[I.D. Systems, Inc. Logo]
Expanding the range of wireless solutions
FOR IMMEDIATE RELEASE
CONTACTS: FOR FINANCIAL PRESS FOR TRADE PRESS
Ned Mavrommatis Greg Smith
Chief Financial Officer Vice President Marketing
NED@ID-SYSTEMS.COM GSMITH@ID-SYSTEMS.COM
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General Phone: 201-996-9000 General Fax: 201-996-9144
I.D. SYSTEMS REPORTS FOURTH QUARTER AND FULL YEAR 2006 FINANCIAL RESULTS
Hackensack, NJ, March 1, 2007--I.D. Systems, Inc. (NASDAQ: IDSY), a leading
provider of RFID-based wireless asset tracking and management solutions, today
announced its unaudited financial results for the year ended December 31, 2006.
Revenues increased 30.2% to a record $24.7 million from $19.0 million for 2005.
The revenue growth was attributable primarily to increased sales of I.D.
Systems' patented Wireless Asset Net(R) system, which utilizes radio frequency
identification, or RFID, technology to control, track, monitor and analyze
enterprise assets, such as industrial vehicles and equipment.
Adjusted net income for 2006 was $1.4 million, or $0.13 per basic share and
$0.11 per diluted share, compared to net income of $851,000, or $0.11 per basic
share and $0.09 per diluted share, for 2005. Adjusted net income was calculated
by adjusting GAAP net income for the impact of stock-based compensation of $3.0
million. Adjusted net income is considered non-GAAP financial information; a
reconciliation of non-GAAP financial measures used in this press release to GAAP
financial measures can be found in the Reconciliation of GAAP to Non-GAAP
Financial Measures table included in this press release. GAAP net loss for the
year ended December 31, 2006, was $1.6 million, or $.15 per basic and diluted
share.
"We are pleased with our overall year-over-year revenue growth," said Jeffrey
Jagid, I.D. Systems' chairman and chief executive officer, "but clearly we have
even higher performance goals, including a more predictable quarter-to-quarter
revenue stream from more diversified sources. To that end, our mission is to
drive customer benefit from our unique wireless technology, facilitate customer
adoption and expansion of our solutions, and open new applications and markets
for our technology, while maintaining our technical leadership. We are taking
active steps to realize these goals, including the strengthening of our sales
and marketing organization, as announced on February 27, 2007, with the
appointment of Peter Fausel, formerly of wireless mobile computing leader LXE,
as I.D. Systems' new executive vice president of sales, marketing and customer
support. With our outstanding human and technical resources and our strong,
blue-chip customer base, we continue to be very positive about I.D. Systems'
prospects for 2007 and beyond."
For the year ended December 31, 2006, cost of revenues was $13.7 million,
including $35,000 attributable to stock-based compensation pursuant to the
company's adoption of accounting rule SFAS 123(R), resulting in a gross profit
margin of 44.6%.
Selling, general and administrative (SG&A) expenses for 2006 increased to $12.9
million from $7.1 million for 2005. The increase was attributable primarily to
$2.2 million of stock-based employee compensation, pursuant to the company's
adoption of accounting rule SFAS 123(R), and to increased expenses related to
the hiring of additional personnel to support continued company growth.
Research and development (R&D) expenditures for 2006 increased to $2.6 million
from $1.6 million in 2005. The increase was attributable primarily to $723,000
of stock-based compensation, pursuant to the company's adoption of accounting
rule SFAS 123(R), and to increased engineering payroll expenses.
Interest income for 2006 increased to $2.8 million from $222,000 for 2005, as
the company invested proceeds from its public stock offering of March, 2006.
As of December 31, 2006, I.D. Systems had $70.4 million in cash, cash
equivalents and marketable securities, and $80.0 million of working capital,
compared to $7.6 million and $13.9 million, respectively, as of December 31,
2005.
