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Wednesday November 14, 12:31 pm Eastern Time
Crystal Systems Solutions Announces Third Quarter Results
HERZLIYA, Israel--(BUSINESS WIRE)--November 14, 2001--Crystal Systems Solutions Ltd (Nasdaq:CRYS - news) today announced financial results for the quarter ended September 30, 2001.
- Q3 Results Show Continued Improvement
- Restructuring Efforts and Cost Containment Contributed to Improved Results
Revenues for the third quarter were US $9.2 million, and the pro forma loss, excluding amortization of goodwill and restructuring expenses, was US $738 thousand. This represents a sequential reduction in loss from US $2.2 million in the first quarter, and US $1.5 million in the second quarter.
In the comparable third quarter of 2000, revenues were US $12.6 million and the pro-forma EBITDA was US $1.6 million. The Company's net loss for the quarter, which includes amortization of goodwill, and restructuring and non-recurring charges, was US $1.6 million or US $0.17 loss per share. In the comparable third quarter of 2000, the net income was US $623 thousand or US $0.06 per share.
Crystal is facing extremely challenging market conditions. The attack on September 11th compounded the recession-like environment the Company was already experiencing, causing customers to postpone or segment projects. In spite of these unfavorable conditions, Crystal managed to adjust its expense level and materially decrease its EBITDA loss.
In line with its strategic plan, Crystal managed to successfully implement its cost reduction and restructuring initiatives. Together they resulted in a sequential reduction of its pro-forma operating expenses and EBITDA loss. Quarterly operating expense level was reduced from US $12.7 million in the first quarter of 2001 to US $11.5 million in the second quarter and US $10 million in this third quarter of 2001. Pro-forma EBITDA loss was reduced from US $1.7 million in the first quarter of 2001, through US $1.3 million in the second quarter, to US $877 thousand in the third quarter of 2001.
According to Crystal's restructuring plan, it is increasing shareholdings in certain subsidiaries and is disposing investments in businesses that are not immediately related to its core technology. For example, the Company completed the acquisition of SCH Software Conversion House Ltd., thereby complementing Crystal's established mainframe expertise with SCH's midrange capabilities. This acquisition also enabled Crystal to withdraw from low margin activities that are not directly related to its core technology.
As a result of these transactions, Crystal's more focused sales and marketing efforts resulted in sales to stable, high-quality clients. In addition, the integrated Research and Development centers can now produce a more consistent and coordinated product offering. Operations also became more efficient by decreasing overlapping operating costs. Crystal believes that these measures will be an ongoing factor in improving results.
``I am encouraged by the progress we have made due to the aggressive steps taken to adjust our operating model to the turbulent economic environment. I believe that with its re-scoped tool offering, Crystal is well positioned to provide unique `cost saving' modernization tools to its current and future customers,'' commented Mr. Gad Goldstein, Chairman of the board. ``I believe Crystal is today structured to successfully compete in today's difficult marketplace, add high-quality new customers, increase its presence in its existing client base, and continue the trend of improved operating results,'' added Mr. Goldstein.
Conference Call Details:
Gad Goldstein, Chairman of the Board, and Iris Yahal, Chief Financial Officer, will discuss the third quarter results and will be available to answer questions. The conference call will be held on Wednesday, November 14th, 2001 at 12:00 P.M. (EST). Interested parties are welcome to call the telephone numbers listed below, five to ten minutes prior to the start of the conference call.
In the US call (866) 580-3165
Outside the US call (847) 944-7122
Callers should reference ``Crystal Systems Solutions Third Quarter Results'' to the AT&T conference call operator. An automated replay of the conference call will be available from November 14th 03:30 P.M. until November 16th at 5:00 P.M. (EST). To access the replay please call (USA) 1-800-475-6701, (Outside the US) 1-320-3653844 and enter Crystal's access code of 611489.
About Crystal Systems Solutions
Crystal Systems Solutions Ltd. (Nasdaq:CRYS - news)
develops and markets software tools and provides consulting services for efficient modernization of legacy systems and cross-platform migrations.
Crystal provides comprehensive enterprise products spanning mainframe, midrange, and client/server computing platforms. Crystal has enhanced its expertise through the successful completion of projects for Fortune 1000 prestigious organizations, establishing solid credibility, and achieving global recognition and presence. Crystal is totally committed to supporting its customers, both directly and via its partners, offering end-to-end solutions through consultancy, assistance, and service in conjunction with its wide variety of proprietary software tools. For more information, please visit our Web site at http://www.crystal-sys.com.
Certain statements contained in this release may be deemed forward-looking statements, with respect to plans, projections, or future performance of the Company, the occurrence of which involves certain risks and uncertainties that could cause actual plans to differ materially from these statements. These risks and uncertainties include but are not limited to: market demand for the Company's tools, successful implementation of the Company's tools, competitive factors, the ability to manage the Company's growth, the ability to recruit and retrain additional software personnel, and the ability to develop new business lines.
All names and trademarks are their owner's property.
