OTI Reports Second Quarter 2013 Financial Results

OTI Reports Second Quarter 2013 Financial Results

ROSH PINA, Israel, Aug. 28, 2013 (GLOBE NEWSWIRE) -- On Track Innovations Ltd.
(OTI) (Nasdaq:OTIV),  a global provider of near field communication (NFC) and
cashless payment solutions, reported financial results for the second quarter
ended June 30, 2013.

Q2 2013 Operational Highlights

  *Received a 30,000 unit order for OTI's NFC and contactless payment readers
    from a leading provider of integrated technology solutions.
    
  *ASEC S.A., OTI's wholly owned subsidiary, was awarded three multi-million
    dollar projects as an e-ticketing operator for mass transit systems
    throughout Poland. The contract value of the three projects total more
    than $50 million over a five to ten year period.
    
  *City of Portsmouth, N.H. implemented EasyPark, OTI's cashless parking
    payment solution.
    
  *Retained Global IP Law Group, a leading international IP-focused law firm,
    to lead OTI's new intellectual property monetization campaign.
    
  *Received favorable Markman hearing decision in patent infringement suit
    again T-Mobile USA.
    
  *Strengthened leadership team with appointments of Dimitrios Angelis as
    chairman of the board, Shay Tomer as chief financial offer, Shlomi Eytan
    as chief sales and marketing officer, and Hanan Caspi as vice president of
    operations.

Q2 2013 Financial Highlights

  *Revenues in the second quarter of 2013 increased 19% to $9.2 million from
    $7.7 million in the same period last year.
    
  *Gross margin in the second quarter of 2013 increased to 56.7% from 45.7%
    in the same period last year.
    
  *Operating expenses in the second quarter of 2013 decreased 8% to $7.2
    million from $7.9 million in the second quarter of 2012. The decrease was
    mainly attributable to lower headcount and reduced management costs.
    
  *Net loss in the second quarter of 2013 improved to $2.3 million from $4.8
    million in the same period last year.
    
  *Adjusted EBITDA loss in the second quarter of 2013 totaled $1.5 million
    compared to an adjusted EBITDA loss of $3.5 million in the second quarter
    of 2012. The improvement was due to the increase in revenues and reduced
    operating expenses (see discussion about the presentation of adjusted
    EBITDA, a non-GAAP term, below).
    
  *Cash and cash equivalents, and short-term investments at June 30, 2013
    totaled $9.7 million. During the quarter, the company used cash to
    purchase equipment to support the expansion of its mass transit projects
    in Poland, and to repay short-term bank loans.

Management Commentary

"The second quarter results were consistent with our expectations and do not
reflect our recent initiatives to divest non-core, B2C operations," said Ofer
Tziperman, OTI's CEO. "The divestitures of Parx France and SmartID mark an
important step in executing OTI's new strategic plan of reducing unnecessary
costs and focusing on our core business of providing NFC-based contactless
payment technology and solutions. By optimizing our operational structure, we
can better leverage our core competencies in these areas, which we believe
will drive long-term growth and sustained profitability.

"We anticipate the pending divesture of the SmartID business will close in
November. This will further strengthen our balance sheet and allow us to
allocate our resources to more effectively capitalize on the fast growing,
multi-billion dollar NFC and cashless payments markets where we have
significant advantages over the competition."

Management Discussion

OTI CEO Ofer Tziperman and CFO Shay Tomer will discuss these results on
Wednesday, September 4, 2013 at 9:00 a.m. Eastern time.

Investors and analysts may submit questions they would like management to
address during the discussion. Questions should be submitted via email to
ir@otiglobal.com by Friday, August 30 at 5:00 p.m. Eastern time.

Discussion Date: Wednesday, September 4, 2013
Time: 9:00 a.m. Eastern time
U.S. Dial-In Number: 1-888-295-2634
Israel Dial-In Number: 1-800-270-077

The discussion will be also webcast and available for replay via the Investors
section of OTI's website at www.otiglobal.com/Investors_Introduction.

For those dialing in, please call the telephone number 5-10 minutes prior to
the start time. If you have any difficulty connecting, please contact Liolios
Group at 1-949-574-3860.

