Exhibit 99.1 [I.D. Systems Logo] 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 ------------------ --------------------- General Phone: 201-996-9000. General Fax: 201-996-9144 I.D. Systems, Inc. Reports Record 2004 Year-End Financial Results Hackensack, NJ, February 16, 2005 -- I.D. Systems, Inc. (NASDAQ: IDSY) today announced its financial results for the year ended December 31, 2004. Revenues increased 73% to $13,741,000, up from $7,959,000 for the year ended December 31, 2003. Net income increased to $398,000, or $0.05 per basic and diluted share, compared to a net loss of ($1,199,000), or ($0.17) per basic and diluted share, a year ago. The growth in revenues and net income was primarily attributable to increased demand for the company's patented RFID-based technology - the Wireless Asset Net(TM) - for tracking and managing industrial equipment. For the fourth quarter ended December 31, 2004, revenues rose 60% to $3,983,000 compared to $2,482,000 for the same period in 2003. Net income for the fourth quarter increased to $16,000, compared to a net loss of ($267,000) for the same period a year ago. "I.D. Systems had a solid year in 2004, thanks to the continued hard work of our employees, our success in expanding relationships with key customers, and the development of new customers and new applications," said Jeffrey Jagid, I.D. Systems' chairman and chief executive officer. "We continue to innovate, enhance our technical capabilities, and capitalize on our unmatched experience providing high-return solutions for our customers. We believe our Wireless Asset Net industrial fleet management system is becoming a `best-practice' technology for corporate material handling and we are achieving significant milestones in opening new markets for our RFID-based solutions, including homeland security, rental car fleet management, and remote machine monitoring. We are pleased to note that 2004 was I.D. Systems' best year to date, on many levels." Ned Mavrommatis, I.D. Systems' chief financial officer, said, "The company continues to meet or exceed its strategic objectives. In 2004, we continued to balance rapid growth with sound cost management, achieving a high double-digit year-over-year increase in revenues, sustaining a high gross profit margin - 53% this year compared to 49% in 2003 - and realizing net income of $.05 per diluted share. I.D. Systems also generated positive cash flow from operations in 2004 of $1,623,000. The company's financial condition remains strong. As of December 31, 2004, the company had $11.6 million in cash, cash equivalents and investments, and $12.7 million of working capital, compared to $8.6 million and $8.2 million, respectively, at December 31, 2003." Selling, general and administrative (SG&A) expenses for the year ended December 31, 2004 were $5,879,000, up from $4,456,000 for the year ended December 31, 2003, as payroll expenses increased to support growing sales. As a percentage of revenues, however, SG&A expenses decreased to 43% in 2004, compared to 56% in 2003. Research and development (R&D) expenditures for the year ended December 31, 2004, were $1,234,000, up from $891,000 in 2003. As a percentage of revenues, however, R&D expenses decreased to 9% in 2004, compared to just over 11% for 2003. Highlights of the year ended December 31, 2004, included: o Expansion of business with Ford Motor Company, including additional orders for I.D. Systems' industrial vehicle electronic control systems (IVECS) for Ford's North American manufacturing plants, and a new contract to provide enterprise-wide support and maintenance for IVECS. o Expansion of business with Target Corporation, which rolled out a new version of I.D. Systems' Wireless Asset Net industrial fleet management system on approximately 400 material handling vehicles in Target distribution facilities throughout the United States. o Continued work with the United States Postal Service (USPS), to translate the previous success of Wireless Asset Net technology at individual USPS mail processing facilities into an enterprise-wide implementation of a wireless Powered Industrial Vehicle Management System (PIVMS). These efforts culminated in a USPS contract award to I.D. Systems, announced in January 2005, for a national PIVMS deployment encompassing up to 460 USPS facilities over the next three years. o Continued development of homeland security applications with the Transportation Security Administration (TSA), including the successful completion of a series of key functional tests at Newark Liberty International Airport, an increase in funding for the Newark program, and the award of a new TSA contract to deploy a wireless vehicle security system at a seaport in Jacksonville, Florida. o Expansion of business with WinCo Foods, which placed a follow-on order for the Wireless Asset Net for its newest distribution center. o Continued development of rental car fleet management applications with Avis Rent A Car System, Inc., which has a version of the Wireless Asset Net deployed on its 2,000-vehicle fleet in Puerto Rico. o Continued work with Northrop Grumman Ship Systems, General Dynamics' National Steel and Shipbuilding Company, and the U.S. Navy's Portsmouth Naval Shipyard to develop and implement an advanced Wireless Equipment Monitoring and Control System (WEMACS) for commercial and shipyard environments. o New business in the automotive