Published:
Image Sensing Systems Reports Sixth Consecutive Year of Record Financial Results
SAINT PAUL, Minn., Feb. 28 /PRNewswire-FirstCall/ -- Image Sensing
Systems, Inc. (ISS) (Nasdaq: ISNS) announced today its sixth consecutive year
of record financial results. On a comparative non-GAAP basis to 2006, without
taking into account the impact of the operations related to the assets
purchased from EIS Electronic Integrated Systems Inc. ("EIS") from December 7,
2007 through year-end or the impact of EIS purchase price allocation
accounting, which are required under U.S. generally accepted accounting
principles, consistently applied ("GAAP"), non-GAAP net income for fiscal year
end December 31, 2007 was $3.9 million or $1.02 per share ($1.00 per diluted
share) versus net income of $3.1 million or $.83 per share ($.80 per diluted
share) for 2006. On a similar basis, non-GAAP net income for the fourth
quarter of 2007 was $1.3 million or $.34 per share ($.34 per diluted share)
versus net income of $1.2 million or $.30 per share ($.30 per diluted share)
for the same period in 2006. On a comparative non-GAAP basis, non-GAAP income
from operations in fiscal year 2007 was $4.7 million versus $3.5 million in
2006 and for the fourth quarter of 2007 was $1.6 million versus $1.1 million
for the same period in 2006.
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On a GAAP basis, net income for fiscal year 2007 was $872,000 or $.23 per
share ($.22 per diluted share) and the net loss for the fourth quarter of 2007
was $1.7 million or $.44 per share. As part of the purchase price allocation
of the EIS asset purchase, the Company recognized an in-process research and
development charge of $4.5 million ($3.0 million net of tax) in the fourth
quarter of 2007. Income (loss) from operations in fiscal year 2007 and in the
fourth quarter of 2007 were $130,000 and $(3.0) million, respectively.
For fiscal year 2007, revenue was $15.1 million compared to $13.1 million
in fiscal year 2006, an increase of 15%. Royalty income was $10.7 million in
2007 compared to $10.1 million in 2006, while international sales were $4.1
million compared to $3.0 million in 2006. The Company's North American
distributor and international subsidiaries both rebounded from slower sales in
the first half of 2007, which the Company believes was related in part to its
transition to the Autoscope(R) Terra platform.
For the fourth quarter of 2007, revenue was $5.2 million versus $4.1
million for the same period in 2006, an increase of 26%. For the quarter,
royalty income was $3.1 million in 2007 compared to $2.8 million in 2006,
while international sales were $1.8 million in 2007 compared to $1.3 million
in 2006. Gross margins in the fourth quarter of 2007 were negatively impacted
by approximately $200,000 in inventory reserves recorded on non-Terra product.
The Company's research and development expense decreased in fiscal year
2007 compared to 2006 due to certain one-time expenses for the Terra
development that occurred in 2006 and because the Company did not meet its
goals for engineering headcount additions in 2007.
Ken Aubrey, CEO, commented, "We are gratified by these encouraging
results, especially given the dip in financial performance early in the Terra
platform transition. On a comparative basis, revenue and income improved
solidly across the board, with revenue growth internationally being
particularly noteworthy. We believe results for the second half of 2007 have
confirmed that the market is enthusiastically accepting our Terra offerings.
Our Terra transition activities continue and we anticipate introducing new
general and country-specific features in the first half of 2008.
"We're also excited about our purchase of the assets of EIS and the
RTMS(TM) radar-based CED product set. EIS posted revenue of $8.7 million in
its fiscal year 2007 and was solidly profitable. We expect the purchase to add
in excess of 50% to our total revenue in 2008 compared to 2007 and with the
RTMS portfolio we are positioned to make the eventual leap to hybrid detection
offerings, which we see as strategically pivotal."
Auction Rate Securities (ARS) Liquidity
In the first half of January 2008, we invested a portion of our excess
cash in AAA-rated student loan backed auction rate securities ("ARS"). Over
the last two weeks, auctions involving these ARS have failed which negatively
affects the liquidity of the securities. As of February 27, 2008 we have $5.5
million of ARS in our investment portfolio of which 97% is guaranteed under
the Federal student loan program. Generally, we believe that issuers of the
ARS are motivated to refinance the securities in the near-term. We cannot
predict when the ARS will become liquid again nor can we predict if we will
need to record an impairment on the recorded value or recognize a loss on
their ultimate disposition.