A telephone replay of the discussion will be available through September 11,
2013.

Adoption of US Generally Accepted Accounting Principles (GAAP) Standards

Due to the changes in the composition of the company's board of directors,
including the election of eight new U.S. directors on December 30, 2012, the
company no longer qualifies as a "Foreign Private Issuer" as of June 30, 2013,
and will be required to report as a domestic issuer commencing on January 1,
2014. As reported on May 31, 2012 and effective as of January 1, 2012, the
company adopted International Financial Reporting Standards (IFRS) as
published by the International Accounting Standards Board. However, as a
domestic issuer, the company will no longer be entitled to prepare its
financial results in accordance with IFRS. Therefore, the company has adopted
US GAAP and accordingly to prepare its financial statements for the fiscal
year ended December 31, 2012 and thereafter in accordance with US GAAP.

It should be noted that the financial results for the periods ended March 31,
2012, June 30, 2012, and September 30, 2012 were previously published in
accordance with IFRS. The financial results for the period ended June 30, 2012
that appear in this press release were prepared in accordance with US GAAP.

About On Track Innovations

On Track Innovations Ltd. (OTI) is a leader in contactless and NFC
applications based on its extensive patent and IP portfolio. OTI's
field-proven innovations have been deployed around the world to address NFC
payment solutions, petroleum payment and management, cashless parking fee
collection systems and mass transit ticketing. OTI markets and supports its
solutions through a global network of regional offices and alliances. For more
information, visit www.otiglobal.com.

Use of Non-GAAP Financial Information

This press release contains certain non-GAAP measures, namely, Adjusted
EBITDA, or adjusted earnings before interest, income tax, depreciation and
amortization. Adjusted EBITDA represents earnings before interest^^1, income
tax, depreciation and amortization, and further eliminates the effect of
share-based compensation expense. OTI believes that adjusted EBITDA should be
considered in evaluating the company's operations since it provides a clearer
indication of OTI's operating results. This measure should be considered in
addition to results prepared in accordance with US GAAP, but should not be
considered a substitute for the US GAAP results. The non-GAAP measures
included in this press release have been reconciled to the US GAAP results in
the tables below.

Safe Harbor for Forward-Looking Statements

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 and other Federal
securities laws. Whenever we use words such as "believe," "expect,"
"anticipate," "intend," "plan," "estimate" or similar expressions, we are
making forward-looking statements. Because such statements deal with future
events and are based on OTI's current expectations, they are subject to
various risks and uncertainties and actual results, performance or
achievements of OTI could differ materially from those described in or implied
by the statements in this press release.Forward-looking statements include
statements regarding Generation of revenue and timing thereof with respect to
e-ticketing projects awarded in Poland, the Company's efforts to decrease
operating expenses, timing of the closing of the sale of SmartID business and
consequential strengthening of the Company's balance sheet, increase revenues
and drivers of long-term growth. Forward-looking statements could be impacted
by the effects of the protracted evaluation and validation periods in the U.S.
and other markets for contactless payment cards, market acceptance of new and
existing products and our ability to execute production on orders, as well as
other risks and uncertainties, including those discussed in the "Risk Factors"
section and elsewhere in our Annual Report on Form 20-F for the year ended
December 31, 2012, and in subsequent filings with the Securities and Exchange
Commission. Although we believe that the expectations reflected in such
forward-looking statements are based on reasonable assumptions, we can give no
assurance that our expectations will be achieved. Except as otherwise required
by law, OTI disclaims any intention or obligation to update or revise any
forward-looking statements, which speak only as of the date hereof, whether as
a result of new information, future events or circumstances or otherwise.

The content of websites or website links mentioned or provided herein is not
part of this press release.