industry, as Premier Manufacturing Support Services ordered the Wireless Asset Net on behalf of one of the world's largest automotive parts manufacturers. Premier provides management and support services for more than 120 automotive plants worldwide and could potentially develop into a strategic marketing and system support partner for I.D. Systems. o New business in the mass market retail distribution sector, as Wajax Industries ordered the Wireless Asset Net on behalf of a major Canadian retailer, as announced in January 2005. o New Wireless Asset Net system enhancements, including the launch of a new generation of wireless vehicle monitoring hardware (the Universal Vehicle Asset Communicator, or UVAC 02) and a series of software upgrades. The UVAC 02 has expanded data management capabilities, can be installed more quickly and easily than earlier hardware generations, simplifies interactivity for equipment operators, and allows for easier maintenance. The improved software includes expanded server options for 2 enterprise-wide deployments, augmented database support, increased data throughput, new reporting and auto-emailing tools, and enhanced remote diagnostic capabilities. o New RFID-based product developments, including the Battery Charger Monitoring Point(TM) (Battery ChaMP(TM)), the AC Power Control Module (ACPCM), and the Machine Asset Communicator(TM) (MAC). o The Battery ChaMP provides remote management and real-time visibility of batteries and chargers used to power fleets of electric vehicles. I.D. Systems has already received an order for this new product, as announced in January 2005 - AeroVironment, Inc. purchased 500 ChaMP units for its PosiCharge(TM) fast-charging system, which is being deployed for a major automotive manufacturer. o The ACPCM product, developed as part of I.D. Systems' program with the National Shipbuilding Research Program, supports Wireless Asset Net installations on complex machinery, such as cranes. The ACPCM is designed to accommodate virtually any power input and monitor multiple motor data points for advanced maintenance management and asset utilization analysis. o The MAC product provides advanced wireless monitoring and control of fixed machinery, including automatic quality control checks, real-time alerts on out-of-specification machine parameters, automatic machine shut-down based on user-defined criteria, and electronic maintenance checklists. The initial application of MAC technology is in the automotive industry, where it is being used to enforce quality control on adhesive-dispensing robots. o A new cooperative relationship with Unisys Coporation, which, as a subcontractor to I.D. Systems, will provide implementation services and technical support for I.D. Systems' program with the U.S. Postal Service. I.D. Systems is also working with Unisys in a informal joint marketing capacity to explore other opportunites for Wireless Asset Net system deployments within the U.S. Government. o The transition of trading in I.D. Systems common stock from the NASDAQ Small Cap Market to the NASDAQ National Market. Investor Conference Call I.D. Systems will be holding a conference call for investors and analysts at 4:45 p.m. Eastern Standard Time on February 16, 2005. Jeffrey Jagid, chairman and CEO, Kenneth Ehrman, president and COO, Ned Mavrommatis, CFO, and Frederick Muntz, EVP of sales and marketing, will discuss the results of the quarter and recent developments. 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 the company's website 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. ABOUT I.D. SYSTEMS I.D. Systems, Inc. is a leading provider of wireless RFID-based solutions for corporate asset management. I.D. Systems' customers include 3M, American Axle, Archer Daniels Midland, DaimlerChrysler, Deere & Co., Ford, General Dynamics, Hallmark Cards, Northrop Grumman, Target, Walgreen, the U.S. Navy, the U.S. Postal Service, and the U.S. Transportation Security Administration, among others. Using local area networks, wide area networks, and the Internet, the company's systems enable management to control and track the location and status of assets - from forklifts, tugs and cranes to automobiles and trucks - in real time. For more information on I.D. Systems, Inc., visit www.id-systems.com. ABOUT THE WIRELESS ASSET NET(TM) The Wireless Asset Net consists of intelligent wireless devices installed on powered equipment, a patented radio frequency communication infrastructure, and client-server software for access control, utilization analysis, real-time location tracking, and many other functions. The Wireless Asset Net is designed to improve industrial workplace safety by restricting vehicle access to trained, authorized operators and by providing electronic safety inspection checklists. The system is designed to reduce maintenance expenses by automatically uploading vehicle data, reporting vehicle problems in real time, scheduling maintenance 3 according to actual vehicle usage rather than on a calendar basis, and helping plant management determine the optimal economic time to replace equipment. The system is also designed to help improve labor productivity and asset utilization by ensuring equipment is in the proper place at the right time and by providing management with unique reports, charts, and analyses. TRADEMARKS I.D. Systems, Inc., Wireless Asset Net, Battery Charger