Non-GAAP Information
Image Sensing Systems provides certain non-GAAP financial information as
supplemental information to GAAP amounts. This non-GAAP information excludes
the operational impact of the EIS asset purchase because the purchase occurred
in December 2007 and thus its impact was immaterial to 2007 results and
excludes the purchase price allocation accounting impact of the EIS asset
purchase because management believes its significant impact makes it difficult
for the reader of the financial statements to compare how the underlying
business of Image Sensing Systems performed in fiscal year 2007 and the fourth
quarter of 2007 compared to similar periods in 2006 when there was no purchase
accounting event. Management uses this non-GAAP information to evaluate
short-term and long-term operating trends in the Company's core operations.
Non-GAAP information is not prepared in accordance with GAAP and should not be
considered a substitute for or an alternative to GAAP financial measures and
may not be computed the same as similarly titled measures used by other
companies.
About Image Sensing
Image Sensing Systems, Inc. is a technology company specializing in
software-based detection solutions for the Intelligent Transportation Systems
(ITS) sector and adjacent overlapping markets. Our industry leading computer
enabled detection (CED) products, including the Autoscope(R) machine-vision
family and the RTMS(TM) radar family, combine embedded software signal
processing with sophisticated sensing technologies for use in transportation
and safety/surveillance management. CED is a group of technologies in which
software, rather than humans, examines the outputs of complex sensors to
determine what is happening in the field of view in real-time. With more than
80,000 instances sold in over 60 countries worldwide, our depth of experience
coupled with breadth of product portfolio uniquely positions us to provide
powerful hybrid technology solutions and to exploit the convergence of the
traffic, security and environmental management markets. We are headquartered
inSt. Paul, Minnesota. Visit us on the web at http://www.imagesensing.com.
Safe Harbor Statement: Statements made in this release concerning the
Company's or management's intentions, expectations, or predictions about
future results or events are "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Such statements
reflect management's current expectations or beliefs, and are subject to risks
and uncertainties that could cause actual results or events to vary from
stated expectations, which variations could be material and adverse. Factors
that could produce such a variation include, but are not limited to, the
following: the inherent unreliability of earnings, revenue and cash flow
predictions due to numerous factors, many of which are beyond the Company's
control; developments in the demand for the Company's products and services;
relationships with the Company's major customers and suppliers; unanticipated
delays, costs and expenses inherent in the development and marketing of new
products and services; the impact of governmental laws and regulations; and
competitive factors. Our forward-looking statements speak only as of the time
made, and we assume no obligation to publicly update any such statements.
Additional information concerning these and other factors that could cause
actual results and events to differ materially from the Company's current
expectations are contained in the Company's reports and other documents filed
with the Securities and Exchange Commission, including its Form 10-K for the
year ended December 31, 2006.
Image Sensing Systems, Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share information)
(unaudited)
Three Months Ended Year Ended
December 31 December 31
2007 2006 2007 2006
Revenue
Royalty income $3,111 $2,854 $10,747 $10,136
North American sales 269 - 269 -
International sales 1,835 1,271 4,067 2,980
5,215 4,125 15,083 13,116
Cost of revenue
Royalty fee - - - 220
Cost of sales 1,036 748 1,987 1,501
1,036 748 1,987 1,721
Gross profit 4,179 3,377 13,096 11,395
Operating expenses
Selling, marketing
and product support 1,153 755 3,463 2,850
General and
administrative 821 458 2,653 2,382
Research and development 618 1,057 2,299 2,639
In-process research
and development and
amortization 4,551 - 4,551 -
7,143 2,270 12,966 7,871
Income (loss) from
operations (2,964) 1,107 130 3,524
Other income 114 168 543 523
Income (loss) before
income taxes (2,850) 1,275 673 4,047
Income tax expense
(benefit) (1,167) 115 (199) 942
Net income (loss) $(1,683) $1,160 $872 $3,105
Net income (loss)
per common share
Basic $(0.44) $0.30 $0.23 $0.83
Diluted $(0.44) $0.30 $0.22 $0.80
Weighted average
shares outstanding
Basic 3,822 3,745 3,789 3,725
Diluted 3,822 3,902 3,881 3,891
Image Sensing Systems, Inc.