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For the three-month period ended December 31, 2006, revenues were $3.9 million,
compared to $6.0 million for the three months ended December 31, 2005. Adjusting
for $1.2 million in stock-based compensation expenses, adjusted net loss for the
three months ended December 31, 2006, was $1.4 million, or $0.12 per basic and
diluted share, compared to net income of $433,000, or $0.06 per basic share and
$0.05 per diluted share, for the same period a year ago. Adjusted net loss is
considered non-GAAP financial information; a reconciliation of non-GAAP
financial measures used in this press release to the GAAP financial measures can
be found in the Reconciliation of GAAP to Non-GAAP Financial Measures table
included in this press release. GAAP net loss for the three-month period was
$2.6 million, or $.23 per basic and diluted share.
For the three months ended December 31, 2006, SG&A expenses were $4.1 million,
compared to $2.2 million for the same period in 2005. The increase was
attributable primarily to increased payroll expenses and to $740,000 of
stock-based compensation pursuant to the company's adoption of accounting rule
SFAS 123(R). R&D expenditures for the period were $913,000, compared to $490,000
for the three months ended December 31, 2005. The increase was attributable
primarily to $452,000 of stock-based compensation pursuant to the company's
adoption of accounting rule SFAS 123(R). Interest income for the fourth quarter
of 2006 increased to $1.1 million from $43,000 for the same period a year ago.
Highlights of 2006 for I.D. Systems included:
o The addition of a number of new customers for the company's core
application, the Wireless Asset Net(R) system, which controls, tracks and
manages fleets of industrial vehicles, including Nissan North America,
Inc. and Weyerhaeuser Company.
o Expansion of business with many existing Wireless Asset Net(R) customers,
including the U.S. Postal Service, where the system is now deployed at 65
facilities, Canadian Tire Retail, Ford Motor Company, Nissan, Target
Corporation, Walgreen Co., and other leading retailers and manufacturers.
o Launch of the I.D. Systems Users' Group Conference, at which
representatives of some of the world's largest and most respected
retailers, manufacturers and governmental agencies shared information on
the current status and future directions of radio frequency
identification-based asset tracking and monitoring applications.
o Development of new alliances, applications and markets, including:
o a marketing agreement with NACCO Materials Handling Group, Inc., the
global manufacturer of Hyster(R) and Yale(R) brand lift trucks, to
distribute and support the Wireless Asset Net(R) system through the
Hyster(R) and Yale(R) dealer networks;
o a cooperative effort with Linde Material Handling North America
Corporation, a subsidiary of one of the world's largest lift truck
makers, to facilitate an I.D. Systems sale to Weyerhaeuser;
o a strategic agreement with C&D Technologies, Inc., a leading producer
and marketer of electrical power storage and conversion systems, to
develop and market a new wireless system for managing the batteries
that power industrial trucks;
o the award of a U.S. Postal Service contract to integrate automated
material flow management capabilities into I.D. Systems' core
wireless asset management system;
o the development of a new application called OptiKan(TM) - an
optimized, wireless, electronic "kanban" system for automatically
signaling material handling operators to achieve "just in time"
production efficiencies;
o the introduction of the Line Asset Communicator(TM) - a component of
the OptiKan(TM) system that triggers automatic, real-time task
requests via radio frequency - to augment I.D. Systems' Vehicle Asset
Communicator(R) and Machine Asset Communicator(TM) products;
o the continued development of I.D. Systems' automated vehicle rental
and return system through a pilot program with a large U.S.-based car
rental company - a new customer for I.D. Systems in the rental fleet
management market; and
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o further advances in I.D. Systems' proprietary technology, including a
number of new patents issued and pending, and the testing and
fielding of a new generation of hardware and software that optimizes
the effectiveness of system communications in RFID-intensive
environments, where EPC-compliant RFID tags and readers saturate the
air with RF energy.
o Enhancement of I.D. Systems' corporate presence, through:
o inclusion of I.D. Systems' common stock in the Russell 3000(R) Index,
which is widely used by investment managers and institutional
investors for index funds and as investment benchmarks;
o achievement of the #107 ranking on Deloitte's 2006 "Fast 500" list of
the fastest-growing technology companies in North America - up from
the #147 ranking in 2005 - based on I.D. Systems' five-year revenue
growth of 1,959 percent; and
o establishment of a European office in Dusseldorf, Germany. Alexander
Glasmacher - a graduate of Stanford University and INSEAD
Fontainebleau Business School with more than 12 years of experience
in the European wireless and RFID markets - was hired to sell and
support the company's products to meet growing international demand
for wireless vehicle management solutions.
