SOURCE: Top Image Systems, Ltd.

August 03, 2006 06:00 ET

Top Image Systems Reports All-Time Record Quarterly Results

Fifth Consecutive Quarter of Growing Profitability

TEL AVIV, ISRAEL -- (MARKET WIRE) -- August 3, 2006 -- Top Image Systems, Ltd. (NASDAQ: TISA), the leading innovator of data capture solutions, today announced its financial results for the second quarter of 2006.

Revenues for the second quarter of 2006 were $4.93 million, an increase of 22% from the $4.04 million revenues recorded for the second quarter of 2005, and a 9% increase from the $4.54 million revenues for the first quarter of 2006. 34% of second quarter revenues were generated from services and 66% from products.

Net income for the second quarter was $285 thousand, compared with a net income of $68 thousand in the second quarter of 2005, and net income of $181 thousand in the prior quarter. Net income per share in this quarter was $0.032 compared with net income per share of $0.007 in the second quarter of 2005, and net income per share of $0.021 in the first quarter of 2006.

Second quarter highlights:

--  Record quarterly revenues with 22% year over year growth.
    
--  Gross margin increased to 63% and net income margin reached 5.8%
    
--  50% of the quarterly revenues generated from existing customers and
    50% from new customers.
    
--  Success in APAC, Germany and the rest of Europe, which generated 16%,
    19% and 24% of the company's quarterly revenues, respectively.
    
--  High levels of activity in France, the third-largest market in Europe.
    
--  Partnerships with major players including Xerox and IBM bore fruit and
    generated 34% of the company's quarterly revenues.
    
--  Growing success for TIS's solution for automatic mail sorting and
    routing, with four new projects in Europe.
    
--  5 new customers implemented eFLOW Ability, TIS module for invoice
    processing integrated with SAP, in Europe and Australia.
    
"We are delighted to announce record second-quarter 2006 results, which beat our expectations. Revenues, operating profits and net income are all up with strong organic year-over-year growth," commented Dr. Ido Schechter, Chief Executive Officer of Top Image Systems.

Dr. Schechter continued, "Over the past few months, we won several major tenders with Xerox, Atos Origin and IBM. These recent successes have validated our strategy to invest in strong partnerships with the major players in the Business Process Outsourcing market. We are seeing significant synergies from the combination of our partners' strong presence in the market and vast experience in providing a wide array of products and services, along with our advanced technological state-of-the-art input information solutions. Together we are able to provide end-users with the ultimate solution for complex and large data collection projects."

"Our overall performance over the first six months of 2006 makes us increasingly confident in our ability to maintain our growth and improve our profitability throughout the year," concluded Dr. Schechter.

Conference Call

TIS management will host a conference call today, August 3, 2006, at 08:30am EST (5:30am Pacific Time, 1:30pm UK Time, 3:30pm Israel Time) to review the second quarter of 2006 financial results and other corporate events. Dr. Ido Schechter, CEO, and Arie Rand, CFO, will be on-line to discuss these results and take part in a question and answer session.

The call can be accessed by dialing:

US Dial-in Number: 1 866 744 5399
UK Dial-in Number: 0 800 917 5108
ISRAEL Dial-in Number: 03 918 0600
INTERNATIONAL Dial-in Number:  +972 3 918 0600
Participants are asked to call the number approximately 10 minutes before the conference call begins.

For those unable to listen to the live call, a replay of the call will be available for three months 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' eFLOW Unified Content Platform is a common platform for the company's solutions. TIS markets its platform in more than 30 countries through a multi-tier network of distributors, system integrators, value added resellers as well as strategic partners. Visit the company's website www.topimagesystems.com for more information.

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. Words such as "anticipate," "project," "expect," "plan," "intend," "may," "should," "will" and similar words or expressions identify some, but not all, of these 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 the Company 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), the Company's ability to successfully integrate TIS Japan, 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

                                                    June 30,   December 31
                                                  -----------  -----------
                                                      2006         2005
                                                  -----------  -----------
                                                      In thousands US$
Assets

Current assets:
Cash and cash equivalents                               7,219        8,200
Marketable securities                                   2,307        1,805
Trade receivables, net                                  7,770        6,802
Other current assets                                    1,111          620
                                                  -----------  -----------

Total current assets                                   18,407       17,427
                                                  -----------  -----------

Severance funds pay                                       604          654
                                                  -----------  -----------

Property and equipment

Cost                                                    2,452        2,358
Less / accumulated depreciation                        (1,895)      (1,781)
                                                  -----------  -----------

