ISNS Image Sensing Systems Inc

SAINT PAUL, Minn., July 31 /PRNewswire-FirstCall/ -- Image Sensing Systems, Inc. (ISS) (NASDAQ:ISNS) announced today that its net income for the quarter ended June 30, 2007 was $702,000 ($0.18 per diluted share) compared to net income of $711,000 ($0.18 per diluted share) for the same period in 2006. Net income for the first half of 2007 was $1.3 million ($0.32 per diluted share) compared to $1.2 million ($0.31 per diluted share) for the same period in 2006. (Logo: http://www.newscom.com/cgi-bin/prnh/20050512/CGISSLOGO ) Revenue for the second quarter was $3.0 million compared to $3.4 million for the same period in 2006, while revenue for the first half of 2007 was $5.7 million compared to $6.0 million for the same period a year ago. Revenue from royalty income decreased to $2.3 million in the quarter from $2.5 million in the second quarter of 2006 and to $4.6 million in the first half from $4.7 million in the first half of 2006. International sales decreased to $736,000 in the quarter from $898,000 for the same quarter in 2006 and decreased to $1.1 million in the first half from $1.3 million in the same period of 2006. The revenue decreases reflect certain manufacturing and end customer purchase timing impacts, in both domestic and international markets, related to the company's transition to the Autoscope(R) Terra product line announced this past April. Operating expenses for the quarter were $2.0 million, a 5% increase from $1.9 million in the same period of 2006, while operating expenses for the first half increased 8% to $3.8 million from $3.5 million in the first half of 2006. Ken Aubrey, CEO, commented, "Coordinating the Terra transition has not been without its share of challenges. As is often the case with major product line transitions, there are unplanned situations to overcome. While we cannot predict how long the transition will impact end customer decisions, we do not expect the impact to be long-term in nature. The majority of our products are now Terra based and we expect to continue the product transition over the next 9 to 12 months." Headquartered in St. Paul, Minnesota, Image Sensing Systems, Inc. combines expertise in image processing, hardware and software engineering and communications to develop Autoscope(R) video detection systems for advanced traffic management and control applications. With equipment supplied for over 50,000 cameras in more than 55 countries, we are a global leader in video detection for management and safety systems for highways, bridges, tunnels and intersections. Autoscope products provide transportation managers the means to reduce roadway congestion, improve safety and security, gain cost efficiencies and assist in roadway planning. 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 Form 10-K for the year ended December 31, 2006. Image Sensing Systems, Inc. Unaudited Consolidated Statement of Income (in thousands, except per share information): Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Revenue Royalty income $2,304 $2,508 $4,595 $4,684 International sales 736 898 1,089 1,311 3,040 3,406 5,684 5,995 Cost of revenue Royalty fee - 116 - 219 Cost of sales 288 368 415 545 288 484 415 764 Gross profit 2,752 2,922 5,269 5,231 Operating expenses Selling, marketing and product support 876 792 1,561 1,414 General and administrative 552 571 1,122 1,133 Research and development 534 510 1,128 992 1,962 1,873 3,811 3,539 Income from operations 790 1,049 1,458 1,692 Other income 142 (75) 280 22 Income before income taxes 932 974 1,738 1,714 Income taxes 230 263 480 500 Net income $702 $711 $1,258 $1,214 Net income per common share Basic $0.18 $0.19 $0.33 $0.33 Diluted $0.18 $0.18 $0.32 $0.31 Weighted average shares outstanding Basic 3,779 3,717 3,776 3,711 Diluted 3,874 3,881 3,880 3,886 Image Sensing Systems, Inc. Unaudited Condensed Consolidated Balance Sheet (in thousands) June 30, December 31, 2007 2006 Assets Current assets Cash and cash equivalents $11,608 $11,626 Investments 3,100 4,100 Receivables 3,900 2,957 Inventories 1,423 670 Prepaid expenses and deferred taxes 374 299 20,405 19,652 Property and equipment, net 421 522 Goodwill 1,050 1,050 $21,876 $21,224 Liabilities and Shareholders' Equity Current liabilities Accounts payable and accrued expenses $1,016 $1,652 Income taxes payable 119 231 1,135 1,883 Deferred income taxes 28 8 Shareholders' equity 20,713 19,333 $21,876 $21,224 Image Sensing Systems, Inc. Unaudited Condensed Consolidated Statement of Cash Flows (in thousands) Six Months Period Ended June 30, 2007 2006 Operating activities Net income $1,258 $1,214 Adjustments to reconcile net income to net cash provided by operations Depreciation and amortization 123 195 Stock option expense 73 137 Changes in operating assets and liabilities (2,483) 1,103 Net cash provided by (used in) operating activities (1,029) 2,649 Investing activities Purchase of property and equipment (22) (253) Maturities (purchases) of investments, net 1,000 (1,800) Net cash provided by (used in) investing activities 978 (2,053) Financing activity - proceeds from exercise of stock options 33 59 Increase (decrease) in cash and cash equivalents (18) 655 Cash and cash equivalents, beginning of period 11,626 9,006 Cash and cash equivalents, end of period $11,608 $9,661 http://www.newscom.com/cgi-bin/prnh/20050512/CGISSLOGO http://photoarchive.ap.org/ DATASOURCE: Image Sensing Systems, Inc. CONTACT: Greg Smith, Chief Financial Officer of Image Sensing Systems, Inc., +1-651-603-7700 Web site: http://www.imagesensing.com/

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