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Tuesday August 13, 8:14 am Eastern Time
Crystal Systems Solutions Announces Second Quarter Results
Gross Profit Margins Widen
Positive Net Income
HERZLIA, Israel--(BUSINESS WIRE)--Aug. 13, 2002--Crystal Systems
Solutions Ltd. (Nasdaq:CRYS - News), a global provider of leading software
products and support services for the modernization of existing
information systems, today announced its financial results for the
second quarter and six months ended June 30, 2002.
Revenues for the second quarter of 2002 were $7.5 million, 7%
lower than in the previous quarter. Gross profit margins for the
second quarter of 2002 were 61%, compared to 60% for the first quarter
of 2002. The Company reported a net income for the second quarter of
2002 of $26K, compared to a net loss of $238K for the first quarter of
2002. The increased gross profit margins compared to the same period
last year were largely due to the company's focus on license sales and
fixed price projects, and a significantly reduced expense structure.
Revenues for the first six months of 2002 were $15.6 million,
compared to $21.2 million for the first six months of 2001. Gross
profit margins for the first half of 2002 were 61%, compared to 52%
for the first six months of 2001. The Company reported a net loss for
the first half of 2002 of $210K, or $(0.02) per share, compared to a
net loss of $6.3 million, or $(0.83) per share in the first half of
2001.
"Revenues for the second quarter were impacted by the continuing
cautious approach of companies to engage in major capital
expenditures, and the ongoing trend to procure products and services
in a phased approach," observed Chanan Weiss, Chief Executive Officer.
"Nevertheless, it's encouraging to see that gross margins continue to
increase as a result of our restructured business model, which focuses
more on license sales and fixed price projects. Moreover, our bottom
line improved, achieving operating profitability and a positive cash
flow due to the comprehensive cost-control programs we implemented
last year.
"The positive second quarter results have been achieved in spite
of the MCI WorldCom affair, which resulted in the loss of an expected
annual income of $2 million, predominantly from the revenue assurance
sector. I believe that this cut will be counterbalanced by the sale of
Crystal's legacy modernization tools, which offer a high return on
investment.
"Whether via revenue assurance or cost-saving legacy
modernization, Crystal's tools are ideally positioned in this period
of budgetary constraints," concluded Chanan Weiss.
Mr. Gad Goldstein, Chairman of the Board, added, "I am satisfied
with our overall performance in these difficult and uncertain economic
times. Looking forward, Crystal, and its subsidiary Mainsoft, continue
to invest in the development of sophisticated modernization tools. The
recurring deals with leading software developers, such as Siebel,
Cadence, and Crystal Decisions, demonstrate the genuine demand for
sophisticated and automated tools with a proven history of a high
return on investment. We will take advantage of opportunities in all
our target markets, continue to improve our products, and keep close
control of our expenses."
Conference Call Details:
Gad Goldstein Chairman, of the Board, and Iris Yahal, the
company's Chief Financial Officer, will discuss the second quarter
results and will be available to answer questions in a conference call
on:
Tuesday, August 13, 2002 at 10 A.M. (EST) / 5 P.M. Israel time.
To participate, please call
In the US call: 888/428-4473
Outside the US call: 612/332-0107
Callers should reference "Crystal Systems Solutions Second Quarter
Results" to the AT&T conference call operator.
An automated replay of the conference call will be available from
August 13 at 2 P.M. through August 15 at 11:59 P.M. (EDT). To access
the replay, please call (USA) 800/475-6701, (International)
320/365-3844. Callers should enter Crystal's access code: 648629.
About Crystal Systems Solutions
Crystal Systems Solutions Ltd. develops solutions that enable
clients to efficiently manage the IT assets at their disposal,
including legacy applications, modern application packages,
middleware, and networking technologies. Its products provide
cross-platform software renovation, modernization, and IT asset
management solutions that are designed to accelerate the process of
mission-critical legacy renewal, integration, and maintenance during
an application's entire life cycle.
For more information, please visit our web site at
http://www.crystal-sys.com.
Crystal Systems Solutions is a member of the Formula Group
(Nasdaq:FORTY - News). The Formula Group is an international information
technology company principally engaged, through its subsidiaries and
affiliates, in providing software consulting services, developing
proprietary software products, and providing computer-based solutions.
SAFE HARBOR: 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.
This press release is also available at www.crystal-sys.com.
All names and trademarks are their owners' property.
CRYSTAL SYSTEMS SOLUTIONS LTD.
(AN ISRAELI CORPORATION)
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per-share data)
Six months ended Three months ended
June 30, June 30,
------------------ ------------------
2002 2001 2002 2001
-------- -------- -------- --------
Revenues $15,568 $21,165 $7,515 $10,151
Cost of revenues 6,137 10,201 2,946 4,868
-------- -------- -------- --------
Gross profit 9,431 10,964 4,569 5,283
Software development costs 3,701 4,675 1,828 2,300
Selling, general and
administrative expenses 4,830 9,293 2,351 4,330
-------- -------- -------- --------
EBITDA 900 (3,004) 390 (1,347)
Depreciation 592 857 294 447
Amortization of goodwill - 821 - 465
Goodwill impairment,
Restructuring costs
& Non-recurring expenses - 1,724 - 854
-------- -------- -------- --------
Operating income (loss) 308 (6,406) 96 (3,113)
Financial income (expenses), net 92 (275) 159 (125)
Other income (loss), net 105 (136) (1) (129)
-------- -------- -------- --------
Income (loss) before taxes 505 (6,817) 254 (3,367)
Taxes on income 55 78 24 0
-------- -------- -------- --------
450 (6,895) 230 (3,367)
Minority interest (244) 1,158 12 704
Equity in losses of affiliated
companies, net (418) (527) (216) (187)
-------- -------- -------- --------
Net income (loss) (212) (6,264) 26 (2,850)
======== ======== ======== ========
Basic earnings per share $(0.02) $(0.63) 0.00 $(0.30)
======== ======== ======== ========
Diluted earnings per share $(0.02) $(0.63) 0.00 $(0.30)
======== ======== ======== ========
Common shares outstanding 10,062 9,909 10,074 9,860
======== ======== ======== ========
Common shares assuming dilution 10,062 9,950 10,074 9,860
======== ======== ======== ========
CRYSTAL SYSTEMS SOLUTIONS LTD.
(AN ISRAELI CORPORATION)
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31
2002 2001
-------- --------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $10,104 $9,374
Marketable securities 834 574
Accounts receivable:
Trade 10,107 12,171
Other 1,811 2,253
-------- --------
Total current assets 22,856 24,372
-------- --------
INVESTMENTS 9,549 8,053
-------- --------
FIXED ASSETS
Cost 9,845 9,799
Less - accumulated depreciation 6,762 6,449
-------- --------
Total fixed assets 3,083 3,350
-------- --------
OTHER ASSETS, NET 19,280 18,892
-------- --------
Total assets $54,768 $54,667
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit $3,718 $2,280
Accounts payable and accruals:
Trade 3,535 5,261
Other 6,906 6,930
-------- --------
Total current liabilities 14,159 14,471
-------- --------
LONG-TERM LIABILITIES:
Accrued severance pay, net 622 702
Loans from banks and others 285 281
-------- --------
Total long-term liabilities 907 983
-------- --------
MINORITY INTEREST 4,212 3,956
-------- --------
SHAREHOLDERS' EQUITY
(net of cost of 1,766,100
shares held by subsidiaries) 35,490 35,257
-------- --------
Total liabilities and
shareholders' equity $54,768 $54,667
======== ========
Contact:
Crystal Systems Solutions Ltd.
Iris Yahal, +972-9-9600233
 
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