Net property and equipment                                557          577
                                                  -----------  -----------

Goodwill                                                  465          465

Net intangible assets                                     950        1,100

Other  long-term assets, net                               68          135
                                                  -----------  -----------

                                                  -----------  -----------
Total assets                                           21,051       20,358
                                                  ===========  ===========


Liabilities and Shareholders' Equity

Current liabilities:
Short-term bank loans                                   1,988        2,179
Trade payables                                            446          900
Accrued liabilities and other payables                  2,888        2,213
                                                  -----------  -----------

Total current liabilities                               5,322        5,292
                                                  -----------  -----------

Long-term liabilities:
Liability for severance pay, net                          919          850
                                                  -----------  -----------

Total long-term liabilities                               919          850
                                                  -----------  -----------

Total liabilities                                       6,241        6,142
                                                  -----------  -----------

Shareholders' equity
Share capital - Ordinary share of NIS 0.04 par
 value                                                     97           97
Surplus capital                                        29,686       29,561
Comprehensive income
Accumulated deficit                                   (14,973)     (15,442)
                                                  -----------  -----------

Total shareholders' equity                             14,810       14,216
                                                  -----------  -----------

                                                  -----------  -----------
Total liabilities and shareholders' equity             21,051       20,358
                                                  ===========  ===========


Top Image Systems Ltd.
Consolidated Statements of Operations for the

                           Three     Three      Six       Six
                           months    months    months    months    Year
                           ended     ended     ended     ended     ended
                         --------- --------- --------- --------- ---------
                                                                 December
                         June 30,   June 30  June 30,   June 30     31,
                         --------- --------- --------- --------- ---------
                           2006      2005      2006      2005      2005
                         --------- --------- --------- --------- ---------
                              In thousands US$ except per shares data

Revenues
Product sales                3,269     2,382     5,875     4,471     9,888
Service revenues             1,665     1,661     3,599     3,529     6,932
                         --------- --------- --------- --------- ---------

Total revenues               4,934     4,043     9,474     8,000    16,820
                         --------- --------- --------- --------- ---------

Cost of revenues (*)
Product costs                  589       530     1,151     1,057     3,363
Service costs                1,241     1,050     2,444     2,230     3,400
                         --------- --------- --------- --------- ---------

Total cost of revenues       1,830     1,580     3,595     3,287     6,763
                         --------- --------- --------- --------- ---------

Gross profit                 3,104     2,463     5,879     4,713    10,057

Expenses

Research and development
 costs                         463       319       884       644     1,312
Selling and marketing        1,737     1,185     3,171     2,755     5,396
General and
 administrative                757       829     1,576     1,701     3,470
Liquidated damages
 related to September
 PIPE                            -         -         -       164       164

                         --------- --------- --------- --------- ---------

                             2,957     2,333     5,631     5,264    10,342
                         --------- --------- --------- --------- ---------

Operating profit (loss)        147       130       248      (551)     (285)

Financing income
 (expenses), net               155       (62)      226      (141)     (146)
                         --------- --------- --------- --------- ---------

Income (loss) before
 taxes on income               302        68       474      (692)     (431)

Taxes on Income                (17)        -        (8)        -       (30)
                         --------- --------- --------- --------- ---------

Net income (loss) for
 the period                    285        68       466      (692)     (461)
                         ========= ========= ========= ========= =========

Basic net income (loss)
 per share                   0.032     0.007     0.053    (0.080)   (0.050)
                         ========= ========= ========= ========= =========

Weighted average number
 of shares used in
 computation of basic
 net income (loss) per
 share                   8,818,499 8,944,534 8,806,714 8,755,169 8,764,222
                         ========= ========= ========= ========= =========

Diluted net income
 (loss) per share            0.032     0.007     0.052    (0.080)   (0.050)
                         ========= ========= ========= ========= =========

Weighted average number
 of shares used in
 computation of diluted
 net income (loss) per
 share                   9,028,989 9,366,534 8,993,278 8,755,169 8,764,222
                         ========= ========= ========= ========= =========

(*) Certain costs were reclassified for prior periods

Contact Information

  • Contact:
    Adi Bar-Lev
    Investor and Public Relations Manager
    Top Image Systems Ltd.
    +972 3 7679114
    Email Contact

    External Investor Relations Contact:
    Ehud Helft
    Email Contact
    Kenny Green
    Email Contact

    GK Investor Relations
    1 866 704 6710