SAINT PAUL, Minn., Feb. 29, 2012 /PRNewswire/ -- Image Sensing
Systems, Inc. (NASDAQ: ISNS), announced today the results for its
fiscal year and fourth quarter ended December 31, 2011. The results include the
previously announced restructuring charge and an adjustment for the
CitySync earn-out and, for the year, they also include the non-cash
goodwill impairment charge incurred in the third quarter.
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Revenue for the year ended December 31,
2011 was $30.5 million
compared to $31.7 million for 2010,
while revenue for the fourth quarter of 2011 was $8.9 million compared to $10.6 million for the same period a year ago.
Revenue from royalties was $13.0
million for 2011 compared to $12.5
million in 2010 and $4.0
million in the fourth quarter of 2011 compared to
$3.3 million in the same period of
2010. Product sales were $17.5
million for 2011 compared to $19.2
million in 2010 and were $4.9
million in the fourth quarter of 2011 compared to
$7.3 million in the same period in
2010. World-wide, RTMS and CitySync product sales for the
year ended December 31, 2011 were
$7.4 million and $5.7 million, respectively, and for the fourth
quarter of 2011 were $1.6 million and
$1.0 million, respectively.
Net loss for the 2011 year was $(10.0)
million or $(2.07) per share
compared to net income of $3.0
million or $0.64 per diluted
share for the same period in 2010. Net loss for the 2011
fourth quarter was $(689,000) or
$(0.14) per diluted share compared to
net income of $1.1 million or
$0.23 per diluted share for the same
period in 2010. On a non-GAAP basis, excluding the goodwill
impairment, restructuring, earn-out adjustment and intangible asset
amortization, all net of tax, net income for 2011 was $361,000 or $0.07
per diluted share and net loss for the fourth quarter was
$(169,000) or $(0.03) per diluted share.
The previously announced restructuring relates to business model
changes, most of which impact the RTMS segment in North America. In the fourth quarter of
2011, we recognized $735,000 in total
restructuring expense. Also, in the fourth quarter, we took
into income the remaining liability of $618,000 for the CitySync earnout as the results
for CitySync did not achieve the level required for the sellers to
receive additional consideration. Income taxes were
negatively impacted by changes in estimates for research and
development credits and future state income tax rates.
Ken Aubrey, CEO, said, "Our
results for the fourth quarter were mixed and remain reflective of
an uncertain economic environment, especially in Europe, coupled with the restructuring and
right-sizing activities which we had underway internally. On
the one hand, we were encouraged that revenues were strong for
royalties and in our Eastern European business, although in the
latter a large project sale produced a gross margin percentage that
was well below our historic levels as the sale came with
significant third party content. In contrast, we fell short
of expectations in our CitySync product line and across Autoscope
and RTMS in Asia. Associated
with the short-fall, product gross margins were depressed due
mostly to the lower volume and, to a lesser degree, unfavorable
product mix. Research and development expense for the quarter
was higher as we made an accelerated final push to be able to
successfully accomplish the introduction of our game-changing
hybrid product, Autoscope®Duo™, in the first quarter of 2012.
"As we announced in December, we are reducing expenses to
achieve substantially improved profit levels for 2012 in spite of
an uncertain future revenue outlook, while preserving operational
flexibility. Excluding restructuring, we expect that
transitioning RTMS North American distribution to Econolite will be
accretive to earnings in 2012 and that it will also have positive
free cash flow implications over the year through lower receivables
and inventory balances. Although the year was difficult, we
leave 2011 with the Duo commercialized and subsequently introduced,
and an outlook to conclude 2012 with improved profitability and
higher cash and investment balances. Duo gives us an entree
to significantly expand our accessible market by driving a
step-function change acceleration in the conversion from legacy
loop detection to above ground detection. We conservatively
estimate the annual loop market in North
America to be still at least double that of above ground
detection.
"Our first quarter is typically seasonal due to winter weather
conditions in our main markets. We are working diligently to
transition RTMS North American manufacturing and distribution to
Econolite and this is likely to continue well into 2012. As
we noted previously, this will result in additional restructuring
charges in 2012 anticipated to be in the range of $100,000 to $150,000," continued Mr. Aubrey.
