OTI Reports First Six Months 2011 Financial Results

On Track Innovations Ltd. (OTI) (Nasdaq:OTIV), a global leader in contactless microprocessor-based smart card solutions for homeland security, payments, petroleum payments and other applications, today announced results for the first half ended June 30, 2011.

The following are various financial figures that compare first half of 2011 to the same period last year.

•     Total revenues of $26.7 million, a 4% decrease compared to $27.8 million last year.
•     Revenues from Licensing and Transaction Fees of $2.7 million, a 49% increase compared to $1.8 million last year.
•     Gross margin of 50% for the first half of 2011.
•     Non-GAAP operating expenses of $15.0 million, a 16% increase compared to $13.0 million last year. GAAP operating expenses of $16.4 million, a 9% increase compared to $15.1 million last year.
•     Non-GAAP operating loss of $1.6 million, compared to non-GAAP operating profit of $2.2 million last year. GAAP operating loss was $3.1 million, compared to GAAP operating profit of $27,000 last year.
•     Strong balance sheet with cash, cash equivalents and short-term investments of $33.1 million as of June 30, 2011.

Oded Bashan, Chairman and Chief Executive Officer of OTI, said, "Following the first six months of 2011, with better than expected revenues, OTI is well positioned to enjoy its expected growth and the investments we have made in the recent years. We are involved in a larger number of projects that have progressed to their commercial implementation stage, resulting in the increase in recurring and transaction fee revenues. We have a larger number of opportunities that are in pilot stages with a clear path to rollouts, which will mainly impact 2012 and 2013 revenues, ultimately increasing our long term visibility and profitability. In addition, we have created new alliances with channel partners in the vertical markets that we focus on, especially in the petroleum and parking markets, which will help us increase revenues from these sectors. The advancements increase our confidence level in meeting the previously provided guidance for the year of $55-$60 million in revenues."

Repurchase Plan

OTI's Board of Directors has authorized to resume the repurchase program of OTI's shares which was terminated last year. The timing and the amounts purchased are to be determined by the Company, and the purchases may occur in the open market or in negotiated or block transactions, all subject to the applicable regulatory requirements.

Discontinued Operations

During the fourth calendar quarter of 2009, the Company signed an agreement for the sale of the assets of OTI's subsidiary Millennium Card's Technology Ltd ("MCT") including the machinery and inlay production IP of OTI to SMARTRAC NV. Results for the discontinued operations have been separated and are presented separately.

About OTI

Established in 1990, OTI (Nasdaq:OTIV) designs, develops and markets secure contactless microprocessor-based smart card technology to address the needs of a wide variety of markets. Applications developed by OTI include product solutions for petroleum payment systems, homeland security solutions, electronic passports and IDs, payments, mass transit ticketing, parking and loyalty programs. OTI has a global network of regional offices to market and support its products.

The Company was awarded the Frost & Sullivan 2005 and 2006 Company of the Year Award in the field of smart cards.