Pro Forma Consolidated Statements of Operations (Unaudited)
(in thousands, except per-share data)
Excluding Amortization of Goodwill, Intangibles
and Non-Recurring Expenses
Nine months ended Three months ended Year ended
September 30, September 30, December 31,
---------------- ---------------- -------
2001 2000 2001 2000 2000
------- ------- ------- ------- -------
unaudited unaudited
Revenues $30,341 $36,633 $ 9,176 $12,592 $49,245
Cost of revenues 14,241 14,960 4,040 5,050 20,065
------- ------- ------- ------- -------
Gross profit 16,100 21,673 5,136 7,542 29,180
Software development
costs 6,956 7,330 2,281 2,305 9,487
Selling, general and
administrative
expenses 13,025 10,988 3,732 3,676 14,650
------- ------- ------- ------- -------
EBITDA (3,881) 3,355 (877) 1,561 5,043
Depreciation 1,185 1,019 328 385 1,427
------- ------- ------- ------- -------
Operating income (5,066) 2,336 (1,205) 1,176 3,616
Financial income
(expenses), net (49) 1,380 226 371 1,370
Other income (loss),
net 529 2,164 665 569 2,510
------- ------- ------- ------- -------
Income before taxes (4,586) 5,880 (314) 2,116 7,496
Taxes on income 78 87 - 16 184
------- ------- ------- ------- -------
(4,664) 5,793 (314) 2,100 7,312
Minority interest 985 (1,471) (173) (590) (1,700)
Equity in losses of
affiliated companies (778) (899) (251) (519) (1,114)
------- ------- ------- ------- -------
Net income (4,457) 3,423 (738) 991 4,498
======= ======= ======= ======= =======
Basic earnings
per share -0.45 0.34 -0.07 0.10 0.44
======= ======= ======= ======= =======
Diluted earnings
per share -0.45 0.33 -0.07 0.10 0.43
======= ======= ======= ======= =======
Common shares
outstanding 9,886 10,164 9,842 10,223 10,149
======= ======= ======= ======= =======
Common shares
assuming dilution 9,914 10,423 9,842 10,328 10,363
======= ======= ======= ======= =======
CRYSTAL SYSTEMS SOLUTIONS LTD.
(AN ISRAELI CORPORATION)
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2001 2000
------- -------
Unaudited Audited
------- -------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,552 $12,086
Marketable securities 630 5,074
Accounts receivable:
Trade 16,412 21,085
Other current assets 4,530 4,706
------- -------
Total current assets 27,124 42,951
------- -------
INVESTMENTS 10,368 7,898
------- -------
FIXED ASSETS
Cost 9,901 10,175
Less - accumulated depreciation 6,231 5,972
------- -------
Total fixed assets 3,670 4,203
------- -------
OTHER ASSETS, NET 20,343 14,085
------- -------
Total assets $61,505 $69,137
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit $ 792 $ 1,015
Accounts payable and accruals:
Trade 5,380 3,841
Other 8,110 8,134
Restructuring accrual 741
------- -------
Total current liabilities 15,023 12,990
------- -------
LONG-TERM LIABILITIES:
Accrued severance pay, net 618 818
Loans from banks and others 271 34
------- -------
Total long-term liabilities 889 852
------- -------
MINORITY INTEREST 3,223 3,886
------- -------
Share capital 23 23
Capital surplus 40,785 40,632
Retained earnings 16,002 23,906
------- -------
56,810 64,561
Cost of Company shares held by
subsidiaries (1,766,100 shares) (14,440) (13,152)
------- -------
42,370 51,409
------- -------
Total liabilities and
shareholders' equity $61,505 $69,137
======= =======
CRYSTAL SYSTEMS SOLUTIONS LTD.
(AN ISRAELI CORPORATION)
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share data)
Nine months ended Three months ended Year ended
September 30, September 30, December 31,
---------------- ---------------- -----------
2001 2000 2001 2000 2000
------- ------- ------- ------- -------
unaudited unaudited
Revenues $30,341 $36,633 $ 9,176 $12,592 $49,245
Cost of revenues 14,241 14,960 4,040 5,050 20,065
------- ------- ------- ------- -------
Gross profit 16,100 21,673 5,136 7,542 29,180
Software development
costs 6,956 7,330 2,281 2,305 9,487
Selling, general and
administrative
expenses 13,025 10,988 3,732 3,676 14,650
------- ------- ------- ------- -------
(3,881) 3,355 (877) 1,561 5,043
Depreciation 1,185 1,019 328 385 1,427
Amortization of
goodwill 1,336 1,020 515 368 1,384
Restructuring costs &
Non-recurring expenses 2,111 - 387 - -
------- ------- ------- ------- -------
Operating income (8,513) 1,316 (2,107) 808 2,232
Financial income
(expenses), net (49) 1,380 226 371 1,370
Other income
(loss), net 529 2,164 665 569 2,510
------- ------- ------- ------- -------
Income before taxes (8,033) 4,860 (1,216) 1,748 6,112
Taxes on income 78 87 - 16 184
------- ------- ------- ------- -------
(8,111) 4,773 (1,216) 1,732 5,928
Minority interest 985 (1,471) (173) (590) (1,700)
Equity in losses of
affiliated companies (778) (899) (251) (519) (1,114)
------- ------- ------- ------- -------
Net income (7,904) 2,403 (1,640) 623 3,114
======= ======= ======= ======= =======
Basic earnings
per share -0.80 0.24 -0.17 0.06 0.31
======= ======= ======= ======= =======
Diluted earnings
per share -0.80 0.23 -0.17 0.06 0.30
======= ======= ======= ======= =======
Common shares
outstanding 9,886 10,164 9,842 10,223 10,149
======= ======= ======= ======= =======
Common shares
assuming dilution 9,914 10,423 9,842 10,328 10,363
======= ======= ======= ======= =======
Contact:
Crystal Systems Solutions, Tel Aviv
Iris Yahal, +972-9-9526110
 
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