First Quarter Revenues of $6.1 Million and Operating Profit of
$0.3 Million
Conference Call Today At 10:00 am ET to Discuss Results
TEL AVIV, Israel, May 13, 2009 (GLOBE NEWSWIRE) -- Top Image Systems, Ltd. (TIS) (Nasdaq:TISA) (TASE:TISA), the leading innovator of data capture solutions, today announced its financial results for the first quarter, ended March 31, 2009.
First Quarter Highlights
-- Margins were strong across the board with first quarter operating
margin at 5.1% and gross margin at 57%, the highest in the last
eight quarters;
-- Executing on strategy and discontinued sales of low-margin third-
party hardware leading to higher margins;
-- Successfully increased software revenues year-over-year;
-- Strong performance in Continental Europe;
-- Sales pipeline is stable and diversified;
-- Increased portion of larger deal wins including governmental
business;
First Quarter 2009 Results
Revenues for the first quarter of 2009 reached $6.1 million. This represents a decrease of 33% from the first quarter of 2008, and a decrease of 6% compared with the fourth quarter of 2008. The sequential and year-over-year decline in revenues is in line with the Company's strategy to increase profitability, and is primarily due to the absence of lower margin third-party and now discontinued hardware sales in Asia. 47% of first quarter revenues were generated from products and 53% from services.
Operating income for the first quarter of 2009 reached $0.3 million compared with an operating income of $0.6 million for the first quarter of 2008 and operating loss of $3.0 million for the fourth quarter of 2008.
Net loss for the first quarter of 2009 totaled $1.4 million, compared to a net income of $1.3 million in the first quarter of 2008 and to a net income of $1.6 million in the fourth quarter of 2008.
Loss per share in the first quarter of 2009 was $0.15, compared with fully diluted earnings per share of $0.13 in the first quarter of 2008 and a loss per share of $0.13 in the fourth quarter of 2008.
Net income in the quarter was negatively impacted by the financial expenses in the quarter, which amounted to $1.7 million, compared with a financial income of $0.8 million in the first quarter of 2008 and a financial income of $5.1 million in the prior quarter.
It is important to note that since the beginning of 2008, the Company adopted Financial Accounting Standard Board Statement no. 159, The Fair Value Option for Financial Assets and Financial Liabilities ("FAS 159"). Therefore the Company's debenture is currently accounted for its fair value. This fair value is based on a base debenture market price and also depends on the exchange rate between the Israeli Shekel and US Dollar. These values change on a daily basis, are not under the control of the Company and are unrelated to the operating performance of the Company.
The Company experienced a high level of financing expenses in the quarter due to the increase in the fair value of the debentures. This was due to the substantial increase in the traded market value of the debentures.
This financial charge is a non-cash expense in nature and has no affect on operating income.
Management comment
"We are pleased with the results of the quarter," commented Dr. Ido Schechter, CEO of Top Image Systems. "We demonstrated a strong improvement in our margins, and this is a testament to the success of our strategy in ending our low-margin hardware sales, as well as our focus on tightly controlling costs and increasing profitability. We took some early and correct decisions last year to significantly reduce costs, including the closure of our Guangzhou office in China, and as we move into 2009 we are already seeing the fruits of these efforts.
"We are also pleased with our revenue levels and our strong growth in software sales, which came in as we had budgeted. This was driven by particularly strong performance in Europe, and in Germany in particular. In fact, our EMEA team won sixteen new projects in the quarter, due to our superior technology and performance vis-a-vis the competition, and this is despite the weak economic climate in these regions. We occupy a niche market associated with efficiency and improved processes, which can easily demonstrate a quick return on a small investment. Thus, I believe our business is defensive in nature, which is especially invaluable in this global economic environment."
Dr. Schechter concluded, "Our pipeline remains stable and strong, and we are targeting bigger scale and more secure deals including large Governmental projects. We are aiming to leverage the current environment to maintain and build on our market leadership, as well as enhancing our long-term competitive positioning. We believe that we have now set up our business as a platform for future growth and increased profitability going forward, and we expect to record an operating income during 2009, at a level higher than that of 2008."
Conference Call
The Company will be holding a conference call today, May 13, 2009, at 10:00am EDT (7:00am Pacific Time, 5:00pm Israel Time) to review the first quarter 2009 financial results and other corporate events.
Dr. Ido Schechter, CEO, will be on-line to discuss these results and take part in a question and answer session.
To participate, please call one of the following teleconferencing numbers at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.
U.S. Dial-in Number: 1 888 723 3164 ISRAEL Dial-in Number: 03 918 0692 INTERNATIONAL Dial-in Number: +972-3-918-0692
The call will also be broadcast live, and can be accessed through a link on Top Image Systems' website at: www.topimagesystems.com.
For those unable to listen to the live call, a replay of the call will be available from the day after the call in the investor relations section of Top Image Systems' website at: www.topimagesystems.com
About Top Image Systems
Top Image Systems is a leading innovator of enterprise solutions for managing and validating content entering organizations from various sources. Whether originating from mobile, electronic, paper or other sources, TIS solutions deliver the content to applications that drive the organization. TIS's eFLOW Unified Content Platform is a common platform for the company's solutions. TIS markets its platform in more than 40 countries through a multi-tier network of distributors, system integrators, value-added resellers as well as strategic partners. Visit the company's website http://www.TopImageSystems.com for more information.
