HACKENSACK, N.J., I.D. Systems, Inc. , 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.
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.
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