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 2007 EIS asset acquisition and the 2010 CitySync
acquisition and may exclude other non-recurring items.
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 provider of software-based
detection solutions for the Intelligent Transportation Systems
(ITS) sector and adjacent markets including security, police and
parking. We have sold more than 120,000 units of our industry
leading Autoscope® machine-vision, RTMS® radar and CitySync
automatic number plate recognition (ANPR) products in over 60
countries worldwide. The depth of our experience coupled with
the breadth of our 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; the
mix of and margins on the products we sell; unanticipated delays,
costs and expenses inherent in the development and marketing of new
products and services, including ANPR products; adverse weather
conditions in our markets; the impact of governmental laws and
regulations; increased international presence; our success in
integrating acquisitions; 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 Annual Report on Form 10-K for the year
ended December 31, 2010 filed in
March 2011.
Image
Sensing Systems, Inc.
Condensed
Consolidated Statements of Operations
(in
thousands, except per share information)
(unaudited)
|
|
|
|
Three-Month
Period Ended
December
31,
|
|
Year
Ended
December
31,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
Royalties
|
|
$3,994
|
|
$3,297
|
|
$13,046
|
|
$12,519
|
|
Product sales
|
|
4,858
|
|
7,276
|
|
17,475
|
|
19,162
|
|
|
|
8,852
|
|
10,573
|
|
30,521
|
|
31,681
|
|
Cost of revenue (exclusive of
amortization below)
|
|
|
|
|
|
|
|
|
|
Product sales
|
|
3,171
|
|
3,202
|
|
8,769
|
|
7,799
|
|
Restructuring
|
|
448
|
|
--
|
|
448
|
|
--
|
|
|
|
3,619
|
|
3,202
|
|
9,217
|
|
7,799
|
|
Gross profit
|
|
5,233
|
|
7,371
|
|
21,304
|
|
23,882
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
Selling, marketing and
product support
|
|
2,735
|
|
3,219
|
|
10,609
|
|
9,807
|
|
General and
administrative
|
|
1,566
|
|
1,089
|
|
6,315
|
|
4,372
|
|
Research and
development
|
|
1,305
|
|
1,030
|
|
4,424
|
|
3,630
|
|
Acquisition related
expenses (income)
|
|
(618)
|
|
290
|
|
(618)
|
|
817
|
|
Goodwill
impairment
|
|
--
|
|
--
|
|
11,685
|
|
--
|
|
Restructuring
|
|
287
|
|
--
|
|
287
|
|
--
|
|
Amortization of intangible
assets
|
|
407
|
|
399
|
|
1,650
|
|
1,218
|
|
|
|
5,682
|
|
6,027
|
|
34,352
|
|
19,844
|
|
Income (loss) from
operations
|
|
(449)
|
|
1,344
|
|
(13,048)
|
|
4,038
|
|
Other income (expense),
net
|
|
2
|
|
23
|
|
9
|
|
(123)
|
|
Income (loss) before income
taxes
|
|
(447)
|
|
1,367
|
|
(13,039)
|
|
3,915
|
|
Income tax expense
(benefit)
|
|
242
|
|
258
|
|
(3,022)
|
|
910
|
|
Net income (loss)
|
|
$(689)
|
|
$1,109
|
|
$(10,017)
|
|
$3,005
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss)
per share
|
|
$(0.14)
|
|
$0.23
|
|
$(2.07)
|
|
$0.66
|
|
Diluted net income (loss)
per share
|
|
$(0.14)
|
|
$0.23
|
|
$(2.07)
|
|
$0.64
|
|
Weighted shares –
basic
|
|
4,847
|
|
4,808
|
|
4,834
|
|
4,555
|
|
Weighted shares –
diluted
|
|
4,847
|
|
4,918
|
|
4,834
|
|
4,667
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to
non-GAAP basis
|
|
|
|
|
|
|
|
|
|
Non-GAAP income before income
taxes (1)
|
|
77
|
|
2,056
|
|
413
|
|
5,950
|
|
Non-GAAP income tax expense
(2)
|
|
246
|
|
394
|
|
52
|
|
1,324
|
|
Non-GAAP net income
(loss)
|
|
$(169)
|
|
$1,662
|
|
$361
|
|
$4,626
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP basic net income
(loss) per share
|
|
$(0.03)
|
|
$0.35
|
|
$0.07
|
|
$1.02
|
|
Non-GAAP diluted net
income (loss) per share
|
|
$(0.03)
|
|
$0.34
|
|
$0.07
|
|
$0.99
|
|
|
|
|
|
|
|
|
|
|
|
Notes to non-GAAP
adjustments
|
|
|
|
|
|
|
|
|
|
- Amortization of intangible
assets, goodwill impairment, restructuring and acquisition related
expenses for the applicable period as shown above are
removed
- Income tax expense is increased
by the impact of (1) as tax effected at ISS' marginal tax
rate of 34% for 2010 and using estimated rates by jurisdiction for
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Image
Sensing Systems, Inc.