INVESTOR CONFERENCE CALL
------------------------
I.D. Systems will hold a conference call for investors and analysts at 4:45 p.m.
Eastern Standard Time on March 1, 2007. Jeffrey Jagid, chairman and CEO, Ned
Mavrommatis, CFO, and Ken Ehrman, COO, will discuss the year's results and
accomplishments. After opening remarks, there will be a question and answer
period. The conference call will be broadcast live over the Internet via the
Investors section of I.D. Systems' web site at WWW.ID-SYSTEMS.COM. To listen to
the live call, go to the website at least 10 minutes early to download and
install any necessary audio software.
NON-GAAP MEASURES
-----------------
To supplement its consolidated financial statements presented in accordance with
GAAP, I.D. Systems has begun providing certain non-GAAP measures of financial
performance. These non-GAAP measures include non-GAAP net income/loss and
non-GAAP net income/loss per basic and diluted share. Reference to these
non-GAAP measures should be considered in addition to results prepared under
current accounting standards, but are not a substitute for, or superior to, GAAP
results. These non-GAAP measures are provided to enhance investors' overall
understanding of I.D. Systems' current financial performance and provide further
information for comparative information due to the adoption of the new
accounting standard SFAS 123R. Specifically, I.D. Systems believes the non-GAAP
measures provide useful information to both management and investors by
excluding certain expenses, gains and losses that may not be indicative of its
core operating results and business outlook. In addition, I.D. Systems believes
the non-GAAP measures that exclude stock-based compensation enhance the
comparability of results against prior periods. Reconciliation to the nearest
GAAP measure of all non-GAAP measures included in this press release can be
found in the financial tables included in this press release.
ABOUT I.D. SYSTEMS
------------------
Based in Hackensack, NJ, I.D. Systems, Inc. is a leading provider of wireless
solutions for managing and securing high-value enterprise assets. These assets
include industrial vehicles, such as forklifts and airport ground support
equipment, and rental vehicles. The Company's patented Wireless Asset Net
system, which utilizes radio frequency identification, or RFID, technology,
addresses the needs of organizations to control track, monitor and analyze their
assets. For more information, visit WWW.ID-SYSTEMS.COM.
ABOUT THE WIRELESS ASSET NET(R) SYSTEM
--------------------------------------
I.D. Systems' Wireless Asset Net improves productivity in manufacturing and
distribution environments by establishing accountability for use of equipment,
ensuring equipment is in the proper place at the right time, streamlining work
flow through automated messaging, and providing management with unique metrics
on - and controls over - equipment utilization. The system also improves safety
and security by restricting vehicle
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access to trained, authorized operators and providing electronic vehicle
inspection checklists. In addition, the system reduces maintenance expenses by
automatically uploading vehicle data, reporting problems identified on
checklists in real time, scheduling maintenance according to actual vehicle
usage rather than on a calendar basis, and helping management determine the
optimal economic time to replace equipment.
TRADEMARKS
----------
I.D. Systems, Inc.(R), Line Asset Communicator(TM), Machine Asset
Communicator(TM), OptiKan(TM), Vehicle Asset Communicator(R), and Wireless Asset
Net(R) are registered or pending trademarks of I.D. Systems, Inc. Other
trademarks used in this press release are registered trademarks of their
respective owners.
