SAINT PAUL, Minn., Feb. 25 /PRNewswire-FirstCall/ -- Image Sensing
Systems, Inc. (NASDAQ:ISNS), announced today our seventh
consecutive year of record financial results including the best
quarterly results ever in the Company's history. (Logo:
http://www.newscom.com/cgi-bin/prnh/20050512/CGISSLOGO) Net income
for fiscal year 2008 was $5.0 million ($1.24 per diluted share)
compared to $872,000 ($0.22 per diluted share) for fiscal 2007. Net
income for our fourth quarter, which ended December 31, 2008, was
$1.5 million ($0.39 per diluted share) compared to a loss of $1.7
million ($0.44 per diluted share) for the same period in 2007. We
recognized an in-process research and development charge of $4.5
million ($3.0 million net of tax) in the fourth quarter of 2007.
Revenue for fiscal year 2008 was $26.5 million compared to $15.1
million for fiscal 2007, while revenue for fourth quarter of 2008
was $7.8 million compared to $5.2 million for the same period a
year ago. Revenue from royalties increased 24% to $13.3 million in
fiscal year 2008 from $10.8 million in 2007 and 7% to $3.3 million
in the fourth quarter of 2008 from $3.1 million in the same period
of 2007, reflecting the continued success of our Autoscope(R) North
American distribution partner, Econolite Control Products, Inc.
(ECPI). North American sales, which are sales of RTMS(R) in North
America, were $5.7 million for fiscal year 2008 and $1.2 million in
the fourth quarter of 2008. International sales, which include both
Autoscope and RTMS sales outside of North America, were $7.5
million for fiscal year 2008, an 83% increase over $4.1 million in
the same period of 2007 and were $3.2 million in the fourth quarter
of 2008, a 76% increase over $1.8 million in the same period in
2007. Sales of RTMS world-wide for the fourth quarter were $2.4
million. We acquired the RTMS family of products in December 2007.
On a non-GAAP basis, excluding intangible asset amortization, in
process research and development and withdrawn offering expenses,
each net of tax, net income was $5.6 million ($1.40 per diluted
share) and operating income was $8.1 million for fiscal year 2008
as compared to net income of $3.9 million ($1.00 per diluted share)
and operating income of $4.7 million for fiscal year 2007. On a
non-GAAP basis for the 2008 fourth quarter, net income was $1.7
million ($0.42 per diluted share) and operating income was $2.4
million as compared to 2007 net income of $1.3 million ($0.34 per
diluted share) and operating income of $1.6 million. Based on the
2008 results for RTMS, the sellers of the RTMS business, also known
as the EIS assets, are entitled to receive a $1.2 million earnout
payment. This liability has been recorded on our balance sheet as
of December 31, 2008 with an offsetting entry to increase goodwill.
Ken Aubrey, CEO, said, "Our fourth quarter and year were strong in
the face of deteriorating economic conditions. All of our regions
finished above internal targets although our North American RTMS
business underperformed. We believe the domestic RTMS results are
showing signs of funding problems at the state government level as
a number of projects are being deferred. This trend is likely to
manifest itself in our domestic Autoscope business and the
royalties earned to date and projections for our first fiscal
quarter of 2009 are below 2008 levels. Some royalties anticipated
to be recognized early in 2009 were instead earned in 2008 which in
turn may dampen 2009 revenue. Discussions with our North American
channel partners indicate the current environment is tougher than
2008. We have high hopes for the infrastructure elements of the
Federal stimulus package although we would not expect to see any
benefit from it in the first half of the year. Internationally, the
outlook currently appears less difficult." Mr. Aubrey added, "We
anticipate expense levels for 2009 will remain at fourth quarter
2008 levels as we focus on continued product initiatives, including
video/radar hybrid solutions, tailored international offerings and
market expansion activities in Eastern Europe and Asia. In
addition, we are placing emphasis on activities to reduce our
manufacturing costs from which we expect to see a benefit towards
the end of the year." Auction Rate Security Update As was announced
in January 2009, we have recovered our entire principal invested in
auction rate securities (ARS). Because of the mechanics of the
settlement, we have valued the ARS and related settlement rights at
December 31, 2008 at a combined value equal to par and have
classified it as a current asset. The previously recognized
valuation impairment and its related components were reversed in
the fourth quarter of 2008. 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 and
excludes the costs incurred in conjunction with our withdrawn
follow-on offering that were expensed in the quarter ended
September 30, 2008. Additionally, we have excluded the impact of
EIS accounting, most notably the in-process research and
development expense, in our 2007 non-GAAP presentation. 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 focused in infrastructure
productivity improvement through the development of software-based
detection solutions for the Intelligent Transportation Systems
