Image Sensing Systems Announces Second Quarter Financial Results
Contact: Art Bourgeois, Chief Financial Officer
Image Sensing Systems, Inc., Phone: 651.603.7700
Saint Paul, MN, July 22, 2005 - Image Sensing Systems, Inc. (ISS) (NASDAQ: ISNS), announced today financial results for its second quarter ended June 30, 2005.
Net income for the quarter decreased 37.7% to $610,000 ($0.16 per fully diluted share) from $979,000 ($0.26 per fully diluted share) for the comparable period in 2004, while net income for the first half of 2005 decreased 22.5% to 1,007,000 ($0.26 per fully diluted share) from $1,299,000 ($0.34 per fully diluted share) for the comparable period in 2004.
Revenues for the second quarter were $2,524,000, a 26.4% decrease from $3,428,000 for the comparable period in fiscal 2004, while revenues for the first half of 2005 were $4,651,000, a 15.5% decrease from $5,501,000 for the comparable period a year ago. Revenue from royalty income increased 8.1% to $2,102,000 from $1,944,000 in the second quarter of 2004 and increased 19.2% to $3,799,000 from $3,187,000 in the first half of 2004 and reflects the continuing success that ISS’s North American distributor is having selling the Autoscope Solo product in the United States and Canada. International sales for the second quarter of 2005 decreased 71.6% to $422,000 from $1,484,000 for the comparable quarter in 2004 and decreased 63.2% to $852,000 in the first half of fiscal 2005 from $2,314,000 in the comparable period of 2004.
The entire international sales decrease was in the Asian market where the company’s Hong Kong subsidiary was unable to repeat a large order sold in the second quarter of 2004 to a customer in Korea. In addition, transition to a new loop detection product for sale in the Asian market has been delayed due to technical issues and has greatly reduced sales of this product. In the second quarter of 2005 sales of the loop product was only $10,000 compared to over $183,000 in the second quarter of 2004 and first half sales of loop detector products totaled $14,000 compared to $540,000 in the first half of fiscal 2004.
Operating expenses for the quarter were $1,391,000, a 23.5% increase from $1,126,000 in 2004 while operating expenses for the first half of fiscal 2005 increased 17.6% to $2,659,000 from $2,262,000 in fiscal 2004, due primarily to the addition of technical and sales staff in Europe and the U.S.
Jim Murdakes, Chairman and CEO said, “There is both good news and bad news. The good news: we grew revenues in North America by 19.2% during the first half of 2005 over 2004 and 40.7% in Europe in the second quarter of 2005 compared to 2004, thus increasing market share in both areas. The bad news is the disappointing revenues from our Asian subsidiary, Flow Traffic Ltd, where we missed our revenue targets. This was caused by two factors: (1) lack of certain software features in the first release of our loop detector product, which we are in the process of correcting, and (2) we missed sales in China because of performance issues aggravated by locally purchased camera working in conjunction with our Autoscope software. Both issues are currently being addressed.”
Headquartered in St. Paul, Minnesota, Image Sensing Systems, Inc. combines expertise in image processing, hardware and software engineering, and communications to develop video vehicle detection systems for traffic management and control applications. The Autoscope vehicle detection system is the world leader in video detection for advanced traffic management systems for highways, tunnel incident detection, intersection control, and traffic data collection. The Autoscope system provides traffic managers the means to reduce roadway congestion, improve roadway planning, and improve cost efficiencies. http://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 Form 10-KSB for the year ended December 31, 2004.
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Image Sensing Systems, Inc. Condensed Statement of Income (in thousands, except per share information) |
||||||||
|
Three-Month Periods Ended June 30 |
Six-Month Periods Ended
June 30 |
|||||||
2005 |
2004 |
2005 |
2004 |
|||||
| Revenue | ||||||||
| Royalty income | $2,102 |
$1,944 |
$3,799 |
$3,187 |
||||
| International sales | 422 |
1,484 |
852 |
2,314 |
||||
2,524 |
3,428 |
4,651 |
5,501 |
|||||
| Cost of revenue | ||||||||
| Royalty fee | 90 |
83 |
170 |
141 |
||||
| Cost of sales | 148 |
781 |
331 |
1,196 |
||||
238 |
864 |
501 |
1,337 |
|||||
| Gross Profit | 2,286 |
2,564 |
4,150 |
4,164 |
||||
| Operating expenses | ||||||||
| Selling, marketing and product support | 660 |
597 |
1,325 |
1,219 |
||||
| General and administrative | 386 |
258 |
706 |
578 |
||||
| Research and development | 345 |
271 |
628 |
465 |
||||
1,391 |
1,126 |
2,659 |
2,262 |
|||||
| Income from operations | 895 |
1,438 |
1,491 |
1,902 |
||||
| Other income | 62 |
11 |
106 |
24 |
||||
| Income before income taxes | 957 |
1,449 |
1,597 |
1,926 |
||||
| Income taxes | 347 |
470 |
590 |
627 |
||||
| Net income | $610 |
$979 |
$1,007 |
$1,299 |
||||
| Net income per common share | ||||||||
| Basic | $0.17 |
$0.29 |
$0.28 |
$0.39 |
||||
| Diluted | $0.16 |
$0.26 |
$0.26 |
$0.34 |
||||
| Weighted average shares outstanding | ||||||||
| Basic | 3,569 |
3,402 |
3,556 |
3,347 |
||||
| Diluted | 3,868 |
3,817 |
3,876 |
3,789 |
||||
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Image Sensing Systems, Inc. Condensed Balance Sheet (in thousands) |
|||||
June 30, 2005 |
December 31, 2004 |
||||
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | $4,382 |
$1,262 |
|||
| Investments | 4,750 |
7,300 |
|||
| Receivables | 2,691 |
2,176 |
|||
| Inventories | 575 |
404 |
|||
| Prepaid expenses and deferred taxes | 195 |
324 |
|||
12,593 |
11,466 |
||||
| Property and equipment, net | 166 |
127 |
|||
| Goodwill and capitalized software development costs | 1,341 |
1,470 |
|||
$14,100 |
$13,063 |
||||
| Liabilities and Shareholders' Equity | |||||
| Current liabilities | |||||
| Accounts payable and accrued expenses | $759 |
$1,110 |
|||
| Income taxes payable | 306 |
30 |
|||
1,065 |
1,140 |
||||
| Deferred income taxes | 144 |
144 |
|||
| Shareholders' equity | 12,891 |
11,779 |
|||
$14,100 |
$13,063 |
||||
|
Image Sensing Systems, Inc. Condensed Statement of Cash Flows (in thousands) |
||||
|
Nine-Month Periods Ended June 30 |
||||
2005 |
2004 |
|||
| Operating activities | ||||
| Net income | $1,007 |
$1,299 |
||
| Adjustments to reconcile net income to net cash provided by operations | ||||
| Depreciation and amortization | 182 |
166 |
||
| Changes in operating assets and liabilities | (598) |
(237) |
||
| Net cash provided by operating activities | 591 |
1,228 |
||
| Ivesting activities | ||||
| Purchase of property and equipment | (93) |
(56) |
||
| Sale of short-term investments | 2,550 |
- |
||
| Purchase of callable FHLB bonds | - |
1,204 |
||
| Net cash provided by (used in) investing activities | 2,457 |
(1,260) |
||
| Financing activity - proceeds from exercise of stock options | 72 |
415 |
||
| Increase in cash and cash equivalents | 3,120 |
383 |
||
| Cash and cash equivalents, beginning of period | 1,262 |
5,384 |
||
| Cash and cash equivalents, end of period | $4,382 |
$5,767 |
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