2,705
Inventories 4,069 4,765
Total current assets 18,884 39,423
Severance pay deposits fund 906 595
Long-term receivables -- 1,077
Property, plant and equipment, net 5,770 5,324
Other intangible assets, net 325 1,438
Goodwill 5,383 4,146
Total assets $31,268 $52,003
Liabilities and Shareholders' Equity
Short-term bank credit and current maturities
of long-term bank loans $1,751 $1,641
Trade payables 3,339 4,305
Other current liabilities 2,624 3,824
Total current liabilities 7,714 9,770
Long-term loans, net of current maturities 3,121 2,018
Accrued severance pay 1,130 1,361
Deferred tax liabilities -- 162
Total long-term liabilities 4,251 3,541
Total liabilities 11,965 13,311
Commitments and Contingencies
Ordinary shares of NIS 0.1 par value: Authorized -
10,000,000 and 30,000,000 shares as
of December 31, 2003 and 2004, respectively;
issued and outstanding - 4,778,715 and
8,422,175 shares as of December 31, 2003 and 2004,
respectively 119 199
Additional paid-in capital 59,965 90,779
Deferred stock compensation (1,257) (3,553)
Accumulated other comprehensive income 287 353
Accumulated deficit (39,811) (49,086)
Total shareholder's equity 19,303 38,692
Total liabilities and shareholders' equity $31,268 $52,003
ON TRACK INNOVATIONS LTD.
CONSOLIDATED BALANCE SHEETS
US dollars in thousands, except per share data
On Track Innovations Ltd. and its subsidiaries
Three Months Ended Year Ended
December 31 December 31
2003 2004 2003 2004
Products $4,828 $6,213 $17,245 $19,120
Non-recurring engineering 16 70 284 433
Licensing and transaction
fees 196 1,168 808 2,237
Customer service and
technical support 738 323 1,258 1,362
Total revenues 5,778 7,774 19,595 23,152
Cost of Revenues
Products 2,057 3,739 8,678 11,853
Non-recurring engineering 5 5 109 183
Customer service and
technical 397 193 691 763
Total cost of revenues 2,459 3,937 9,478 12,799
Gross profit 3,319 3,837 10,117 10,353
Research and development 719 995 3,159 3,544
Less - participation by
the Office of the Chief
Scientist 335 11 853 394
Research and development,
net 384 984 2,306 3,150
Selling and marketing 1,127 1,779 4,092 6,010
General and administrative 1,446 1,901 5,853 6,549
Amortization of intangible
assets 47 120 188 261
Expenses relating to
raising of capital
and exchange of subsidiary's
employees equity interest
in equity interest of the
Company -- 1,112 -- 3,227
Total operating expenses 3,004 5,896 12,439 19,197
Operating gain (loss) 315 (2,059) (2,322) (8,844)
(expenses), net (212) (113) (897) (287)
Other income (expenses),
net 96 5 (244) 29
Loss before taxes on
income 199 (2,167) (3,463) (9,102)
Taxes on income (97) (2) (104) (173)
102 (2,169) (3,567) (9,275)
Minority interest -- -- -- --
Net loss $102 $(2,169) $(3,567) $(9,275)
Basic and diluted net loss $0.04 $(0.26) $(1.52) $(1.33)
per ordinary share
Weighted average number of
ordinary shares used in
computing basic and
diluted net loss per
ordinary share 2,496,138 8,098,294 2,354,254 6,972,878
Source: On Track Innovations Ltd.