SAINT PAUL, Minn., July 29 MN-Image-Sensing-Q2
SAINT PAUL, Minn., July 29 /PRNewswire-FirstCall/ -- Image Sensing
Systems, Inc. (Nasdaq: ISNS), announced today record financial results for its
second quarter ended June 30, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050512/CGISSLOGO)
Net income for the quarter ended June 30, 2008 was $1.2 million ($0.30 per
fully diluted share) compared to $702,000 ($0.18 per fully diluted share) for
the same period in 2007. Net income for the first half of 2008 was $2.3
million ($0.57 per diluted share) compared to $1.3 million ($0.32 per diluted
share) for the same period in 2007.
Revenue for the second quarter was $6.7 million compared to $3.0 million
for the same period a year ago, while revenue for the first half of 2008 was
$12.6 million compared to $5.7 million for the same period a year ago.
Revenue from royalties increased 46% to $3.4 million from $2.3 million in the
second quarter of 2007 and 36% to $6.3 million in the first half from $4.6
million in the first half of 2007, reflecting 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 $1.9 million for the
second quarter and $3.5 million for the first half of 2008. International
sales, which include both Autoscope and RTMS sales outside of North America,
were $1.4 million in the second quarter, a 96% increase over $736,000 in the
same period in 2007, and $2.8 million in the first half, a 157% increase over
$1.1 million in the same period of 2007. Sales of RTMS world-wide for the
quarter were $2.4 million. We acquired the RTMS family of products in
December 2007.
On a non-GAAP basis for the second quarter, excluding intangible asset
amortization net of tax, net income increased 91% to $1.3 million ($0.34 per
fully diluted share) and operating income increased 140% to $1.9 million as
compared to the comparable quarter of 2007. On a non-GAAP basis for the first
half, net income increased 101% to $2.5 million ($0.63 per fully diluted
share) and operating income increased 150% to $3.6 million as compared to the
same period of 2007.
Ken Aubrey, CEO, said, "We completed a strong first half of 2008. We
began shipping RTMS G4 in Q2 and saw continued growing acceptance of the
Autoscope Terra platform. All in all, we believe the integration of the EIS
asset purchase and final Terra transition matters are progressing on
schedule."
Follow-on Offering Update
We have received a comment letter from the Securities and Exchange
Commission (SEC) on our Form S-1 registration statement that was originally
filed in May. We expect that upon making the changes requested by the SEC in
an amendment we would be in position to have the offering declared effective.
However, given our recent share price range, we believe that proceeding with
an offering at this time is not in the best interests of our shareholders.
Additionally, we do not view current stock market conditions as favorable nor
do we foresee the need for increased working capital at present. We continue
to believe there are significant benefits to a follow-on offering and
contemplate pursuing an offering when market conditions change. Please see
the disclaimer below.
Auction Rate Security Update
We continue to hold $5.4 million in face value of student loan backed
auction rate securities (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 believe that
the underlying credit quality of the ARS is excellent and that the main
problem remains illiquidity. Our updated analysis of the ARS fair value
indicates there is a temporary impairment of $318,000 ($210,000 net of tax).
The ARS are classified as long-term assets at June 30, 2008. This 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 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, 2007.
Disclaimer: A registration statement relating to these securities has
been filed with the Securities and Exchange Commission but has not yet become
effective. These securities may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective.
Image Sensing Systems, Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share information)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenue
Royalties $3,373 $2,304 $6,265 $4,595
North American sales 1,923-3,548-
International sales1,446 7362,8011,089
6,7423,040 12,6145,684
Cost of revenue
Cost of sales 1,406 2882,608 415
Gross profit 5,3362,752 10,0065,269
Operating expenses
Selling, marketing
and product support 1,660 8762,9931,561
General and
administrative1,015 5521,9031,122
Research and
development 765 5341,4661,128
Amortization of
intangible assets 192- 384-
3,6321,9626,7463,811
Income from operations 1,704 7903,2601,458
Other income, net 23 142 64 280
Income before income
taxes 1,727 9323,3241,738
Income taxes 512 2301,053 480
Net income $1,215 $702 $2,271 $1,258
Net income per common
share
Basic $0.31$0.18$0.58$0.33
Diluted$0.30$0.18$0.57$0.32
Weighted average shares
outstanding
Basic 3,9293,7793,9293,776
Diluted3,9993,8744,0133,880
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 June 30, 2008
Revenue $6,742 $- $6,742
Cost of revenue 1,406 - 1,406
Gross profit 5,336 - 5,336
Operating expenses 3,632(192)(1) 3,440
Income from operations 1,704 192 1,896
Other income, net 23 - 23
Income before income taxes 1,727 192 1,919
Income taxes 512 65 (2)577
Net income$1,215$127 $1,342
Basic net income per share $0.31 $0.34
Diluted net income per share $0.30 $0.33
Weighted shares - basic3,929 3,929
Weighted shares - diluted 3,999 3,999
GAAP Non-GAAP
basis adjustments basis
Six months ended June 30, 2008
Revenue$12,614 $-$12,614
Cost of revenue 2,608 - 2,608
Gross profit 10,006 - 10,006
Operating expenses 6,746(384)(1) 6,362
Income from operations 3,260 384 3,644
Other income, net 64 - 64
Income before income taxes 3,324 384 3,708
Income taxes 1,053 130 (2) 1,183
Net income$2,271$254 $2,525
Basic net income per share $0.58 $0.64
Diluted net income per share $0.57 $0.63
Weighted shares - basic3,929 3,929
Weighted shares - diluted 4,013 4,013
Notes to adjustments
(1) Intangible asset amortization for the period
(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)
June 30, December 31,
2008 2007
Assets
Current assets
Cash and cash equivalents $7,333$10,876
Receivables, net 5,706 4,997
Inventories2,034 1,579
Prepaid expenses and deferred taxes 672370
15,745 17,822
Property and equipment, net698700
Investments, net of valuation allowance
(restricted)5,082 -
Deferred income taxes1,849 1,676
Goodwill and intangible assets, net 9,756 10,140
$33,130$30,338
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued expenses $2,342 $2,029
Bank debt, current 1,000 5,000
Income taxes payable 446 -
3,788 7,029
Bank debt, long-term 3,834 -
Income taxes payable - 84
Shareholders' equity25,508 23,225
$33,130$30,338
Image Sensing Systems, Inc.
Condensed Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
Six-Month Period Ended
June 30,
2008 2007
Operating activities
Net income$2,271 $1,258
Adjustments to reconcile net income to net
cash provided by (used in) operations
Depreciation and amortization573123
Stock option expense 159 73
Changes in operating assets and liabilities (798)(2,483)
Net cash provided by (used in) operating
activities2,205 (1,029)
Investing activities
Purchase of property and equipment, net of
disposals(188) (22)
Sale (purchase) of investments (5,400) 1,000
Net cash provided by (used in) investing
activities (5,588) 978
Financing activities
Repayment of bank debt(166) -
Proceeds from exercise of stock options 6 33
Net cash provided by (used in) financing
activities (160)33
Increase (decrease) in cash and cash
equivalents (3,543) (18)
Cash and cash equivalents, beginning of
period 10,876 11,626
Cash and cash equivalents, end of period $7,333$11,608
SOURCE Image Sensing Systems, Inc.
