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. (Logo:
http://www.newscom.com/cgi-bin/prnh/20050512/CGISSLOGO) 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 in St. 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 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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