Monitoring Point, Battery ChaMP, ChaMP, and Machine Asset Communicator are all registered or pending trademarks of I.D. Systems, Inc. "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, the impact of competitive products, product demand and market acceptance risks, fluctuations in operating results and other risks detailed from time to time in I.D. Systems' filings with the Securities and Exchange Commission. These risks could cause I.D. Systems' actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, I.D. Systems. I.D. Systems assumes no obligation to update the information contained in this press release. -- Tables to Follow -- 4 I.D. SYSTEMS, INC. STATEMENTS OF OPERATIONS YEAR ENDED DECEMBER 31, ----------------------------- 2003 2004 ------------ ------------ Revenue $ 7,959,000 $ 13,741,000 Cost of revenue 4,075,000 6,509,000 ------------ ------------ Gross profit 3,884,000 7,232,000 ------------ ------------ Operating expenses: Selling, general and administrative expenses 4,456,000 5,879,000 Research and development expenses 891,000 1,234,000 ------------ ------------ 5,347,000 7,113,000 ------------ ------------ Income (loss) from operations (1,463,000) 119,000 Interest income 269,000 195,000 Interest expense (59,000) (63,000) Other income 54,000 147,000 ------------ ------------ NET INCOME (LOSS) $ (1,199,000) $ 398,000 ============ ============ NET INCOME (LOSS) PER SHARE - BASIC $ (.17) $ 0.05 ============ ============ NET INCOME (LOSS) PER SHARE - DILUTED $ (.17) $ 0.05 ============ ============ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC 6,905,000 7,455,000 ============ ============ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED 6,905,000 8,783,000 ============ ============ 5 I.D. SYSTEMS, INC. BALANCE SHEETS December 31, 2003 DECEMBER 31, 2004 ----------------- ----------------- ASSETS Cash and cash equivalents $ 3,179,000 $ 8,440,000 Short-term investments 3,339,000 3,195,000 Accounts receivable, net 2,204,000 1,432,000 Unbilled receivables -- 402,000 Inventory 676,000 1,739,000 Investment in sales type leases 37,000 39,000 Interest receivable 75,000 50,000 Officer loan 10,000 10,000 Prepaid expenses and other current assets 129,000 225,000 ------------ ------------ Total current assets 9,649,000 15,532,000 Long-term investments 2,100,000 -- Fixed assets, net 845,000 1,009,000 Investment in sales type leases 73,000 34,000 Officer loan 31,000 20,000 Deferred contract costs 675,000 476,000 Other assets 97,000 88,000 ------------ ------------ $ 13,470,000 $ 17,159,000 ============ ============ LIABILITIES Accounts payable and accrued expenses $ 1,055,000 $ 2,541,000 Long term debt - current portion 188,000 199,000 Line of credit 137,000 -- Deferred revenue 89,000 95,000 ------------ ------------ Total current liabilities 1,469,000 2,835,000 Long term debt 648,000 449,000 Deferred revenue 285,000 191,000 Deferred rent 89,000 112,000 ------------ ------------ 2,491,000 3,587,000 ------------ ------------ STOCKHOLDERS' EQUITY Preferred stock; authorized 5,000,000 shares, $.01 par value; none issued Common stock; authorized 15,000,000 shares, $.01 par value; issued and outstanding 7,097,000 shares and 7,690,000 shares 71,000 77,000 Additional paid-in capital 22,804,000 24,994,000 Treasury stock; 40,000 shares at cost (113,000) (113,000) Accumulated deficit (11,783,000) (11,386,000) ------------ ------------ 10,979,000 13,572,000 ------------ ------------ $ 13,470,000 $ 17,159,000 ============ ============ 6 I.D. SYSTEMS, INC. STATEMENTS OF CASH FLOWS DECEMBER 31, --------------------------- 2003 2004 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $(1,199,000) $ 398,000 Adjustments to reconcile net income (loss) to cash (used in) provided by operating activities: Depreciation and amortization 173,000 255,000 Deferred rent expense 23,000 23,000 Deferred revenue 348,000 (88,000) Bad debt expense 20,000 (7,000) Deferred contract costs (675,000) 199,000 Amortization of premium on investments 174,000 94,000 Changes in: Accounts receivable (1,110,000) 779,000 Unbilled receivables -- (402,000) Inventory 715,000 (1,063,000) Prepaid expenses and other assets 28,000 (87,000) Investment in sales type leases 571,000 37,000 Installment receivable 867,000 -- Other liabilities (100,000) -- Accounts payable and accrued expenses (70,000) 1,485,000 ----------- ----------- Net cash (used in) provided by operating activities (235,000) 1,623,000 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets (339,000) (419,000) Purchase of investments (5,698,000) (1,235,000) Maturities of investments 4,084,000 3,385,000 Increase (decrease) in interest receivable (2,000) 25,000 Collection of officer loan 10,000 11,000 ----------- ----------- Net cash (used in) provided by investing activities (1,945,000) 1,767,000 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from term loan 1,000,000 -- Repayment of term loan (164,000) (188,000) Repayment of line of credit -- (137,000) Proceeds from exercise of stock options 765,000 1,171,000 Proceeds from exercise of warrants -- 1,025,000 ----------- ----------- Net cash provided by financing activities 1,601,000 1,871,000 ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (579,000) 5,261,000 Cash and cash equivalents - beginning of period 3,758,000 3,179,000 ----------- ----------- CASH AND CASH EQUIVALENTS - END OF PERIOD $ 3,179,000 $ 8,440,000 =========== =========== 7