OTI REPORTS FY 2009 FINANCIAL RESULTS
• Revenues of $31.4 Million ($38.2 Million Including Discontinued Operations)
• Gross Margin Increased to 47%
• Net Cash Provided by Operating Activities of $5.1 Million
• $32 Million in cash, cash equivalents and short terms investments at year end
Iselin, NJ – March 1, 2010 – 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 consolidated financial results for the year ended December 31, 2009. Following are various financial figures that compare fiscal year 2009 to 2008.
• Net cash provided by continuing operating activities of $5.1 million.
• Strong balance sheet with cash, cash equivalents and short-term investments of $32 million at year end.
• Total revenues of $31.4 million ($38.2 million including revenues from discontinued operations), a 10% decrease from last year.
• Gross margin increased to 47% vs. 43% last year.
• Non-GAAP operating expenses of $24.1 million, a 6% decrease compared to $25.7 million last year. GAAP operating expenses of $28.7 million compared to $58.9 million last year (2008 GAAP operating expenses included a $24.2 million one-time charge related to impairment of goodwill).
• Non-GAAP operating loss of $9.4 million, a 9% decrease compared to $10.4 million last year. GAAP operating loss of $14.1 million, compared to $43.7 million last year (2008 GAAP operating loss included a $24.2 million one-time charge related to impairment of goodwill).
• Non-GAAP net loss of $10.7 million, an 11% decrease compared to $11.9 million last year. GAAP net loss of $23.4 million, compared to $49.9 million last year (2008 GAAP net loss included a $24.2 million one-time charge related to impairment of goodwill).
Oded Bashan, Chairman and CEO of OTI, said: “We are opening 2010 in a strong position, with solid and established pipeline of large projects and a stronger balance sheet, after finishing 2009 with positive cash flow from operations. We are on target to reach operating breakeven on a non-GAAP basis for the year, with expected sales of $48 million, which represents a 50% increase over 2009 sales.”
Mr. Bashan continued: “2009 results demonstrate the success of OTI’s strategy to focus on improving margins and reducing operating expenses, specifically in R&D and G&A."
Mr. Bashan concluded: “The sale of the assets of MCT including the machinery and inlay production IP of OTI in the fourth quarter of 2009 for EUR 8.5 million, is a result of our continued efforts to adapt organization structure to corporate strategy, reduce our operating expenses and offer end-to-end solutions which ultimately yield high margin product sales and recurring revenues. The sale reduces OTI’s operating expenses and improves our cash flow position.” Discontinued Operations
During the fourth 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 (as announced in November 2009). Results for the discontinued operations have been separated and are presented separately for both 2008 and 2009 statements. 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 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 and impairment of intangible assets and goodwill 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 are provided later in this press release.
Conference call and Webcast Information
The Company has scheduled a conference call and simultaneous Web cast for March 1, 2010, at 9:00 AM ET to discuss operating results and future outlook. To participate, call:
1-888-668-9141 (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 March 7th, by calling U.S.: 1-888-295-2634 on the web at: http://www.otiglobal.com/Investors_Introduction
Established in 1990, OTI (NASDAQ GM: 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.
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(SEE TABLES AT THE FILE ATTACHED BELOW)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, plans or current expectations. For example, when we say that we are opening 2010 in a strong position, with solid and established pipeline of large projects and a stronger balance sheet, after finishing 2009 with positive cash flow from operations, or when we say that we are on target to reach operating breakeven on a non-GAAP basis for the year, with expected sales of $48 million, which represents a 50% increase over 2009 sales, or when we say that 2009 results demonstrate the success of our strategy to focus on improving margins and reducing operating expenses, specifically in R&D and G&A, or when we say that the sale of the assets of MCT including the machinery and inlay production IP of OTI in the fourth quarter of 2009 for EUR 8.5 million is a result of our continued efforts to adapt organization structure to corporate strategy, reduce our operating expenses and offer end-to-end solutions which ultimately yield high margin product sales and recurring revenues, or when we say that the sale reduces our operating expenses and improves our cash flow position, we are using forward looking statements. 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 the 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, 2008 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.