"SAFE HARBOR" STATEMENT UNDER THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
------------------------------------------------
This press release contains forward looking statements that are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995 and that are subject to risk and uncertainties, including, but not limited
to, future economic and business conditions, the loss of any of the Company's
key customers or reduction in the purchase of its products by any such
customers, the failure of the market for the Company's products to continue to
develop, the inability to protect the Company's intellectual property, the
inability to manage the Company's growth, the effects of competition from a wide
variety of local, regional, national and other providers of wireless solutions
and other risks detailed from time to time in the Company's filings with the
Securities and Exchange Commission, including the Company's annual report on
Form 10-K for the year ended December 31, 2005. These risks could cause actual
results to differ materially from those expressed in any forward looking
statements made by, or on behalf of, the Company. The Company assumes no
obligation to update the information contained in this press release.
-- Tables to Follow --
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I.D. SYSTEMS, INC.
STATEMENTS OF OPERATIONS
Year Ended December 31, Quarter Ended December 31,
------------------------------- ----------------------------
2005 2006 2005 2006
----------- ----------- ---------- -----------
(Unaudited) (Unaudited) (Unaudited)
Revenue:
Product $14,905,000 $16,205,000 $4,311,000 $ 1,740,000
Service 4,099,000 8,535,000 1,720,000 2,173,000
----------- ----------- ---------- -----------
19,004,000 24,740,000 6,031,000 3,913,000
Cost of revenue:
Product 7,816,000 8,229,000 2,197,000 984,000
Service 1,892,000 5,472,000 770,000 1,542,000
----------- ----------- ---------- -----------
9,708,000 13,701,000 2,967,000 2,526,000
Gross profit 9,296,000 11,039,000 3,064,000 1,387,000
----------- ----------- ---------- -----------
Operating expenses:
Selling, general and administrative expenses 7,140,000 12,943,000 2,212,000 4,123,000
Research and development expenses 1,625,000 2,639,000 490,000 913,000
----------- ----------- ---------- -----------
8,765,000 15,582,000 2,702,000 5,036,000
----------- ----------- ---------- -----------
Income (loss) from operations 531,000 (4,543,000) 362,000 (3,649,000)
Interest income 222,000 2,801,000 43,000 1,061,000
Interest expense (53,000) (29,000) (10,000) (6,000)
Other income 151,000 155,000 38,000 40,000
----------- ----------- ---------- -----------
Net income (loss) $851,000 $(1,616,000) $433,000 $(2,554,000)
=========== =========== ========== ===========
Net income (loss) per share - basic $0.11 $(0.15) $0.06 $(0.23)
=========== =========== ========== ===========
Net income (loss) per share - diluted $0.09 $(0.15) $0.05 $(0.23)
=========== =========== ========== ===========
Weighted average common shares outstanding - basic 7,771,000 10,501,000 7,847,000 11,281,000
=========== =========== ========== ===========
Weighted average common shares outstanding - diluted 9,332,000 10,501,000 9,600,000 11,281,000
=========== =========== ========== ===========
I.D. SYSTEMS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
TWELVE MONTHS ENDED THREE MONTHS
DECEMBER 31, 2006 ENDED DECEMBER
31, 2006
Net loss attributable to common stockholders $(1,616,000) $ (2,554,000)
Stock-based compensation 2,975,000 1,192,000
NON-GAAP NET INCOME (LOSS) $ 1,359,000 $ (1,362,000)
NON-GAAP NET INCOME (LOSS) PER SHARE - BASIC $ 0.13 $ (0.12)
NON-GAAP NET INCOME (LOSS) PER SHARE - DILUTED $ 0.11 $ (0.12)
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I.D. SYSTEMS, INC.
