SAINT PAUL, Minn., May 1 /PRNewswire-FirstCall/ -- Image Sensing
Systems, Inc. (NASDAQ:ISNS), announced today record financial
results for its first quarter ended March 31, 2008. (Logo:
http://www.newscom.com/cgi-bin/prnh/20050512/CGISSLOGO) Net income
for the first quarter was $1.1 million ($.26 per fully diluted
share) compared to $556,000 ($0.14 per fully diluted share) for the
same period in 2007. Revenues for the first quarter were $5.9
million compared to $2.6 million for the same period a year ago.
Revenue from royalties increased 26% to $2.9 million from $2.3
million in the first quarter of 2007 and reflects the continued
success of our North American distributor, Econolite Control
Products, Inc. (ECPI), in selling Autoscope(R) products in the
United States and Canada. North American sales, which are sales of
RTMS(R) in North America, were $1.6 million. International sales,
which include both Autoscope and RTMS sales outside of North
America, were $1.4 million in the first quarter, a four-fold
increase over $353,000 in the same period in 2007. Sales of RTMS
world-wide for the quarter were $1.8 million. We acquired the RTMS
family of products in December 2007. On a non-GAAP basis, excluding
intangible asset amortization net of tax, net income for the
quarter increased 113% to $1.2 million ($.29 per fully diluted
share) and operating income increased 162% to $1.7 million as
compared to the first quarter of 2007. Ken Aubrey, CEO, said, "Our
results reflect continued strong organic growth in our core
business in addition to the solid performance of our recent
acquisition despite what is typically the seasonally slowest
quarter of the year. We executed well across all product lines and
regions including the newly acquired RTMS radar family and were the
beneficiary of several large projects internationally. "We look
forward to beginning shipments of the next generation RTMS G4 in
the second quarter of 2008 and concluding some important
enhancements for Autoscope Terra. We believe this should position
us well for the remainder of 2008." New Bank Financing On May 1,
2008, we entered into three loan agreements with Associated Bank
that replace our previous arrangements with Wells Fargo. The first
two agreements include a three-year amortizing $3 million term loan
and a three- year $5 million revolving line of credit. Under the
agreements we have drawn fully the $3 million term loan and have
advanced $2 million on the line of credit. A major benefit of the
new agreements is that we are required to pledge only our auction
rate securities (ARS) as collateral and the borrowings are based on
an advance formula which includes ARS and receivables. This has
freed up over $3.5 million in money market funds that were pledged
under the Wells Fargo arrangement. The third agreement is a $10
million guidance facility to be used for future acquisitions. The
use of the facility is subject to lender due diligence and meeting
certain debt service ratios. We refer you to our Current Report on
8-K filed with the SEC dated May 1, 2008 for further detail.
Auction Rate Security Update We continue to hold $5.5 million in
face value of student loan backed ARS, substantially all of which
are Federal government backed under the Federal Family Education
Loan Program. All auctions since mid-February involving our ARS
have failed. We continue to believe that the underlying credit
quality of the ARS is excellent and that the main problem remains
illiquidity. Based on an analysis of the ARS fair value, we have
determined there is a temporary impairment and have recorded an
unrealized loss of $251,000 ($166,000 net of tax) and have
reclassified the ARS as long-term assets at March 31, 2008. The
unrealized loss does not flow through our income statement, rather
it is recorded directly to shareholders' equity as a component of
accumulated other comprehensive income/loss. There is uncertainty
in the ARS market and, should circumstances change, we may deem the
impairment to be other than temporary or otherwise adjust our
analysis. Non-GAAP Information We provide certain non-GAAP
financial information as supplemental information to GAAP amounts.