Condensed
Consolidated Balance Sheet
(in
thousands)
(unaudited)
|
|
|
December
31,
2011
|
|
December
31,
2010
|
|
Assets
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash
equivalents
|
$5,224
|
|
$ 8,021
|
|
Investments
|
2,093
|
|
3,954
|
|
Receivables,
net
|
10,148
|
|
10,137
|
|
Inventories
|
6,142
|
|
4,649
|
|
Prepaid expenses and
deferred taxes
|
2,073
|
|
2,247
|
|
|
25,680
|
|
29,008
|
|
Property and equipment,
net
|
1,435
|
|
1,122
|
|
Deferred taxes
|
3,131
|
|
--
|
|
Goodwill and intangible
assets, net
|
11,008
|
|
24,226
|
|
|
$41,254
|
|
$54,356
|
|
Liabilities and Shareholders'
Equity
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts payable and
accrued expenses
|
$4,545
|
|
$ 4,925
|
|
Earn-outs
payable
|
--
|
|
2,928
|
|
Income taxes
payable
|
67
|
|
17
|
|
|
4,612
|
|
7,870
|
|
Income taxes payable and
deferred taxes
|
316
|
|
465
|
|
Shareholders'
equity
|
36,326
|
|
46,021
|
|
|
$41,254
|
|
$54,356
|
|
|
|
|
|
|
|
|
|
|
|
|
Image
Sensing Systems, Inc.
Condensed
Consolidated Statement of Cash Flows
(in
thousands)
(unaudited)
|
|
|
Year
Ended
December
31,
|
|
|
2011
|
|
2010
|
|
Operating activities
|
|
|
|
|
Net income (loss)
|
$(10,017)
|
|
$3,005
|
|
Adjustments to reconcile net
income (loss) to net cash provided by (used in)
operations
|
|
|
|
|
Goodwill
impairment
|
11,685
|
|
--
|
|
Earn-out income
|
(618)
|
|
|
|
Depreciation and
amortization
|
2,197
|
|
1,717
|
|
Stock option
expense
|
412
|
|
342
|
|
Changes in operating
assets and liabilities
|
(4,970)
|
|
(5,031)
|
|
Net cash provided by (used in)
operating activities
|
(1,311)
|
|
33
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
Purchase of
CitySync
|
--
|
|
(7,871)
|
|
Purchases of property and
equipment, net of disposals
|
(859)
|
|
(380)
|
|
Repayment of
CitySync seller loans
|
--
|
|
(445)
|
|
Payments of
earn-outs
|
(2,361)
|
|
(1,541)
|
|
Sales (purchases) of
investments
|
1,861
|
|
(19)
|
|
Net cash used in investing
activities
|
(1,359)
|
|
(10,256)
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
Repayment of bank debt,
net
|
--
|
|
(4,556)
|
|
Net proceeds from common
stock offering
|
--
|
|
8,818
|
|
Proceeds from exercise of
stock options
|
105
|
|
121
|
|
Net cash provided by financing
activities
|
105
|
|
4,383
|
|
|
|
|
|
|
Effect of exchange rate changes
on cash
|
(232)
|
|
(223)
|
|
|
|
|
|
|
Decrease in cash and cash
equivalents
|
(2,797)
|
|
(6,063)
|
|
Cash and cash equivalents,
beginning of period
|
8,021
|
|
14,084
|
|
Cash and cash equivalents, end
of period
|
$5,224
|
|
$8,021
|
|
|
|
|
|
|
|
SOURCE Image Sensing Systems, Inc.