The Top Image Systems logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4212
Caution Concerning Forward-Looking Statements
Certain matters discussed in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, particularly statements regarding future operating or financial performance. Words such as "will," "expects," "anticipates," "estimates," "intends," "believes," "plans" and words and terms of similar substance in connection with any discussion of future operating or financial performance identify forward-looking statements. These statements are based on management's current expectations or beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially including, but not limited to, risks in product development plans and schedules, rapid technological change, changes and delays in product approval and introduction, customer acceptance of new products, the impact of competitive products and pricing, market acceptance, the lengthy sales cycle, proprietary rights of TIS and its competitors, risk of operations in Israel, government regulation, dependence on third parties to manufacture products, quarterly fluctuations in sales of products in the Data Capture market (where in general the fourth quarter is the strongest and the first quarter is the weakest), TIS's ability to successfully integrate businesses it acquires, litigation (including litigation over intellectual property rights), general economic conditions and other risk factors detailed in the Company's most recent annual report on Form 20-F and other subsequent filings with the United States Securities and Exchange Commission. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.
Top Image Systems Ltd.
Consolidated Balance Sheet as at
December 31, March 31,
2008 2009
------------ ------------
In thousands
US$
Assets
Current assets:
Cash and cash equivalents 5,777 3,446
Restricted cash 1,231 1,059
Short term deposits 722 919
Marketable securities 630 630
Trade receivables and unbilled customers,
net 6,469 7,027
Other account receivables and prepaid
expenses 1,081 1,235
------------ ------------
Total current assets 15,910 14,316
------------ ------------
Long term assets:
Severance pay funds 856 815
Long-term deposits and long-term asset 194 193
Property and equipment, net 672 611
Investment in affiliates 861 614
Intangible assets, net 336 248
Goodwill 5,813 5,351
------------ ------------
Total long-term assets 8,732 7,832
------------ ------------
------------ ------------
Total assets 24,642 22,148
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Short-term bank loans 3,342 2,520
Current maturity of convertible debenture 1,155 1,319
Trade payables 1,124 939
Deferred revenues 975 1,398
Accrued expenses and accounts payable 3,284 2,945
------------ ------------
Total current liabilities 9,880 9,121
------------ ------------
Long-term liabilities:
Convertible debentures 3,464 3,994
Accrued severance pay 1,196 1,158
------------ ------------
Total long-term liabilities 4,660 5,152
------------ ------------
Total liabilities 14,540 14,273
------------ ------------
Shareholders' equity
Share capital - Ordinary share of NIS
0.04 par value 98 98
Additional paid-in capital 31,137 31,141
Accumulated other comprehensive income (692) (1,549)
Accumulated deficit (20,441) (21,815)
------------ ------------
Total shareholders' equity 10,102 7,875
------------ ------------
------------ ------------
Total liabilities and shareholders'
equity 24,642 22,148
============ ============
Top Image Systems Ltd.
Statements of Operations for the
------------------------------------------------------ ------------
Three months Three months
ended ended
------------ ------------
March 31, March 31,
------------ ------------
2008 2009
------------ ------------
In thousands US$, except
per share data
Revenues
Product sales 5,168 2,865
Service revenues 4,045 3,280
------------ ------------
Total revenues 9,213 6,145
------------ ------------
Cost of revenues
Product costs 2,211 453
Service costs 2,379 2,175
------------ ------------
Total cost of revenues 4,590 2,628
------------ ------------
Gross profit 4,623 3,517
------------ ------------
Expenses
------------ ------------
Research and development costs, net 377 390
Selling and marketing 2,401 1,684
General and administrative 1,291 1,129
------------ ------------
4,069 3,203
------------ ------------
Operating profit (loss) 554 314
------------ ------------
Financing income (expenses), net 780 (1,653)
------------ ------------
Income (loss) before taxes on income 1,334 (1,339)
------------ ------------
Taxes on Income (21) (3)
------------ ------------
Other income (expenses) -- (7)
------------ ------------
Discontinued Operation (125) 13
------------ ------------
Equity profit (loss) of invest in
affiliates 129 (38)
------------ ------------
Net income (loss) for the period 1,317 (1,374)
============ ============
Earning per Share
-----------------
Basic
Income (loss) from continuing operations 0.162 (0.149)
Income (loss) from discontinuing
operations (0.014) 0.001
------------ ------------
Net Income (loss) per share - basic 0.148 (0.148)
============ ============
Weighted average number of shares used in
computation of basic net income (loss)
per share 8,911,182 9,312,155
============ ============
Diluted
Income (loss) from continuing operations 0.142 (0.149)
Income (loss) from discontinuing
operations (0.010) 0.001
------------ ------------
0.131 (0.148)
============ ============
Weighted average number of shares used in
computation of diluted net income (loss)
per share 11,982,105 9,312,155
============ ============
A reconciliation of Non GAAP net income to GAAP net income is as
follows (in thousands US$):
Three months Three months
ended ended
------------ ------------
March 31, March 31,
------------ ------------
2008 2009
------------ ------------
In thousands US$, except
per share data
Net Income (loss) for the period 1,317 (1,374)
Employees ESOP related costs 23 4
Amortization of intangible assets related
to acquisition 311 85
Change In Fair Value of Convertible
Debenture (1,114) 1,508
------------ ------------
Non-GAAP Net Income (loss) 537 223