Condensed Consolidated Statements of Income
Reconciliation of GAAP to comparative non-GAAP basis
(in thousands, except per share information)
(unaudited)
Comparative
GAAP Non-GAAP
basis adjustments basis
Year ended December 31, 2007
Revenue $15,083 $(269)(1) 14,814
Cost of revenue 1,987 (60)(1) 1,927
Gross profit 13,096 (209) 12,887
Operating expenses 12,966 (4,768)(2) 8,198
Income from operations 130 4,559 4,689
Other income, net 543 - 543
Income before income taxes 673 4,559 5,232
Income taxes (benefit) (199) 1,550(3) 1,351
Net income $872 $3,009 $3,881
Basic net income per share $0.23 $1.02
Diluted net income per share $0.22 $1.00
Weighted shares -- basic 3,789 3,789
Weighted shares -- diluted 3,881 3,881
Quarter ended December 31, 2007
Revenue $ 5,215 $(269)(1) $ 4,946
Cost of revenue 1,036 (60)(1) 976
Gross profit 4,179 (209) 3,970
Operating expenses 7,143 (4,768)(2) 2,375
Income (loss) from operations (2,964) 4,559 1,595
Other income 114 - 114
Income (loss) before
income taxes (2,850) 4,559 1,709
Income taxes (benefit) (1,167) 1,550(3) 383
Net income (loss) $(1,683) $3,009 $1,326
Basic net income (loss)
per share $(0.44) $0.34
Diluted net income per share $(0.44) $0.34
Weighted shares -- basic 3,822 3,822
Weighted shares -- diluted 3,822 3,914
Notes to adjustments
(1) Revenue and cost of revenue from RTMS sales from December 7, 2007 to
year-end
(2) Operating expenses of RTMS from December 7, 2007 to year-end of $217
and in-process research and development and amortization expense of
$4,551 related to EIS asset purchase
(3) Income tax expense impact of (1) and (2) at ISS' marginal tax rate of
34%
Image Sensing Systems, Inc.
Condensed Consolidated Balance Sheet
(in thousands)
(unaudited)
December 31, December 31,
2007 2006
Assets
Current assets
Cash and cash equivalents
(including restricted cash) $10,876 $11,626
Investments - 4,100
Receivables, net 4,997 2,957
Inventories 1,579 670
Prepaid expenses and other 421 319
17,873 19,672
Property and equipment, net 700 522
Deferred income taxes 1,653 -
Goodwill and intangible assets, net 10,140 1,050
$30,366 $21,244
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued expenses $2,029 $1,652
Bank debt 5,000 -
Income taxes payable 84 231
7,113 1,883
Deferred income taxes 28 28
Shareholders' equity 23,225 19,333
$30,366 $21,244
Image Sensing Systems, Inc.
Condensed Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
Year Ended
December 31
2007 2006
Operating activities
Net income $872 $3,105
Adjustments to reconcile net income to net
cash provided by operations
Depreciation and amortization 277 388
In-process research and development expense 4,500 -
Stock option expense and tax benefits 306 290
Changes in operating assets and liabilities (4,330) 856
Net cash provided by operating activities 1,625 4,639
Investing activities
Purchase of assets of EIS (11,406) -
Purchases of property and equipment (103) (419)
Maturities (purchases) of investments, net 4,100 (1,800)
Net cash used in investing activities (7,409) (2,219)
Financing activities
Bank debt 5,000 -
Proceeds from exercise of stock options 34 200
5,034 200
Increase (decrease) in cash and cash equivalents (750) 2,620
Cash and cash equivalents, beginning of year 11,626 9,006
Cash and cash equivalents, end of year $10,876 $11,626
SOURCE Image Sensing Systems, Inc.
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Copyright © 2008, NewsBlaze,
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