This non-GAAP information excludes the impact, net of tax, of
amortizing the intangible assets from the EIS asset purchase that
occurred in December 2007. Management believes that this
presentation facilitates the comparison of our current operating
results to historical operating results. Management uses this
non-GAAP information to evaluate short-term and long-term operating
trends in our 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(R) 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 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, 2007. Image Sensing Systems, Inc. Condensed
Consolidated Statements of Income (in thousands, except per share
information) (unaudited) Three-Month Period Ended March 31, 2008
2007 Revenue Royalties $2,892 $2,291 North American sales 1,625 -
International sales 1,355 353 5,872 2,644 Cost of revenue Cost of
sales 1,202 127 Gross profit 4,670 2,517 Operating expenses
Selling, marketing and product support 1,333 685 General and
administrative 888 570 Research and development 701 594
Amortization of intangible assets 192 - 3,114 1,849 Income from
operations 1,556 668 Other income, net 41 138 Income before income
taxes 1,597 806 Income taxes 541 250 Net income $1,056 $556 Net
income per common share Basic $0.27 $0.15 Diluted $0.26 $0.14
Weighted average shares outstanding Basic 3,928 3,774 Diluted 4,026
3,888 Image Sensing Systems, Inc. Condensed Consolidated Statements
of Income Reconciliation of GAAP to non-GAAP basis (in thousands,
except per share information) (unaudited) GAAP Non-GAAP basis
adjustments basis Quarter ended March 31, 2008 Revenue $ 5,872 $- $
5,872 Cost of revenue 1,202 - 1,202 Gross profit 4,670 - 4,670
Operating expenses 3,114 (192)(1) 2,922 Income from operations
1,556 192 1,748 Other income 41 - 41 Income before income taxes
1,597 192 1,789 Income taxes 541 65(2) 606 Net income $1,056 $127
$1,183 Basic net income per share $0.27 $0.30 Diluted net income
per share $0.26 $0.29 Weighted shares - basic 3,928 3,928 Weighted
shares - diluted 4,026 4,026 Notes to adjustments (1) Intangible
asset amortization for quarter (2) Income tax expense impact of (1)
at ISS' marginal tax rate of 34% Image Sensing Systems, Inc.
Condensed Consolidated Balance Sheet (in thousands) (unaudited)
March 31, December 31, 2008 2007 Assets Current assets Cash and
cash equivalents (including restricted cash) $6,559 $10,876
Receivables, net 5,273 4,997 Inventories 1,888 1,579 Prepaid
expenses and deferred taxes 492 370 14,212 17,822 Property and
equipment, net 639 700 Investments, net of valuation allowance
5,199 - Deferred income taxes 1,826 1,676 Goodwill and intangible
assets, net 9,948 10,140 $31,824 $30,338 Liabilities and
Shareholders' Equity Current liabilities Accounts payable and
accrued expenses $ 1,916 $ 2,029 Bank debt 5,000 5,000 Income taxes
payable 674 - 7,590 7,029 Income taxes payable - 84 Shareholders'
equity 24,234 23,225 $31,824 $30,338 Image Sensing Systems, Inc.
Condensed Consolidated Statement of Cash Flows (in thousands)
(unaudited) Three-Month Period Ended March 31, 2008 2007 Operating
activities Net income $1,056 $556 Adjustments to reconcile net
income to net cash provided by (used in) operations Depreciation
and amortization 290 57 Stock option expense 73 29 Changes in
operating assets and liabilities (249) (722) Net cash provided by
(used in) operating activities 1,170 (80) Investing activities
Purchase of property and equipment, net of disposals (37) 4 Sale
(purchase) of investments (5,450) 1,000 Net cash provided by (used
in) investing activities (5,487) 1,004 Financing activity -
proceeds from exercise of stock options - 30 Increase (decrease) in
cash and cash equivalents (4,317) 954 Cash and cash equivalents,
beginning of period 10,876 11,626 Cash and cash equivalents, end of
period $6,559 $12,580
http://www.newscom.com/cgi-bin/prnh/20050512/CGISSLOGO
http://photoarchive.ap.org/ DATASOURCE: Image Sensing Systems
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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