^1 "Financial expenses"

ON TRACK INNOVATIONS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
                                                      June 30     December 31
                                                       2013        2012
                                                      (Unaudited) (Audited)
                                                                 
Assets                                                            
                                                                 
Current assets                                                    
Cash and cash equivalents                             $6,193    $9,304
Short-term investments                                3,493     8,712
Trade receivables (net of allowance for doubtful
accounts of $429 and $431 as of June 30, 2013 and      5,304      7,516
December 31, 2012, respectively)
Other receivables and prepaid expenses                 4,036       5,349
Short term restricted deposit for employees benefit   2,969       2,922
Inventories                                            6,884       7,049
                                                                 
Total current assets                                   28,879      40,852
                                                                 
                                                                 
Long term restricted deposit for employees benefit     615         1,099
                                                                 
Severance pay deposits                                 696         836
                                                                 
Property, plant and equipment, net                     13,465    13,074
                                                                 
Intangible assets, net                                602         656
                                                                 
Goodwill                                               485         485
                                                                 
                                                                 
                                                                 
                                                                 
                                                                 
                                                                 
                                                                 
                                                                 
                                                                 
                                                                 
Total Assets                                           $ 44,742    $ 57,002
                                                                 

ON TRACK INNOVATIONS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
                                                                 
                                                                 
                                                      30 June     31 December
                                                       2013        2012
                                                      (Unaudited) (Audited)
Liabilities andEquity                                            
                                                                 
Current Liabilities                                               
Short-term bank credit and current maturities of       $4,004    $7,368
long-term bank loans
Trade payables                                         8,272       10,696
Accrued severance pay                                  3,398       3,539
Other current liabilities                             9,027       10,971
Total current liabilities                              24,701      32,574
                                                                 
Long-Term Liabilities                                             
Long-term loans, net of current maturities            3,277     2,224
Accrued severance pay                                  1,756       2,032
Deferred tax liability                                 47        53
Total long-term liabilities                            5,080       4,309
                                                                 
Total Liabilities                                      29,781      36,883
                                                                 
                                                                 
                                                                 
                                                                 
Equity                                                            
Shareholders' Equity                                              
Ordinary shares of NIS 0.1 par value: Authorized –                
50,000,000 shares as of June 30, 2013 andDecember 31,
2012; issued: 33,434,511 and 32,938,011shares as of
June 30, 2013 and December 31, 2012, respectively;     833       820
outstanding: 32,255,812 and 31,759,312 shares as of
June 30, 2013 and December 31, 2012, respectively
Additional paid-in capital                             211,233     210,853
Treasury shares at cost - 1,178,699 shares as of June  (2,000)     (2,000)
30,2013 and December 31, 2012.
Accumulated other comprehensive income (loss)          (173)       36
Accumulated deficit                                    (194,410)   (189,131)
Total Shareholder's equity                             15,483      20,578
Non-controlling interest                              (522)     (459)
                                                                 
Total Equity                                           14,961      20,119
                                                                 
Total Liabilities and Equity                           $ 44,742    $ 57,002


ON TRACK INNOVATIONS LTD.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
                                                              
                          Six months ended June 30 Three months ended June 30
                          2013         2012        2013          2012
                          (Unaudited)  (Unaudited) (Unaudited)   (Unaudited)
                                                              
                                                              
Revenues                                                       
Sales                     $15,606   $17,865  $8,057     $6,523
Licensing and transaction  2,227       2,475     1,149       1,213
fees
                                                              
Total revenues            17,833     20,340    9,206       7,736
                                                              
Cost of revenues                                               
Cost of sales              8,351        10,526      3,984         4,204
Total cost of revenues     8,351        10,526      3,984         4,204
                                                              
Gross profit               9,482        9,814       5,222         3,532
Operating expenses                                             
Research and development   3,864        4,426     2,092       2,083
Selling and marketing     5,261        7,030       2,600         3,396
General and                4,588        5,096     2,521       2,369
administrative
Amortization of intangible 53         102       28          53
assets
                                                              
Total operating expenses   13,766     16,654    7,241       7,901
                                                              
Operating loss             (4,284)      (6,840)     (2,019)       (4,369)
                                                              
Financial expense, net     (869)      (494)     (269)       (398)
                                                              
Loss before taxes on       (5,153)      (7,334)     (2,288)       (4,767)
income
                                                              
Taxes on income            (190)      (91)      (17)        (70)
                                                              
Net loss                   (5,343)      (7,425)     (2,305)       (4,837)
                                                              
Net loss attributable to   64           36          31            2
noncontrolling interest
Net loss attributable to   $ (5,279)    $ (7,389)   $ (2,274)     $ (4,835)
shareholders
                                                              
Basic and diluted net loss
attributable to            $ (0.16)     $ (0.23)    $ (0.07)      $ (0.15)
shareholders per ordinary
share
                                                              
Weighted average number of
ordinary shares used
incomputing basic and     32,467,881   32,069,223  32,495,334    32,073,103
diluted net loss per
ordinary share
                                                              
                                                              
                                                              
                                                              
                                                              
(*) includes in H1 2013, $634 finance
expenses resulted from exchange rate                            
differentials.