(ITS) sector and adjacent overlapping markets. ISS' 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, environmental 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 90,000 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 and Form 10-Q filed periodically in 2008. 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, 2008 2007 2008 2007
Revenue Royalties $3,314 $3,111 $13,321 $10,747 North American
sales 1,221 269 5,689 269 International sales 3,234 1,835 7,455
4,067 7,769 5,215 26,465 15,083 Cost of revenue Cost of sales 1,444
1,036 4,912 1,987 Gross profit 6,325 4,179 21,553 13,096 Operating
expenses Selling, marketing and product support 1,992 1,153 6,680
3,463 General and administrative 1,186 821 4,069 2,653 Research and
development 741 618 2,908 2,299 In-process research and development
- 4,500 - 4,500 Amortization of intangible assets 192 51 768 51
4,111 7,143 14,425 12,966 Income (loss) from operations 2,214
(2,964) 7,128 130 Other income (expense), net (15) 114 43 543
Income (loss) before income taxes 2,199 (2,850) 7,171 673 Income
tax expense (benefit) 668 (1,167) 2,207 (199) Net income (loss)
$1,531 $(1,683) $4,964 $872 Net income (loss) per common share
Basic $0.39 $(0.44) $1.26 $0.23 Diluted $0.39 $(0.44) $1.24 $0.22
Weighted average shares outstanding Basic 3,974 3,822 3,943 3,789
Diluted 3,974 3,822 4,001 3,881 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 Year ended
December 31, 2008 Revenue $26,465 $- $26,465 Cost of revenue 4,912
- 4,912 Gross profit 21,553 - 21,553 Operating expenses 14,425
(989) (1,2) 13,436 Income from operations 7,128 989 8,117 Other
income, net 43 - 43 Income before income taxes 7,171 989 8,160
Income taxes 2,207 336 (3) 2,543 Net income $4,964 $653 $5,617
Basic net income per share $1.26 $1.42 Diluted net income per share
$1.24 $1.40 Weighted shares - basic 3,943 3,943 Weighted shares -
diluted 4,001 4,001 GAAP Non-GAAP basis adjustments basis Quarter
ended December 31, 2008 Revenue $7,769 $- $7,769 Cost of revenue
1,444 - 1,444 Gross profit 6,325 - 6,325 Operating expenses 4,111
(192) (1) 3,919 Income from operations 2,214 192 2,406 Other income
(expense), net (15) - (15) Income before income taxes 2,199 192
2,391 Income taxes 668 65 (3) 733 Net income $1,531 $127 $1,658
Basic net income per share $0.39 $0.42 Diluted net income per share
$0.39 $0.42 Weighted shares - basic 3,974 3,974 Weighted shares -
diluted 3,974 3,974 Notes to adjustments - -----------------------
(1) Intangible asset amortization for the period of $192 and $768,
respectively (2) Withdrawn offering cost expense of $221 (3) Income
tax expense impact of (1) and (2) at ISS' marginal tax rate of 34%
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) (4) 14,814 Cost of revenue 1,987 (60) (4)
1,927 Gross profit 13,096 (209) 12,887 Operating expenses 12,966
(4,768) (5) 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 (6) 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) (4) $4,946 Cost of revenue 1,036 (60) (4) 976
Gross profit 4,179 (209) 3,970 Operating expenses 7,143 (4,768) (5)
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 (6) 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 -------------------- (4) Revenue and cost of
revenue from RTMS sales from December 7, 2007 to year-end (5)
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 (6) Income tax
expense impact of (1) and (2) at ISS' marginal tax rate of 34%
Image Sensing Systems, Inc. Condensed Consolidated Balance Sheets
(in thousands) (unaudited) December 31, December 31, 2008 2007
Assets Current assets Cash and cash equivalents $10,289 $10,876
Investments (restricted) 4,000 - Receivables, net 6,620 4,997
Inventories 1,608 1,579 Prepaid expenses and deferred taxes 752 370
23,269 17,822 Property and equipment, net 628 700 Deferred income
taxes 1,575 1,676 Goodwill and intangible assets, net 10,536 10,140
$36,008 $30,338 Liabilities and Shareholders' Equity Current
liabilities Accounts payable and accrued expenses $2,135 $2,029
Bank debt, current 1,000 5,000 EIS earnout payable 1,164 - Income
taxes payable 529 - 4,828 7,029 Bank debt, long-term 2,750 - Income
taxes payable - 84 Shareholders' equity 28,430 23,225 $36,008
$30,338 Image Sensing Systems, Inc. Condensed Consolidated
Statements of Cash Flows (in thousands) (unaudited) Year Ended
December 31, 2008 2007 Operating activities Net income $4,964 $872
Adjustments to reconcile net income to net cash provided by
operations Depreciation and amortization 1,124 4,777 Stock option
expense 339 194 Changes in operating assets and liabilities (1,652)
(4,217) Net cash provided by operating activities 4,775 1,626
Investing activities Purchase of property and equipment, net of
disposals (285) (104) Purchase of EIS assets - (11,406) Sale
(purchase) of investments, net (4,000) 4,100 Net cash used in
investing activities (4,285) (7,410) Financing activities Proceeds
from (repayment of) bank debt (1,250) 5,000 Proceeds from exercise
of stock options 173 34 Net cash provided by (used in) financing
activities (1,077) 5,034 Decrease in cash and cash equivalents
(587) (750) Cash and cash equivalents, beginning of period 10,876
11,626 Cash and cash equivalents, end of period $10,289 $10,876
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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