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Monday November 18, 8:27 am ET
Crystal Systems Solutions Reports Third Quarter Improved Operating Results, Positive Net Income
HERZLIA, Israel--(BUSINESS WIRE)--Nov. 18, 2002--Crystal Systems
Solutions Ltd. (Nasdaq:CRYS - News)
- Shareholders Approve Share Exchange Agreement with Certain
Liraz Shareholders;
- Combined Business to Provide Improved Visibility, Critical
Entry Mass and Strong Leverage Opportunities
Crystal Systems Solutions Ltd. (Nasdaq:CRYS - News), a global provider of
leading software products and support services for the modernization
of existing information systems and cross platform re-hosting, today
announced its operating and financial results for the third quarter
and nine months ended September 30, 2002.
Revenues for the third quarter of 2002 were $7.3 million, compared
to $7.5 million in the previous quarter. Gross profit was $4.6
million, and gross margins for the third quarter of 2002 were 61%, in
line with company's objectives. Operating profit was $609,000 compared
to $96,000 in the previous quarter. Crystal reported a net income for
the third quarter of 2002 of $32,000.
On November 14th, at a special general shareholders meeting,
Crystal shareholders approved a share exchange agreement between the
Company and certain shareholders of Liraz, whereby 3,478,624 common
shares of Crystal were issued in exchange for 5,809,302 shares, or 86%
of Liraz's outstanding shares. The transaction was then closed on the
same day.
Crystal's strategic activities to position itself as a leading
software modernization provider, and expand its penetration into
organizations that require innovative modernization solutions for
their existing IT environment, were strengthened through the recent
acquisition of Liraz, a public company traded on the Tel Aviv Stock
Exchange. Liraz develops and markets software products used for the
sophisticated and robust applications needed by large enterprises,
primarily large financial organizations and telecom companies in
Europe, the Far East and the United States. Currently, most of its
revenues are generated from long-term software maintenance agreements,
consulting services and sales of its software product licenses.
Commenting on this major strategic development, Gad Goldstein,
Chairman of Crystal Systems Solutions, stated, "Following the
implementation of organizational and structural modifications and
changes that are already underway, the unified organization is
strongly expected to reap the synergistic benefits of the unification
of all its components. Beginning in FY 2003, the new combined company
is believed capable of generating annual revenues of over $50
million."
Mr. Goldstein elaborated, "The Company will now be offering an
extensive portfolio of software modernization tools primarily based on
Crystal's proven technologies. The combined sales, support and
marketing forces create an extensive geographic presence in target
markets. Liraz provides a seasoned veteran sales force with extensive
ties and relationships with customers representing potential Crystal
customers. The opportunities for cross marketing are very strong.
Given that most of Liraz customers are involved in long-term software
maintenance and consulting agreements, the potential for leveraging
such relationships to market and sell additional software tools and
products is visible. In addition, the new combined business entity
will now have sufficient critical entry mass to allow it to qualify
for bidding on larger projects."
"The combined backlog and pipeline consist of orders for software
modernization tools and solutions, consulting services and maintenance
revenues. Due to the healthy composition of mixed revenue sources and
a strong presence in various countries, the consolidated entity is
expected to significantly expand the business and turn the
opportunities into a profitable and sequentially growing revenue
stream. We look forward to reporting to you on these developments in
future communications," concluded Mr. Goldstein.
Gad Goldstein Chairman, of the Board, and Iris Yahal, the
company's Chief Financial Officer, will discuss the third quarter
results and will be available to answer questions in a conference call
on Monday, November 18, 2002 at 10 A.M. (EST) / 5 P.M. Israel time.
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: 800/288-8976
Outside the US call: 612/332-0630
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 18th 02:00 P.M. until November 20th at 11:59 P.M. (EST). To
access the replay please call (USA) 800/475-6701 (International)
320/365-3844 and enter Crystal's access code of 660639.
About Crystal
Crystal Systems Solutions Ltd. develops and markets software
products and 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 BALANCE SHEETS
(in thousands)
September 30, December 31
2002 2001
------------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $8,756 $9,374
Marketable securities 536 574
Accounts receivable:
Trade 9,867 12,171
Other 2,164 2,253
------------- ------------
Total current assets 21,323 24,372
------------- ------------
INVESTMENTS 9,954 8,053
------------- ------------
FIXED ASSETS
Cost 9,793 9,799
Less - accumulated depreciation 6,825 6,449
------------- ------------
Total fixed assets 2,968 3,350
------------- ------------
OTHER ASSETS, NET 19,569 18,892
------------- ------------
Total assets $53,814 $54,667
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit $3,848 $2,280
Accounts payable and accruals:
Trade 2,724 5,261
Other 6,489 6,930
------------- ------------
Total current liabilities 13,061 14,471
------------- ------------
LONG-TERM LIABILITIES:
Accrued severance pay, net 588 702
Loans from banks and others 258 281
------------- ------------
Total long-term liabilities 846 983
------------- ------------
MINORITY INTEREST 4,385 3,956
------------- ------------
SHAREHOLDERS' EQUITY
(net of cost of 1,766,100 shares
held by subsidiaries) 35,522 35,257
------------- ------------
Total liabilities and shareholders' equity $53,814 $54,667
============= ============
CRYSTAL SYSTEMS SOLUTIONS LTD.
(AN ISRAELI CORPORATION)
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Nine months ended Three months ended
September 30, September 30,
--------- --------- -------- ---------
2002 2001 2002 2001
--------- --------- -------- ---------
unaudited unaudited
Revenues $22,868 $30,341 $7,300 $9,176
Cost of revenues 8,850 14,241 2,713 4,040
--------- --------- -------- ---------
Gross profit 14,018 16,100 4,587 5,136
Software development costs, net 5,386 6,956 1,685 2,281
Selling, general and
administrative expenses 6,869 13,125 2,039 3,832
--------- --------- -------- ---------
1,763 (3,981) 863 (977)
Depreciation 846 1,185 254 328
Amortization of goodwill 1,336 515
Restructuring costs &
non-recurring expenses 2,111 387
--------- --------- -------- ---------
Operating income (loss) 917 (8,613) 609 (2,207)
Financial income (expenses), net 58 (49) (34) 226
Other income, net 103 529 (2) 665
--------- --------- -------- ---------
Income (loss) before taxes 1,078 (8,133) 573 (1,316)
Taxes on income 56 78 1
--------- --------- -------- ---------
1,022 (8,211) 572 (1,316)
Minority interest (417) 985 (173) (173)
Equity in losses of affiliated
companies (785) (778) (367) (251)
--------- --------- -------- ---------
Net income (loss) (180) (8,004) 32 (1,740)
========= ========= ======== =========
Basic earnings (loss) per share (0.02) (0.81) 0.00 (0.18)
========= ========= ======== =========
Diluted earnings (loss) per share (0.02) (0.81) 0.00 (0.18)
========= ========= ======== =========
Common shares outstanding 10,066 9,886 10,074 9,842
========= ========= ======== =========
Common shares assuming dilution 10,066 9,914 10,074 9,842
========= ========= ======== =========
Contact:
Crystal Systems Solutions Ltd.
Iris Yahal, +972-9-9600233
 
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