ON TRACK INNOVATIONS LTD.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENT
The following tables reflect selected On Track Innovations Ltd, non-GAAP
results reconciled to GAAP results:
(In thousands, except share and per share data)
                                                             
                      Six months ended June 30   Three months ended June 30
                      2013          2012         2013           2012
                      (Unaudited)   (Unaudited)  (Unaudited)    (Unaudited)
                                                             
Net Loss             $ (5,343)     $ (7,425)    $ (2,305)      $ (4,837)
                                                             
Financial expenses     869          494        269           398
Depreciation           787          755         387           369
Taxes on income        190           91           17             70
Amortization expenses  53            102          28             53
Total EBITDA           $ (3,444)     $ (5,983)    $ (1,604)      $ (3,947)
                                                             
Stock based            $ 154         $ 724        $ 70           $ 414
compensation
Total adjusted EBITDA  $ (3,290)     $ (5,259)    $ (1,534)      $ (3,533)


ON TRACK INNOVATIONS LTD.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands, except share and per share data)
                                                                 
                                                     Six months ended June 30
                                                     2013         2012
                                                     (Unaudited)  (Unaudited)
                                                                 
Cash flows from operating activities                              
Net loss                                             $ (5,343)    $ (7,425)
Adjustments required to reconcile net loss tonet                 
cash used in operating activities:
Stock-based compensation related to options and       154          724
shares issuedto employees and others
Amortization of intangible assets                     53          102
Depreciation                                         787         755
Gain on sale of fixed assets                          (11)         --
                                                                 
Changes in operating assets and liabilities:                      
Accrued severance pay, net                            (157)        631
Accrued interest and linkage differences             69           29
Decrease in deferred tax liability                    (6)          (6)
Decreasein trade receivables, net                    2,147        5,377
Decrease (Increase) in other receivables and prepaid  1,099        (374)
expenses
Decreasein inventories                               87           581
Decrease in trade payables                            (1,881)      (1,501)
Decreasein other current liabilities                 (1,893)      (210)
Net cash used in continuing operating activities      (4,895)      (1,317)
                                                                 
Cash flows from investing activities                              
                                                                 
Purchase of property and equipment                    (1,656)      (249)
Purchase of short term investments and long term      (296)        (7,185)
restricted deposit
Acquisition ofbusiness operations                   --           (100)
Proceeds from restricted deposit for employee benefit 306          --
Proceeds from maturityand sale of short term         5,542        10,843
investments
Proceeds from sale of fixed assets                   11           --
                                                                 
Net cash provided byinvesting activities             3,907        3,309
                                                                 
Cash flows from financing activities                              
Decrease in short-term bank credit, net               (2,438)      (418)
Proceeds from long-term bank loans                    1,398       273
Repayment of long-term bank loans                     (1,210)      (1,300)
Proceeds from exercise of options and warrants, net   239          9
Net cash used in financing activities                 (2,011)     (1,436)
                                                                 
Cash flows from discontinued operations                           
Net cash used in discontinued operating activities    --           (150)
Total net cash used in discontinued activities        --           (150)
                                                                 
Effect of exchange rate changes on cash               (112)       (4)
                                                                 
Increase (decrease)in cash and cash equivalents      (3,111)      402
Cash and cash equivalents at the beginning of the     9,304      12,517
period
                                                                 
Cash and cash equivalents at the end of the period    $6,193     $12,919

CONTACT: Company Contact:
         Galit Mendelson
         VP, Corporate Relations
         732 429 1900 ext. 111
         galit@otiglobal.com

         Investor Contact:
         Scott Liolios or Matt Glover
         Liolios Group, Inc.
         949 574 3860
         otiv@liolios.com

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