BALANCE SHEETS
AS OF DECEMBER 31,
ASSETS 2005 2006
---- ----
(Unaudited)
Current assets:
Cash and cash equivalents $ 2,138,000 $ 9,644,000
Marketable securities 5,463,000 60,716,000
Accounts receivable, net 6,068,000 5,101,000
Unbilled receivables 1,293,000 1,042,000
Inventory 2,952,000 6,430,000
Investment in sales type leases 34,000 --
Interest receivable -- 179,000
Officer loan 11,000 8,000
Prepaid expenses and other current assets 140,000 271,000
------------------ ------------------
Total current assets 18,099,000 83,391,000
Fixed assets, net 1,159,000 1,394,000
Investment in sales type leases 433,000 --
Officer loan 8,000 --
Deferred contract costs 53,000 33,000
Other assets 88,000 87,000
------------------ ------------------
$ 19,840,000 $ 84,905,000
================== ==================
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 3,881,000 $ 2,950,000
Current portion of long term debt 209,000 221,000
Deferred revenue 155,000 221,000
------------------ ------------------
Total current liabilities 4,245,000 3,392,000
Long term debt 240,000 19,000
Deferred revenue 90,000 133,000
Deferred rent 99,000 77,000
------------------ ------------------
4,674,000 3,621,000
------------------ ------------------
Commitments and Contingencies (Note J)
STOCKHOLDERS' EQUITY
Preferred stock; authorized 5,000,000 shares, $0.01 par value; none issued
Common stock; authorized 50,000,000 shares, $0.01 par value; issued and 79,000 113,000
outstanding 7,851,000 and 11,337,000 shares at December 31, 2005 and 2006,
respectively
Additional paid-in capital 25,735,000 93,423,000
Accumulated deficit (10,535,000) (12,151,000)
Comprehensive income -- 12,000
------------------ ------------------
15,279,000 81,397,000
Treasury stock; 40,000 shares at cost (113,000) (113,000)
------------------ ------------------
Total stockholders' equity 15,166,000 81,284,000
------------------ ------------------
Total liabilities and stockholders' equity $ 19,840,000 $ 84,905,000
================== ==================
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I.D. SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
2004 2005 2006
-------------------------------------------------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 398,000 $ 851,000 $ (1,616,000)
Adjustments to reconcile net income (loss) to cash provided
by (used in) operating activities:
Inventory reserve -- 105,000 100,000
Accrued interest income 119,000 42,000 (165,000)
Stock based compensation -- -- 2,975,000
Depreciation and amortization 255,000 362,000 468,000
Deferred rent expense 23,000 (13,000) (22,000)
Deferred revenue (88,000) (41,000) 109,000
Bad debt expense (12,000) 20,000 211,000
Deferred contract costs 199,000 423,000 20,000
Unrealized gain on investments -- -- 12,000
Changes in:
Accounts receivable 784,000 (4,656,000) 756,000
Unbilled receivables (402,000) (891,000) 251,000
Inventory (1,063,000) (1,318,000) (3,578,000)
Prepaid expenses and other assets (87,000) 85,000 (130,000)
Investment in sales type leases 37,000 467,000
(394,000)
Accounts payable and accrued expenses 1,485,000 1,340,000 (931,000)
-------------------------------------------------------
Net cash (used in) provided by operating 1,648,000 (4,085,000) (1,073,000)
activities
-------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (419,000) (512,000) (703,000)
Purchase of investments (1,235,000) (5,963,000) (68,481,000)
Maturities of investments 3,385,000 3,703,000 13,214,000
Collection of officer loan 11,000 11,000 11,000
-------------------------------------------------------
Net cash provided by (used in) investing activities 1,742,000 (2,761,000) (55,959,000)
-------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of term loan (188,000) (199,000) (209,000)
Repayment of line of credit (137,000) -- --
Proceeds from exercise of stock options 1,171,000 743,000 786,000
Net proceeds from public offering -- -- 63,961,000
Proceeds from exercise of warrants 1,025,000 -- --
-------------------------------------------------------
Net cash provided by financing activities 1,871,000 544,000 64,538,000
-------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH 5,261,000 (6,302,000) 7,506,000
EQUIVALENTS
Cash and cash equivalents - beginning of period 3,179,000 8,440,000 2,138,000
-------------------------------------------------------
CASH AND CASH EQUIVALENTS - END OF $ 8,440,000 $ 2,138,000 $ 9,644,000
PERIOD
-------------------====================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest $63,000 $53,000 $29,000
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